Identifying the Opportunity
My client Kevin is a true entrepreneur. He watched as a home in his Ottawa neighbourhood sat on the market in the depths of a dark and early winter. It’s located close to the (hopefully) soon-to-be-built LRT. As days passed and we watched the activity on the house, we worked together to establish market rents for upper and lower apartments, we estimated construction costs and then proceeded to make an offer.
After a successful negotiation, Kevin knew he couldn’t pass up the opportunity.
He approached this investment, the first of this type of property for him, with a learner’s mindset. He did much of the work himself and hired experts for the technical and professional jobs.
Upstairs, all that was needed was a coat of warm, neutral paint, some overhead lighting in the bedrooms and a brand new kitchen.
To create a legal Secondary Dwelling Unit (SDU) downstairs, the back entry had to be walled off from the main portion of the house. Two large egress windows on the south side (for maximum light) had to be installed, along with a full bathroom, kitchen, stacked laundry area and three bedrooms with closets.
Our estimate for the renovation is just under $100,000 including all the soft costs like permits and drawings. If he had hired out more of the work, we estimate the cost would have easily been approximately $150,000. For budget purposes, the hydro is not separate so rent will need to be inclusive of all utilities.
Before he was even finished the work, the upstairs was rented to a friend of a friend.
The lower level unit will be offered at close to the same rental price.
The rent will cover the mortgage payment, the utilities, the incidentals and will leave a few hundred dollars per month in Kevin’s pocket.
If we had to sell this property today, Kevin would likely break even. In 2-3 years, this will not only have been a good cash flow investment but it will have built equity, both from paying into the mortgage and also because it’s in an up-and-coming desirable area of Ottawa.
The Bottom Line
Even in a higher interest rate environment, there are opportunities for investors. Not only is this working well for Kevin’s portfolio, but it has doubled the housing opportunities on that one lot.
Why I like working with landlords and tenants
Kevin and I first worked together on another investment property – a new build that he hired me to rent out for him. He wanted a layer of professionalism between him and potential tenants. We enjoyed that experience and are now on our third project together. Likely the third of many knowing Kevin…
The housing crisis is as bad for everyone. For landlords, it means an influx of applications, from often inexperienced and unprepared applicants. The back and forth required to coordinate showings can be excruciating and then the reference, credit and proof of income checks can be tedious – but they are critical. Unvetted tenants can create long-term expensive problems for landlords.
The tenants that I meet through rental listings or that come to me directly are some of my favourite clients. Often they have not had a professional real estate rental experience before. They don’t know their rights and responsibilities, and I have the privilege of educating them. It’s a great basis for a long-term real estate relationship.
Need More Info?
If you would like to learn more about Kevin’s investment property, specifically the numbers $$, please get in touch by text 613.898.1184 or by email. Our real estate board does not allow us to publish sale prices but I’m happy to share privately.
I'm Liisa and I love helping people moving to Ottawa make their home purchase and transition smooth and seamless. I also love helping sellers get the most for their Ottawa home. Let me know how I can help you make your real estate dreams come true.
613-898-1184 (call or text)