Creating Choice Through Real Estate - The 4 Risk Factors, and How to Mitigate them!

Working on my 1st Investment Property

Have 1 or more Investment Properties

Matthew Lee, Managing Partner [email protected]

(416) 937-5251

[Volition (vō-ˈli-shən): the power to make your own choices or decisions; free will.]

Tonight’s Meetup is brought to you by…

416.410.9905 [email protected]

15 MINUTE NETWORKING BREAK Find one person and share one real-

estate related WIN in the past month that you’ve achieved!!

Creating Choice Thru Real Estate

Importance of Holding For The

Long Term

4 Risk Factors in Real Estate Multiplier Effect

Understanding The Fundamentals

The Importance of Holding For The Long-

Term

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

$1,000,000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Property Value Mortgage Balance

Purchase: $500k Initial investment: $100k

Mortgage: Standard 25yr, 3%

Assume: $1M value (double in 25 years)

$100k $385k $765k

Years

Initial investment of $100k is now worth $765k

Importance of Holding For The Long Term



Long Term



The Multiplier Effect From $60k

to $6M & $200k cashflow in 20 years

Year 3

Year 6

Year 9

Year 12

… and then you wait.

ACQUISITION PHASE



Long Term



The 4 Risk Factors in Real Estate

The 4 Risk Factors in Real Estate (and How to Mitigate Them!)

• Don’t just buy because it’s “CHEAP” • Don’t spend your cashflow!! Build reserve fund for

unforeseen problems.

Property Risk

•  Buy in markets with strong economic fundamentals •  READ: “Secrets of Canadian Real Estate Cycle”

Market Risk

•  Know your tenant profile, attract a high-quality tenant •  SCREEN, SCREEN, SCREEN!!

Tenant Risk

•  Educate yourself & keep up-to-date •  Build your “Real Estate Dream Team”

Investor Risk

Exte

rnal

In

tern

al





Long Term



Investment Property Case Study

14 Symington

14 Symington Ave

Toronto Ontario M6P3W1

Sold: $700,000

List: $589,000

Taxes: $2,559.58 / 2015 For: Sale % Dif: 119

SPIS: N Last Status: Sld

Plan M23 Pt Lot 10 DOM: 8

Att/Row/Twnhouse

2-Storey

Irreg:

Fronting On: W

Acreage:

14.67 x 125 Feet

Rms: 7 + 3

Bedrooms: 3 + 1

Washrms: 3

1x4xGround, 1x4x2nd, 1x4xBsmt

MLS#: W3279329 Seller: Jamaal Joseph And Bertram Evingston Joseph Occupancy: Partial

PIN#: ARN#: Contact After Exp: N

Holdover: 90

# Room Level Length (ft) Width (ft) Description

1 Living Ground 12.96 x 11.64 Laminate Window

2 Kitchen Ground 12.30 x 11.32 Ceramic Floor Ceramic Back Splash W/O To Yard

3 Dining Ground 11.32 x 8.36 Ceramic Floor Large Window

4 Br Ground 11.64 x 10.00 Hardwood Floor Window

5 Living 2nd 14.27 x 10.99 Hardwood Floor W/O To Balcony Window

6 Kitchen 2nd 11.32 x 8.36 Ceramic Floor W/O To Balcony

7 Br 2nd 11.32 x 9.02 Hardwood Floor Closet Window

8 Living Bsmt 16.24 x 10.00 Vinyl Floor Combined W/Dining

9 Kitchen Bsmt 9.02 x 6.72 Vinyl Floor

10 Br Bsmt 11.32 x 7.05 Laminate Closet Window

Contract Date: 8/04/2015

Expiry Date: 11/30/2015

Last Update: 8/13/2015

Sold Date: 8/12/2015

Closing Date: 9/10/2015

CB Comm: 2.5%

Leased Terms:

Original: $589,000

Toronto W02 Dovercourt-Wallace Emerson-Junction Toronto 114-14-Q

Dir/Cross St: Bloor / Symington

Kitchens: 2 + 1

Fam Rm: Y

Basement: Finished / Sep Entrance

Fireplace/Stv: N

Heat: Forced Air / Gas

A/C: None

Central Vac:

Apx Age:

Apx Sqft:

Assessment:

Laundry lev:

Exterior: Brick / Insulbrick

Drive: Lane

Garage: Detached / 2.0

Park Spaces: 1

UFFI:

Pool: None

Prop Feat: Fenced Yard, Park,

Public Transit

Zoning:

Cable TV: Hydro:

Gas: Phone:

Water: Municipal

Water Supply:

Sewer: Sewers

Waterfront:

Retirement:

Farm/Agr:

Oth Struct:

Spec Desig: Unknown

Client Remks: Ideal Investment Opportunity In A Great Location!! Minutes To Subway And Go Station!! Great Curb Appeal! Victorian Style House With

Three Self-Contained Units! High Ceilings On Main & Second Floor; Lovely Front Veranda; Second Floor Balcony; Deep Lot With Fully Fenced Yard,

Storage Shed, And Detached Garage; Separate Front Entrance To Basement. Steps To Bloor Street - Close To All Needs! Don't Miss It!

