It is not the 'asking' nor the 'sale' price of an investment property like this that matters most ... it is how much you actually have to invest in the property (the downpayment) that counts. With a downpayment of $250,000, for example, I believe it is possible to achieve a return of approximately $100,000 to $125,000 over the next 3-5 years. Now that's amazing! How? Read on:
Based on statistics published by the Ottawa Real Estate Board for over the past 30 years, properties appreciate in value approx. 5% per year, on average in Ottawa. I believe that 52 Willard is a more attractive and safer investment property bet than most because appreciation is even higher in central areas such as Old Ottawa South. So, if you stand back and look at what might be achievable in 3-5 years, a reasonable guesstimate of the sale price would be approx. $825,000-$900,000. Perhaps more.
The best variable mortgage rate I can find today is prime -.65%. (If you can't get this rate - or close to it - from your Mortgage Broker, then call me.) This mortgage rate, translated, means that $500k can be borrowed on a 35 year amortization at a 1.9% variable rate for a 5 year term and monthly payments would be $1,628.87 each month leaving a mortgage balance at the end of the 5 years of $447,161.29. Therefore, the mortgage would be paid down by about $50,000 over the 5 year term. Taxes on the property are currently $5,800 per year or $483.33 per month; therefore, principle, interest and taxes together = $2,112.20. The current rent more than covers this amount and provides monthly cash flow. (Note, however, that I have not factored in the cash flow between the monthly rent and the monthly P.I.T. because the property taxes will increase once the house is sold and the cash flow will lessen.)
The current tenants are in the 2nd year of a 4 year lease. The current rent is $2,750, next year $2,800 and the final year $2,850. The Tenants are a diplomatic family and take exceptional care of the house "as if it were their own". This lease must be honoured and terminates at the end of August 2013.
If you decided to move in after the current lease terminates, you would have a wonderful home in a great location. If you preferred to keep it as an investment, it could be re-rented at a higher rental rate which would, in turn, increase the revenue. (Current rents are on the low-side for the area and style of home.)
So, in summary, using the scenerio above, the Tenants pay the mortgage down by $50,000, there's monthly income (cash flow) to use for improvements (painting, for example) and the appreciation in 3-5 years bring you another $75,000-$100,000. Rarely do you find a house that has as much to offer in terms of space and function. The superb location, the sought-after charm of the era, quality finishings (such as refinished oak trim) all ensure excellent appreciation for years to come. This is an incredible opportunity for some lucky investor.
(Note: the above is an estimate only and not warranted; please conduct your own due diligence.) |
DETAILS:
- All brick, 3 story + finished basement
- Main floor: (all hardwood including staircase) hallway/entrance, formal family room, dining room, family room, kitchen, side entrance/mudroom
- Second floor: (all hardwood) 3 piece bathroom + linen closet, Master bedroom w/closet, Bedroom #2 w/ closet, Bedroom #3 w/closet
- Third floor: (varnished pine floor) bedroom #4 or office/playroom
- Basement: (carpet) 3 piece bathroom, laundry and tool room, entertainment/rec room, bedroom #5, small bedroom #6 or computer nook/storage area
- Heating - forced air natural gas (exception 3rd floor loft is baseboard electric heat)
- Central air throughout + the loft has a stand-alone air conditioning unit
- 3rd Level Loft - finished in 2000 (added 2nd dormers and new windows)
- Updated wiring throughout the house (2000)
- Two storey addition built in 2003 (all brick)
- Roof re-shingled in 2009
- Professionally landscaped
- Rented (new April ‘10) hot water heater
- 8’ x 6’ wood shed in backyard
- 2 car parking in driveway (no garage)
- Included: all light fixtures (2 original fixtures of 1930's art deco period), fridge, stove, microwave, dishwasher, washer, dryer, ceiling fan.
- The furnace has a drip humidifier ‘flow through’ (as opposed to a drum roll type)
- All fixtures are included in the sale...that also includes the two original antique fixtures and the two sconces in the dining room and annex family room which are typical of the time of build
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