This week I am going to show you an example of a deal and talk you through the numbers.
123 Abc Street
Listing price, $330,000.
Down payment:$16,500
Property type- Legally suited house
Property taxes: $2,400 ($200 per month)
Mortgage: $1,477 per month
Insurance: $100 per month
Utilities $500 per month
Total EXPENSES= $2,278 per month
Most of you will have heard of the terms "Mother in-in law suite" and "legally suited house".
THERE IS A DIFFERENCE!
A "legally suited property" is one that has been approved by the city. It is where the windows are large enough for egress (large enough for a firefighter to help you escape). among many other safety and building code upgrades. Legally suited homes are different from Mother-in-law suites because of one major thing… If you don't have your Mother-ln law or family members living in that suite, it is illegal and should not be rented out and does not help in any way with your buying power to purchase this home.
With a legally suited house, a portion of the rent from this legal basement suite will be added to your income and therefore help you qualify to buy this house.
For example, you can rent your basement suite for $900 a month utilities included.
With a legally suited house, you can also rent out your upstairs suite for $1,350 a month utilities included.
Did you know...for extra income you can also rent out your garage to your tenants for an additional $100 a month per stall #DoubleCarGarage.
You can buy these properties for 20% downpayment if you are just buying for investment and not intending to live in the property. Personally, I would rather buy 4 legally suited houses at 5% down payment than just buying one property at 20% downpayment.
In order to buy with only 5% down payment, you will need to move into one of the suites.
Lets say you move into the upstairs suite... 3 bedrooms, 2 bathrooms, a great place to live!
Let's say the basement is rented for $900 and the young couple downstairs wanted to rent both garage stalls from you for $100 each.
(You are fine with parking your car outside because you always have.)
Rental income is
$900 (basement suite) +
$200 (double car garage)= $1,100 per month.
$2,278 (total expenses) - $1,100 (rental income) = $1,178 per month would be all you would have to pay per month to own this great property.
But it gets better…
Here's how you can live for $78 per month!
Your upstairs suite is 3 bedrooms and 2 bathrooms. If you rent out those 2 extra bedrooms for $550 EACH a month, you have an additional $1100 per month income.
Therefore...
Rental income
$900 (legal basement suite) +
$200 (garage) +
$1,100 (Roommates) = $2,100 total rental income
$2,278 (expenses) - $2,200 (rental income) = $78 per month!
This really works...
When my mom bought her first property she was 18 years old. She bought a house with three bedrooms and rented out two rooms. The portion of mortgage payment she had to cover was only $5 a month!
If while you are reading this your mind is playing the "what if" or "if only" game, let me encourage you on that...it is not too late!!
That was 39 years ago, but it still works today. Okay, maybe inflation has taken over a bit and instead of $5 per month it is $78 per month.
Can you make your payment of $78 a month? Even if you lost your job you could make that kind of payment on a paper route!
Now more good news...
Every month, you are paying off The principal amount on your mortgage (every month the amount you owe on your mortgage is getting smaller and smaller) by an average of $816 per month over 5 years.
$816 x 12 = $9,800 in equity paid off per year.
$9,800 (equity per year) x 5 years = $49,000.
At the end of 5 Years you have almost $50,000 in equity and hopefully by that time you've saved enough to buy another one since you're part of the mortgage payment was only $78!
Next week I will show you how this first house, can buy you more houses!
Bryce Kander
Realty Executives Alberta Elite
403-896-7331
No comments:
Post a Comment