Need evaluation on potential property

[Pooja]

Hello fellow investors ,
I'm kind of new to investing .Only experience I have is through Don"s books and forum topics.
I have shortlisted a potential property in a great neighborhood . I have evaluated it from the limited understanding I have ,but looking for insight if it is a good decision or not.Here are the numbers from last year .
DUPLEX
LIST PRICE -419,000
TAXES : 3098
RENTAL INCOME: 29400
ADDITIONAL INCOME (solar panels) : 5160
INSURANCE : 2500
REPAIRS : 1036
TOTAL OP EXPENSES : 12824

Other details: Walking distance to transit and plaza with national brand grocery store.Age of property -23 years
Im looking for suggestions on these numbers if they make sense or not.If not what am I missing and how to evaluate it. Thanks
Pooja

 

[Pooja]

I am wondering why no one replied to my post.I have seen great advice here and was kind of hopeful that some of you more experienced people would be able to give a better direction with the numbers and if I'm heading in the right or wrong direction .This is my first post and I'm assuming I posted at the right forum .
Thanks

 

[Tina Myrvang]

There is quite a few factors that we would need to determine if this is a good deal.

1. Where is the property
2. Have you researched the rents for that area
3. What are the expenses.
4. Purchase Costs are not included

You need to go through our ACRE system and learn how to properly evaluate a property.
You have not given enough information on the property for the investors to evaluate this deal.
I hope that helps.

 

[Thomas Beyer]

I answer this post in another forum

Please don't ask the same questions 2x

 

[Pooja]

I answer this post in another forum

Please don't ask the same questions 2x

Thank you Thomas for your reply on the other thread. My reason to post it on the other thread was ,I did not receive any reply from this one for 2 days .Since I am new to the site I dint know the appropriate forum to post

 

[housingrental]

My personal opinion only
I would not purchase it
If you are needing to purchase something, go with a cheaper single unit house
Duplex's can be a pain
The rent to purchase price isn't high enough to justify the pain

 

[Matt Crowley]

The yield on this property comes in at 5.1% for me with an NOI of $21,382 (after 12% management fees). So not terrible. I've never heard of solar panel income...I am suspicious this may be an expense recovery where they are calling the electricity savings as a "revenue". I also assumed utilities are in tenant's names. If incomes decrease or expenses increase substantially upon further review, I would not look at this property any further.

Keep in mind that real estate is incredibly localized. I have no idea if the property is in a good neighbourhood or a poor one. I don't know the tenant mix , local economy, or historical vacancies. If you want to make money in real estate, you need to be a great speculator. If you don't pick the correct micro-market to invest in, you will be stuck with your capital in a property chugging at 5.1%.

Jobs drive growth. Where are the jobs? What does the economic cycle look like in your market? Where are you in the cycle right now?

How can you make more money on this property? Are there any upgrades that can be done to improve rent? Is making a fourplex out of your duplex a potential option? Any government programs? Potential rezoning and redevelopment?

What is your exit strategy? How much money do you need to make? Is 10% cash on cash return sufficient? 15%? 30%? What will you net after tax on this property? Is that better than RRSP / TFSA? (hint: it usually isn't)

Very often, governments have programs to encourage accessibility, affordability, or neighbourhood renewal. If you want 15% plus cash on cash, you need to do miles and miles better than a conventional purchase.

 

[Pooja]

I've never heard of solar panel income

Although that property did not work after digging deeper but the income from solar panels in Kitchener area has been done by some people .The contract is through local utility funded partially /subsidized by govt. The hydro that the solar panels make go back to the local utility company with an assignable contract for 20 years .None of it is used for the house. The utility company then reimburses the owner back every month depending on how much generated. For this property it averaged at about $430 p.m (which was classified as additional income)