rent-to-own project proposal - new market project
DESCRIPTION
Rent-to-own investment opportunity. Another Crazy Thomas project in New Market. We provide our investor 20% ROI per year. Good stable rent-to-own client in place.TRANSCRIPT
Joint Venture OpportunitySemi-Detached House in New Market
3 Bedroom, 3 Bathrooms37 Widdifield Ave., New Market, Ontario
Thomas Wongwww.happinessinspiration.com416-806-9568thomaswong@rogers.com
www.happinessinspiration.com Thomas Wong - 37 Widdifield Ave., New Market
The Project• The property is a Semi-Detached house in a convenient location
in New Market, close to Yonge St.• The house is originally listed for $300,000. The house needs
some minor improvements.• The market value is around $315,000 to $325,000. • We got the offer accepted to buy the property for $288,000. The
current closing date is set for September 1, 2010.• We have a confirmed rent-to-own tenant, signed a Lease Option
agreement. The tenant is paying the initial $5,000 toward the purchase deposit and will pay another $7,000 deposit.
• Using Lease Option program as the exit strategy, potential profit in 3 year will be around $58K
www.happinessinspiration.com Thomas Wong - 37 Widdifield Ave., New Market
The Opportunity
• Project Finder/ Real Estate experts invest
– 5% of cash investment ($3,195)– Over 50 hours of time and expertise
• Cash partners invest:– 95% of the cash investment ($60,700)
• RRSP 2nd mortgage of $14,000
• Split profit 35-65 ($20K - $38K)
www.happinessinspiration.com Thomas Wong - 37 Widdifield Ave., New Market
Pictures of the property
www.happinessinspiration.com Thomas Wong - 37 Widdifield Ave., New Market
Key Features of the Property
• House was built in 1994, 3 bedroom, 3 bath (ensuite in Master bedroom
• Finished Basement with recreation room
• Main Floor parquet flooring and ceramic tile
• Main floor laundry
• gas Fireplaces
• Close To Yonge St. & Savage
www.happinessinspiration.com Thomas Wong - 37 Widdifield Ave., New Market
Profile of the tenant
• Husband and wife with 3 children (13, 16, and 18)• The husband is working for Rogers, and the wife is
working for a childcare company plus a partime job.• The combined reported income is about $75K per year.• They had credit issue due to his job related injury several
year ago. He is now retrained for a different position at Rogers.
• They do not have a valid credit score at the moment. They are in process of reestablishing credit
www.happinessinspiration.com Thomas Wong - 37 Widdifield Ave., New Market
Financial AssumptionsDescription of the property:Type of Property: Free Hold
Current Purchase Price: $288,000 Monthly Market Rent: $1,800
Land transfer tax Other Ont. City $2,795
Rehab cost/setup cost: $10,000
Closing legal fee $2,500
Avg. Annual Appreciation 4%
Assignment fee $5,000
Adjusted Cost base: $308,295
Annual property tax: $3,000
After Repair Market Value: $320,000
Annual Insurance: $600
Financing:
1st MortgageInitial Cash Investment $63,895
1st Mortgage Amount 80% $230,400 DCR(Free Hold) 1.19Interest rate 4.5%
# of Amortization Years 35
2nd Mortgage RRSP 2nd Mortgage Amount $14,000
2nd Mortgage Interest rate 14%
Total Mortgage $244,400
37 Widdifield Ave., New Market
www.happinessinspiration.com Thomas Wong - 37 Widdifield Ave., New Market
Benefit to Lessee
Lessee's Point of View:3 Year Lease Opt.
Down Payment $12,000Monthly Rent $1,710
Monthly Option Premium $468Monthly Condo Fee $270
Total Monthly Payment $2,178
Addition Monthly Option Bonus $200Purchase price
at the end of lease term 359,956$ Down payment credit at
purchase $36,048% Down available at the end of
Lease 10%
Additional money credited to Leasee's downpayment at purchase
www.happinessinspiration.com Thomas Wong - 37 Widdifield Ave., New Market
Joint Venture Profit -1
Investor's Point of View:
Option Exercised: 3 Year Lease Opt.
Total Gross Income during Lease Term: $ 414,316
Profit before Mortgage Payment: $ 95,221
Net Profit after Mortgage Interest: $58,796
Average Annual Net Profit: $19,599
selling price + 36*(monthly rent - monthly option bonus)
gross income - adjusted cost base - 3*(property tax + insurance)
profit before mortgage payment - interest portion of mortgage payment
www.happinessinspiration.com Thomas Wong - 37 Widdifield Ave., New Market
Joint Venture Profit - 2
Option NOT Exercised:3 Year Lease Opt.
Total Gross Income during Lease Term: $90,408
Profit before Mortgage Payment: $79,608
Net Profit after Mortgage Interest: $43,182
Average Annual Net Profit: $14,394
(Note: Profit does not included the increase in property value)
initial down payment + 36*(monthly rent + monthly option premium)
gross income - adjusted cost base - 3*(property tax + insurance)
profit before mortgage payment - interest portion of mortgage payment
www.happinessinspiration.com Thomas Wong - 37 Widdifield Ave., New Market
Joint Venture Return Analysis
Joint Venture Analysis: % contribution Investment % Profit
Partner #1 (deal finder) Thomas & Bob 5% $3,195 35%
Partner #2 Investors 95% $60,700 65%
Option Exercised: 3 Year Lease Opt.
Net Profit after Mortgage Interest: 58,796$
Partner #1 (deal finder) Profit 20,579$ ROI 644%Partner #2 Profit 38,217$ ROI 63%
www.happinessinspiration.com Thomas Wong - 37 Widdifield Ave., New Market
Cash Flow Analysis
Monthly Income $2,178
1st Mortgage Monthly payment 1,090.38$ Monthly portion of Property Tax $250.00Monthly portion of House Insurance $50Monthly condo fee if applicable $0Monthly 2nd Mortgage Interst if applicable $163Total Monthly Expenses 1,553.72$
Positive Cash Flow $624.28
Partner 1 portion of Cash Flow $218.50Partner 2 portion of Cash Flow $405.78
www.happinessinspiration.com Thomas Wong - 37 Widdifield Ave., New Market
Map of the Area
www.happinessinspiration.com Thomas Wong - 37 Widdifield Ave., New Market
Questions & Answers
www.happinessinspiration.com Thomas Wong - 37 Widdifield Ave., New Market
Sample Pictures of Projects
www.happinessinspiration.com Thomas Wong - 37 Widdifield Ave., New Market
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