This week’s Income Property clients are Ann-Marie and Scott, who want to build a real estate empire so they can travel the world. But will their first attempt at acquiring property break the bank?
Scott McGillivray guided our clients to a two-unit bungalow located a mile from the lake and a mile from a manufacturing plant (hopefully in a different direction). The upstairs unit has been completely remodeled and looks fantastic. After some finishing touches, it should be ready to rent and bring in approximately $1,200.
The downstairs apartment needs a total rehab. The plumbing was not properly affixed to the wall, causing problems everywhere. The floor is no longer secured to the floor and there is mold everywhere. However, the price tag of $230,000 is tough to pass up, especially with double income potential.
Surprisingly, the renovation has few pitfalls. The mold problem was quickly addressed, though it did point out a potential problem with the foundation. Fortunately, an investigation outside showed that a lack of a downspout—an easy and inexpensive fix relative to digging up the foundation—was probably to blame. The only other major issue was a dormant beehive found in the ceiling. They plugged the exterior hole to the house the bees were using. Still: yuck.
The $50,000 renovation led to a gorgeously refurbished two-bedroom apartment. Both of the bedrooms doubled in size, both are receiving quite a bit of natural light, and a large four-piece bathroom also fit in the space. The house was appraised for $300,000, which is a somewhat smaller return on investment, but now Ann-Marie and Scott have solid equity for getting a down payment on their next house.
Our Scott reported that the upstairs tenant is pay $1,350 (+$150 there) and the downstairs apartment should be able to bring in $950, giving the couple a tidy monthly profit of about $550. But what happened after the show: