Joint Venture OpportunityDetached House in Brampton
3 Bedroom, 2.5 Bath 13 Ecclestone Drive, Brampton, Ontario
Thomas Wongwww.happinessinspiration.com416-806-9568thomaswong@rogers.com
www.happinessinspiration.com Thomas Wong - 13 Ecclestone Drive
The Project• The property is a Detached house in a convenient location in
central part of Brampton.• The house is originally listed for $297,500. The is in good
conditions.• We got the offer accepted to buy the property for $281K. The
current closing house is set for November 19, 2009.• The market value is around $296K• We have a confirmed rent-to-own tenant, signed a Lease Option
agreement. The tenant already paid $2,000 toward the purchase deposit. The tenant is planning to move into the property by December 1, 2009.
• Using Lease Option program as the exit strategy, potential profit in 3 year will be around $49K
www.happinessinspiration.com Thomas Wong - 13 Ecclestone Drive
The Opportunity
• Project Finder/ Real Estate experts invest
– 5% of cash investment ($2,820)– Over 50 hours of time and expertise
• Cash partners invest:– 95% of the cash investment ($53,571)
• RRSP 2nd mortgage of $12,000
• Split profit 35-65 ($17K - $32K)
www.happinessinspiration.com Thomas Wong - 13 Ecclestone Drive
Key Features of the Property
• 3 bedrooms, 2.5 baths detached house
• Convenient location in Central Brampton
• Double garage
• Finished basement with separate entrance
• New Roof
www.happinessinspiration.com Thomas Wong - 13 Ecclestone Drive
Profile of the tenant• A family of 4 (Husband and wife and 2 children) • The lady just finished maternity leave and got back into the
workforce as a nurse.• Their combined income is about $80,000• The lady’s credit score is about 639 and the husband’s credit score
is about 551. • They only need to save a bit more down payment to get a good
mortgage. With their improved income (additional income from the wife), they are on track to improve their credit.
• They are ready to sign a lease with option to purchase agreement and put a deposit of $2000 to confirm their participation in the rent-to-own program. The total initial deposit from the tenant will be $8,000, to be collected before they move into the property.
www.happinessinspiration.com Thomas Wong - 13 Ecclestone Drive
Financial AssumptionsDescription of the property:Type of Property: Free Hold
Current Purchase Price: $281,000 Monthly Market Rent: $1,500
Land transfer tax Other Ont. City $2,690
Rehab cost/setup cost: $2,000
Closing legal fee $2,500
Avg. Annual Appreciation 5%
Assignment fee $5,000
Adjusted Cost base: $293,190
Annual property tax: $3,200
After Repair Market Value: $296,000
Annual Insurance: $600
Financing:
1st MortgageInitial Cash Investment $56,390
1st Mortgage Amount 80% $224,800 DCR(Free Hold) 1.12Interest rate 4.5%
# of Amortization Years 35
2nd Mortgage RRSP 2nd Mortgage Amount $12,000 14050
2nd Mortgage Interest rate 14%
Total Mortgage $236,800
13 Ecclestone Drive
www.happinessinspiration.com Thomas Wong - 13 Ecclestone Drive
Benefit to Lessee
Lessee's Point of View:3 Year Lease Opt.
Down Payment $8,000Monthly Rent $1,485
Monthly Option Premium $540Monthly Condo Fee $270
Total Monthly Payment $2,025
Addition Monthly Option Bonus $200Purchase price
at the end of lease term 342,657$ Down payment credit at
purchase $34,640% Down available at the end of
Lease 10%
Additional money credited to Leasee's downpayment at purchase
www.happinessinspiration.com Thomas Wong - 13 Ecclestone Drive
Joint Venture Profit -1
Investor's Point of View:
Option Exercised: 3 Year Lease Opt.
Total Gross Income during Lease Term: $ 388,917
Profit before Mortgage Payment: $ 84,327
Net Profit after Mortgage Interest: $49,484
Average Annual Net Profit: $16,495
profit before mortgage payment - interest portion of mortgage payment
selling price + 36*(monthly rent - monthly option bonus)
gross income - adjusted cost base - 3*(property tax + insurance)
www.happinessinspiration.com Thomas Wong - 13 Ecclestone Drive
Joint Venture Profit - 2
Option NOT Exercised:3 Year Lease Opt.
Total Gross Income during Lease Term: $80,900
Profit before Mortgage Payment: $69,500
Net Profit after Mortgage Interest: $34,657
Average Annual Net Profit: $11,552
(Note: Profit does not included the increase in property value)
initial down payment + 36*(monthly rent + monthly option premium)
gross income - adjusted cost base - 3*(property tax + insurance)
profit before mortgage payment - interest portion of mortgage payment
www.happinessinspiration.com Thomas Wong - 13 Ecclestone Drive
Joint Venture Return Analysis
Joint Venture Analysis: % contribution Investment % Profit
Partner #1 (deal finder) Thomas & Bob 5% $2,820 35%
Partner #2 Investors 95% $53,571 65%
Option Exercised: 3 Year Lease Opt.
Net Profit after Mortgage Interest: 49,484$
Partner #1 (deal finder) Profit 17,319$ ROI 614%Partner #2 Profit 32,164$ ROI 60%
www.happinessinspiration.com Thomas Wong - 13 Ecclestone Drive
Map of the Area
www.happinessinspiration.com Thomas Wong - 13 Ecclestone Drive
Questions & Answers
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www.happinessinspiration.com Thomas Wong - 13 Ecclestone Drive
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