Rent-to-own Project Proposal Presentation 131 Karalee Cres

Joint Venture OpportunityDetached House in Cambridge

3+1 Bedroom, 3 Bathroms131 Karalee Cres., Cambridge, Ontario

Thomas Wongwww.happinessinspiration.com416-806-9568thomaswong@rogers.com

www.happinessinspiration.com Thomas Wong - 131 Karalee Cres., Cambridge

The Project• The property is a newer Detached house in a convenient location

in Cambridge, close to the HWY401.• The house is originally listed for $284,900. The house is in good

conditions.• We are planning to add a bathroom in the basement. The market

value after the addition will be around $295,000.• We got the offer accepted to buy the property for $280,000. The

current closing date is set for March 19, 2010.• We have a confirmed rent-to-own tenant, signed a Lease Option

agreement. The tenant already paid $4,000 toward the purchase deposit and paid another $8,000 deposit by July 2010. The tenant is planning to move into the property by April 1, 2010.

• Using Lease Option program as the exit strategy, potential profit in 3 year will be around $54K


The Opportunity

• Project Finder/ Real Estate experts invest

– 5% of cash investment ($3,109)– Over 50 hours of time and expertise

• Cash partners invest:– 95% of the cash investment ($59,066)

• RRSP 2nd mortgage of $12,000

• Split profit 32-68 ($17K - $37K)


Pictures of the property


Key Features of the Property

• 3+1 bedrooms, 3 bathrooms detached house

• Ensuite in master bedroom• Convenient location in Cambridge very

close to HWY401• Single attached garage• Finished basement with recreation room

and bedroom• Nice deck and landscaped backyard


Planned upgrade to the property

• Add a bathroom in the basement (rough-in already in place)

• Touch-up various drywall taping.


Profile of the tenant

• A single sales professional• He went through divorce several years ago (no child

support obligation). His two teenage sons may visit him from time to time.

• His only current liability is a car loan• He is current selling for Dixon Commercial Investigators

(a collection company established since 1956) http://www.dixoncommercial.com/

• His projected annual income is about $75K• His credit score is in the low 600, in process of

reestablishing credit• He is putting together plans to save up extra down

payment outside our rent-to-own program as well.

http://www.dixoncommercial.com/


Financial AssumptionsDescription of the property:Type of Property: Free Hold

Current Purchase Price: $280,000 Monthly Market Rent: $1,550

Land transfer tax Other Ont. City $2,675

Rehab cost/setup cost: $8,000

Closing legal fee $2,500

Avg. Annual Appreciation 6%

Assignment fee $5,000

Adjusted Cost base: $298,175

Annual property tax: $3,500

After Repair Market Value: $295,000

Annual Insurance: $600

Financing:

1st MortgageInitial Cash Investment $62,175

1st Mortgage Amount 80% $224,000 DCR(Free Hold) 1.18Interest rate 4.0%

# of Amortization Years 35

2nd Mortgage RRSP 2nd Mortgage Amount $12,000

2nd Mortgage Interest rate 14%

Total Mortgage $236,000

131 Karalee Cres.


Benefit to Lessee

Lessee's Point of View:3 Year Lease Opt.

Down Payment $12,000Monthly Rent $1,566

Monthly Option Premium $465Monthly Condo Fee $270

Total Monthly Payment $2,031

Addition Monthly Option Bonus $200Purchase price

at the end of lease term 347,387$ Down payment credit at

purchase $35,940% Down available at the end of

Lease 10%

Additional money credited to Leasee's downpayment at purchase


Joint Venture Profit -1

Investor's Point of View:

Option Exercised: 3 Year Lease Opt.

Total Gross Income during Lease Term: $ 396,545

Profit before Mortgage Payment: $ 86,070

Net Profit after Mortgage Interest: $54,685

Average Annual Net Profit: $18,228

selling price + 36*(monthly rent - monthly option bonus)

gross income - adjusted cost base - 3*(property tax + insurance)

profit before mortgage payment - interest portion of mortgage payment


Joint Venture Profit - 2

Option NOT Exercised:3 Year Lease Opt.

Total Gross Income during Lease Term: $85,098

Profit before Mortgage Payment: $72,798

Net Profit after Mortgage Interest: $41,413

Average Annual Net Profit: $13,804

(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


Joint Venture Return Analysis

Joint Venture Analysis: % contribution Investment % Profit

Partner #1 (deal finder) Thomas & Bob 5% $3,109 32%

Partner #2 Investors 95% $59,066 68%

Option Exercised: 3 Year Lease Opt.

Net Profit after Mortgage Interest: 54,685$

Partner #1 (deal finder) Profit 17,499$ ROI 563%Partner #2 Profit 37,186$ ROI 63%


Cash Flow AnalysisMonthly Income $2,031

1st Mortgage Monthly payment 991.82$ Monthly portion of Property Tax $291.67Monthly portion of House Insurance $50Monthly condo fee if applicable $0Monthly 2nd Mortgage Interest if applicable $140Total Monthly Expenses 1,473.48$

Positive Cash Flow $557.02

Partner 1 portion of Cash Flow $178.25Partner 2 portion of Cash Flow $378.77


Map of the Area


Questions & Answers


Sample Pictures of Projects


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Rent-to-own Project Proposal Presentation 131 Karalee Cres

Real Estate

Transcript of Rent-to-own Project Proposal Presentation 131 Karalee Cres