So this just happened ...
As you know, for most of my clients, one of the key wealth strategies we implement is cash flowing investment properties. We do a lot of joint venture work with clients and I wanted to boast about a recent success story … and a very typical scenario.
In May 2019 we purchased a bungalow in Lindsay for a cost of $382K. The mortgage initial mortgage was for $300K. So the down payment was $82K. We spent $70K renovating the property making it a legal duplex. Upstairs tenants pay $1500 a month plus utilities and the downstairs tenants pay $1400 plus utilities. After expenses the property cash flows over $1000 a month.
So September, 16 months since purchase the property was appraised at $460K. We were then able to refinance 80K back out of the investment, leaving the funds left in the project at $70K.
Here’s the numbers
Initial investment $152K
80K returned on refinance or 53% of initial investment returned
Equity in the project $460K-$368K (new mortgage amt) = $92
Investment left in the project $152-80K = $72K
Cash flow of $12K over the period (there was no cash flow for first 4 months during renovation)
What’s the return?
($12K Cash flow + $20K Additional equity created ($92K-$72K))/$72K investment left in project.
44% over a 16-month period. (33% on an annualized basis).
We are actively looking for new joint venture partners to repeat the process. If you’d like to look at how cash flowing real estate can enhance your wealth and retirement pls reach out. Get cash flow, mortgage pay down, and property appreciation working for you!
Note: While these returns are typical every investment property will differ in terms of cash flow, initial investment, renovations costs, and future appraisals and market values. Results are not guaranteed.
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