Well I'm obtaining my second investment property, but this time, I'm just turning it for profit. Here's a list of expenses:
$220'000 - Purchase price
$1500 - Closing costs
$12'000 - Improvements
$8'000 - Realtor fees (selling)
$4000 - Mortgage payments (3 months, with only 300 going to the principle)
________
$245'500 is my approximate cost.
Now, places in the building are selling around $245, so is there money to be made? Should I shoot to make it higher end? I was told the places that sold were livable, but not fancy. So I began wondering if I should put in higher priced flooring & nicer appliances. The building itself is only sub-par.
What do you think?
Mr. Taylor (#2)...investor
11 comments:
Mr. Taylor,
From my experience, a super decked out, pimp-pad with gold trim and ivory crowned mouldings will not pay off if the building itself is ghetto. So, I believe in your case you should apply the ghetto-pimp ratio formula (GPF). What is the GPF? Well, it's not as scientific as the title may sound. It's just a matter of doing what you did and surveying who is already buying there. If they lean more ghetto, then don't buy the ivory. If they are more Kerrisdale or Kitsalano, then put in the ivory and don't forget the organic food basket.
I can back this up with personal experience. When we were shopping for our first home and were attracted to a very west-side looking home based on the interior shots on the MLS. When we got there, though, the building was so poopalicious that I was afraid the hallway was about to cave in. After viewing the beautifully renovated home, we turned around and walked down that same hallway and said to each other "I'd never invite my friends here."
The price was also way lower than it would have been in a building right across the road becuse of this.
Hope this helps, Taylor. We don't have to like each other to help each other. And remember - Love is a choice, not a feeling.
Listen number 1, The building in and out is gettin done up. I'm bidding on the outside paint, so you know it'll look like a million bucks. I hoping to time my suite to go on the market as the building is getting finished. I hope to maximize my return of investment by 300%. I'm only puttin 11'000 down, so when it sells, I am hoping to walk away with 35-40'000. That is because I have two things you lack.........a dream and a sequin jumpsuit.
I agree with Mr. Taylor (sic).
The outside of a property is sometimes as important as the inside. This is especially true for condos. It is difficult to sell a beautifully renovated condo if the buyer doesn't even make it inside.
That being said, a fresh coat of paint can do wonders to any wall, hall, or exterior.
A real issue is the location of the building. If it's a sub-par building in a nicer neighbourhood, then with a few building upgrades, every unit could potentially increase in value.
In any reno-purchase situation, it's nice if your total cost can be under the comparable selling prices of the other units. It's much easier to sell a product that is being renovated up to its surrounding standards. I'm not sure if Mr. Taylor has included all of the necessary expenses in his calculation, but he has a dream.
The numbers are very important, but sometimes it's your feeling that you have to rely on in the end.
Number 2, I find your presence in this blog irritating already. I mean, you put on this white gansta' thang' makin' it out like you're all that and a bag of chips, when in fact, you're still in school like the rest of us. Let's chill on the Trump-front be True like a Taylor and gel like brothers in business...that is... before I open up a can of volatile stocks in your portfolio, sucka!
I totally trust your renovatory aptitudes. I would pay more to know that you have overseen the reno. No doubt about that. All I'm saying is make sure that the pre-reno value is within a reasonable range. Is it close to the Skytrain? If so, I'd add value to it right away, regardless of what anyone else tells you. And have you looked into the strata minutes? It's a quick and easy way to make sure the building is kosher. Make sure the whaddya-call-it fund is topped up for new roofs and all that. It is very likely that a moderately savvy buyer will check that stuff. It was the first advice I got as a homebuyer.
If you find all that stuff checks out and the neighbours dig the hood then sign it and seal it and send me a cheque in the mail for my consultation.
Rest assured. Yuppies are buying there. The roof is being done as we speak, and Joe (nonposter) There is $140'000 in the contingency fund to paint the outside, re-roof, and paint the halls inside. Which only leaves location to deal with. Unfortunately it's pretty close to Taylor 1, so it's probably a bit of a ghetto. It's on the border of burnaby and New West.
and 12000 to fix it up is only supply cost. I'll be spending two weeks in there so of course my time is worth another $20'000.
can of volatile stocks back at you taylor 1
First of all, if I were Joe, I'd launch some devastating abuse at you for calling me a 'nonposter'. But Joe may prove more mature than that. We'll see!
As for calling my hood a ghetto...it's kind of a ghetto-yuppy blend so get your real-estate terminology right, Taylor 2. Hard to explain without living here.
Sounds like a score then. Is it walkable to the Skytrain? Refer to my recent post about my Skytrain predictions.
You accidentally added 2-3 extra zeros to your bi-weekly monetary value. You wrote 20,000. Check that keyboard. It must be stickin'
you can only dream of one of my paycheques falling on your lap. And look at me, I'm writing this post at 2PM. I ain't even at work!
Unfortunately there is a skytrain closeby, but it's an uphill walk to the apartment, and if there's one thing a thief hates, it's exercise.
What are you talking about 'unfortunately'? Did you miss my post, mang? Get it together, Taylor 1!
How long is the walk?
Sorry peabody, like Dispjoe said, crime rates are higher. Maybe not everywhere, but look at King George Hwy in Surrey. It looks exactly like main and hastings. and...oh is that a skytrain they put in there 20 years ago? Also I know people who have been jumped and robbed at stations. It was even in the news a year or two ago. Happens all the time. Meth heads are drawn to the lights. And with prices going up again, and turnstiles going in, we're going to see even more crime. Now people can get jumped for their ticket!!
Oh it's a few blocks downhill from the joint. But it's on 12th
I'll sell it for $280'000. I feel good about that price.
Square feet? Private MLS listing you can send me? Google earth map? Like to see the goods if you can produce.
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