Hi Everyone! I am new to REIN and hoping to get a second set of eyes on an investment property I am looking at. This will be my first one and its a big one and frankly I'm scared to death. After speaking with many investors, they all leaned towards the same piece of advice; if you can go big. My experience spans property management (retail) and I am now a Realtor(6yrs). My investment strategy will be a little different in that I am looking to purchase 2-3 large mixed use properties and hold them for 5-10 years until I can hopefully retire.
I am refinancing my home to provide a small down-payment on this property. The owner of the building is giving me 20% VTB for 2 years. The rest I will need to finance if I can. My concern is the numbers. They look tight to me and I do need to sit down with an accountant next week to confirm the numbers but wanted to advise on the flip side from others. Here they are:
The building has two retail units below with good leases for the next 5 years and both have been there for over 10 years. There are two completely renovated apartments above that have also been rented out for years by same tenants. Further, the basement has storage units that many businesses in town use for there extra paperwork, etc. The majority of them are lawyers and such. Only half of this is currently rented out and owner never bothered to market it to its full potential.
Purchase Price $ 1,700,000.00
Mortgage $ 7,420.00
Utilities $ 113.00
Private Down $ 1,350.00
2nd on House $ 230.00
Property Taxes $ 959.00
Insurance $ 250.00
Total Expenses per month $ 10,322.00
Total Gross Income per month $ 11,140.00 - Per Year $ 133,680.00
Contingency $ 818.00/month
The storage will provide additional income when I get them rented. Also the area this building is located in has some major developments with a small rise condo being built two doors down. I'm worried the small contingency a month is tight. Even though this building is making money I would have felt saver with a larger contingency a month.
Also, I need to somehow write off the huge mortgage principal yearly or the revenue this building generates will kill me in taxes. I will be putting the building in its own corporate name. I think I can creatively do this with professional fees and such but its about 72k a year that I have to write off, which is substantial!
Any thoughts on the crazy investment would be appreciated!
I am refinancing my home to provide a small down-payment on this property. The owner of the building is giving me 20% VTB for 2 years. The rest I will need to finance if I can. My concern is the numbers. They look tight to me and I do need to sit down with an accountant next week to confirm the numbers but wanted to advise on the flip side from others. Here they are:
The building has two retail units below with good leases for the next 5 years and both have been there for over 10 years. There are two completely renovated apartments above that have also been rented out for years by same tenants. Further, the basement has storage units that many businesses in town use for there extra paperwork, etc. The majority of them are lawyers and such. Only half of this is currently rented out and owner never bothered to market it to its full potential.
Purchase Price $ 1,700,000.00
Mortgage $ 7,420.00
Utilities $ 113.00
Private Down $ 1,350.00
2nd on House $ 230.00
Property Taxes $ 959.00
Insurance $ 250.00
Total Expenses per month $ 10,322.00
Total Gross Income per month $ 11,140.00 - Per Year $ 133,680.00
Contingency $ 818.00/month
The storage will provide additional income when I get them rented. Also the area this building is located in has some major developments with a small rise condo being built two doors down. I'm worried the small contingency a month is tight. Even though this building is making money I would have felt saver with a larger contingency a month.
Also, I need to somehow write off the huge mortgage principal yearly or the revenue this building generates will kill me in taxes. I will be putting the building in its own corporate name. I think I can creatively do this with professional fees and such but its about 72k a year that I have to write off, which is substantial!
Any thoughts on the crazy investment would be appreciated!