Extras: Electric Light Fixtures; 3 Fridges; 3 Stoves; Gas Burner & Equipment.

Brkage Remks: Offers To Be Reviewed Tuesday, August 11th @ 7:00Pm, At Lb Office. Please Register By 5:00Pm. Attach Schedule B & Form 801 To

Offers W/ 24 Hour Irrevocable. Deposit Cheque Must Be Certified & Herewith.

List: RE/MAX REALTRON REALTY INC., BROKERAGE Ph: 416-782-8882 Fax: 416-782-3329

DINO LUCA, Salesperson 416-782-8882 VINCE LUCA, Salesperson 416-782-8882

Co-Op: RIGHT AT HOME REALTY INC., BROKERAGE

Suneil Kaul, Salesperson

Prepared by: MATTHEW RICHARD LEE, Salesperson

RIGHT AT HOME REALTY INC., BROKERAGE

895 Don Mills Road Suite 112, Toronto, ON M3C1W3 416-937-5251Printed on 01/21/2016 4:07:02 PM

Toronto Real Estate Board (TREB) assumes no responsibility for the accuracy of any information shown. Copyright TREB 2016

14 Symington Ave

Toronto Ontario M6P3W1

Sold: $700,000

List: $589,000

Taxes: $2,559.58 / 2015 For: Sale % Dif: 119

SPIS: N Last Status: Sld

Plan M23 Pt Lot 10 DOM: 8

Att/Row/Twnhouse

2-Storey

Irreg:

Fronting On: W

Acreage:

14.67 x 125 Feet

Rms: 7 + 3

Bedrooms: 3 + 1

Washrms: 3

1x4xGround, 1x4x2nd, 1x4xBsmt

MLS#: W3279329 Seller: Jamaal Joseph And Bertram Evingston Joseph Occupancy: Partial

PIN#: ARN#: Contact After Exp: N

Holdover: 90

# Room Level Length (ft) Width (ft) Description

1 Living Ground 12.96 x 11.64 Laminate Window

2 Kitchen Ground 12.30 x 11.32 Ceramic Floor Ceramic Back Splash W/O To Yard

3 Dining Ground 11.32 x 8.36 Ceramic Floor Large Window

4 Br Ground 11.64 x 10.00 Hardwood Floor Window

5 Living 2nd 14.27 x 10.99 Hardwood Floor W/O To Balcony Window

6 Kitchen 2nd 11.32 x 8.36 Ceramic Floor W/O To Balcony

7 Br 2nd 11.32 x 9.02 Hardwood Floor Closet Window

8 Living Bsmt 16.24 x 10.00 Vinyl Floor Combined W/Dining

9 Kitchen Bsmt 9.02 x 6.72 Vinyl Floor

10 Br Bsmt 11.32 x 7.05 Laminate Closet Window

Contract Date: 8/04/2015

Expiry Date: 11/30/2015

Last Update: 8/13/2015

Sold Date: 8/12/2015

Closing Date: 9/10/2015

CB Comm: 2.5%

Leased Terms:

Original: $589,000

Toronto W02 Dovercourt-Wallace Emerson-Junction Toronto 114-14-Q

Dir/Cross St: Bloor / Symington

Kitchens: 2 + 1

Fam Rm: Y

Basement: Finished / Sep Entrance

Fireplace/Stv: N

Heat: Forced Air / Gas

A/C: None

Central Vac:

Apx Age:

Apx Sqft:

Assessment:

Laundry lev:

Exterior: Brick / Insulbrick

Drive: Lane

Garage: Detached / 2.0

Park Spaces: 1

UFFI:

Pool: None

Prop Feat: Fenced Yard, Park,

Public Transit

Zoning:

Cable TV: Hydro:

Gas: Phone:

Water: Municipal

Water Supply:

Sewer: Sewers

Waterfront:

Retirement:

Farm/Agr:

Oth Struct:

Spec Desig: Unknown

Client Remks: Ideal Investment Opportunity In A Great Location!! Minutes To Subway And Go Station!! Great Curb Appeal! Victorian Style House With

Three Self-Contained Units! High Ceilings On Main & Second Floor; Lovely Front Veranda; Second Floor Balcony; Deep Lot With Fully Fenced Yard,

Storage Shed, And Detached Garage; Separate Front Entrance To Basement. Steps To Bloor Street - Close To All Needs! Don't Miss It!

Extras: Electric Light Fixtures; 3 Fridges; 3 Stoves; Gas Burner & Equipment.

Brkage Remks: Offers To Be Reviewed Tuesday, August 11th @ 7:00Pm, At Lb Office. Please Register By 5:00Pm. Attach Schedule B & Form 801 To

Offers W/ 24 Hour Irrevocable. Deposit Cheque Must Be Certified & Herewith.

List: RE/MAX REALTRON REALTY INC., BROKERAGE Ph: 416-782-8882 Fax: 416-782-3329

DINO LUCA, Salesperson 416-782-8882 VINCE LUCA, Salesperson 416-782-8882

Co-Op: RIGHT AT HOME REALTY INC., BROKERAGE

Suneil Kaul, Salesperson

Prepared by: MATTHEW RICHARD LEE, Salesperson

RIGHT AT HOME REALTY INC., BROKERAGE

895 Don Mills Road Suite 112, Toronto, ON M3C1W3 416-937-5251Printed on 01/21/2016 4:07:02 PM

Toronto Real Estate Board (TREB) assumes no responsibility for the accuracy of any information shown. Copyright TREB 2016

Exterior

Main Floor

Main Floor (cont)

2nd Floor

2nd Floor (cont)

Bsmt

Bsmt (cont)

Backyard

Other stuff to consider:

Other stuff to consider:

2nd Floor (After reno)

PRO FORMA

EXECUTIVE SUMMARY Initlal Investment Overview Net Investment After Reno/Refinance

Property: 14 Symington Purchase Value: $750,000 # of Units: 3 Original Mortgage (80% LTV): $600,000 Purchase Value: $750,000 After Repair Value: $825,000

After Repair Value: $825,000 After Repair Value Mortgage (80% LTV): $660,000

Length of Investment (Years): 7 Equity Takeout: $60,000 Downpayment Required: $150,000 Initial Investment Required: $226,250 Closing Costs & Reserve Fund Required: $26,250 Net Investment: $166,250 Renovation Costs: $50,000 Initial Investment Required: $226,250

DETAILED SUMMARY Projected Income & Expense Projected Returns over 7 year timeframe

% Monthly Annual Cash Returns Income Total Cashflow $106,790 $119,276 $132,181 Gross Rental Income $4,750 $57,000 +Total Mortgage Paydown $115,314 $115,314 $115,314 +Initial Reno Equity Lift $12,500 $25,000 $37,500 Expenses +Total Y/Y Appreciation $122,666 $189,646 $260,644 Monthly Mortgage ($660000, 30yr) 2.25% $2,523 $30,274 Total Profit $357,270 $449,237 $545,639 Property Taxes $250 $3,000 Insurance $150 $1,800 Hydro $150 $1,800 Annual % ROI on Net Investment Gas $125 $1,500 Cash-On-Cash ROI % 9.18% 10.2% 11.36% Water $75 $900 +Equity-On-Cash ROI % 9.91% 9.9% 9.91% Property Management 0% $0 $0 +Initial Reno Equity Lift ROI % 1.07% 2.1% 3.22% Maintenace 5% $238 $2,850 +Y/Y Appreciation ROI % 10.54% 16.3% 22.40% Vacancy 4% $190 $2,280 Total Profit ROI % 30.7% 38.6% 46.9% Total Hard Expenses $3,700 $44,404

Profit Scenario Analysis

Cashflow $1,050 $12,596 Conservativ

e Target Optimisti

c Contingency Fund (savings for Maintenance & Vacancy) $428 $5,130 Annual Appreciation 2.0% 3.0% 4.0% Mortgage Paydown $1,285 $14,272 Annual Rent Increase 2.0% 3.0% 4.0% Annual Appreciation 3% $2,063 $24,750 Investor Partner Total Profit: $357,270 $449,237 $545,639 Projected Gross Income $4,398 $52,770 Investor Annual ROI: 30.7% 38.6% 46.9% Investor Total ROI over 7 years: 214.9% 270.2% 328.2%

1.  Investor-focussed Real Estate Agent 2.  Advisory/coaching/mentorship for Real Estate Investors 3.  Joint Venture Partnerships

Matthew Lee, Managing Partner [email protected]

(416) 937-5251

Services we offer:

If you take your financial goals seriously and are looking for a mortgage team who understands the big picture –

we would love to serve you!

1-855-410-9905 or 416-410-9905 www.CalumRoss.com

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