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INVESTMENT OPPORTUNITY 4 Bedroom Semi-Detached 23 Ashdale Court Barrie, Ontario Closing Date: April 29, 2011 Contact Information Andrew Brennan Mailing Address: Res. Phone: Fax: Email:

70 Fairway Crescent, Wasaga Beach, ON, L9Z 1B8 705-429-6446 Cell Phone: 705-220-5166 705-429-4827 brennanproperty@rogers.com


Table of Contents A. Objectives and Summary B. Property Numbers Summary C. Property Proforma D. Pictures


A. Objectives and Summary 1) To purchase a cash flowing Real Estate Investment property, in the growing Barrie, Ontario market. Use the fix and re-finance strategy to force appreciation on the property and return a large portion of the investor’s original investment to improve the annual return on investment. Property is re-financed 2 or 3 months after closing. 2) Original investment of $49,210. The estimated funds returned to the investor after repairing and re-financing is $28,000. Resulting in an ongoing investment of approximately $22,000. Will pay the interest on the investor’s leveraged funds. 3) Fixer upper, 4 bedroom, 1 1/2 bath, semi-detached 4 level back split, MLS# price $189,900 accepted purchase price is $175,000. The expected rent of $15,900 per year. Represents a yield of 9.08% 4) The current estimated market values of these properties (based on market comparables from sales in the area) are estimated at $210,000 The property will have approximately $35,000 in equity after repairs. 5) Currently property is owner occupied and will be moving out upon possession. Market rental comparables in the area are $1,250 - $1,400. We will rent this unit for $1,325. 6) The market rental of the property will provide a positive cash flow position for the property (based on a conservative proforma) • Estimated positive cash flow based on attached profroma – additional reserve funds have been budgeted (3 extra months rent). • $357/ month (see attached details) 7) Total estimated investment is $49,210. This will cover all down payments, closing costs, repair materials, and reserve funds. There is no charge for labour for the repairs. 8) Based on a estimated 5% per year appreciation the estimated return for the on going investment of $22,000 would be 364% or $80,193


B. Property Numbers Summary A. Summary B. Property Summary Information & Strategy


23 Ashdale Barrie, Ontario Semi-Detached - Property Executive Summary

The Numbers Purchase Price

$175,000

Appraised Value (after repairs)

$210,000

Down Payment

$35,000

Estimated Renovations

$5,000

Mortgage After Repairs ( variable rate 2.3% 35 yr Amort.)

$168,000

Second Financing

$0

Investment After Re-financing

$22,000

(including all renovations, down payment, and closing costs)

Year 1 Annual Cash Flow

$4,284

Year 1 Mortgage Reduction

$3,470

Year 1 Profit

$7,754

Year 1 Cash on Cash Return

19.5%

Year 1 Return on Investment

35.2%

Estimated 5 Year Value (5% growth/year)

$268,019

Estimated 5 Year Mortgage Balance

$165,826

Estimated 5 Year Profit (5% growth/year)

$80,193

(Estimated 5 Year Value - Mortgage Balance – Down Payment)

Estimated 5 Year Return on Investment

364%


Property Summary: The Property Year Constructed Sq Ft Room Parking Appliances Included Taxes Foundation Construction Roof

1970 1,001 (approximately 1,600 total finished) 7 rooms, 4 bedroom, 1 1/2 bathrooms Attached garage and driveway for 2 cars Fridge, stove, washer, dryer $2,318 (2010) Concrete Frame Asphalt Shingles

The Benefits Key Features: • Low investment funds required, initial investment of $49,210 but only $22,000 as an on going investment is required to own an arm-chair investment opportunity. Included in initial investment all funds required (down payment, reserve funds, renovation fund, and closing costs) • Purchased significantly below market levels (estimated $35,000 in equity with the fix and re-finance strategy). • Desirable neighbourhood for market appreciation. Barrie is rated in the top 10 cities in Canada for real estate in investment

Tenants, Property Management and Exit Strategy Tenants: Property Management: Renovation Strategy:

Exit Strategy:

Similar units are renting between $1,250 - $1,400. Currently owner occupied. Rents will start at $1,325. Brennan & Associate Inc. will provide full service Property Management services Brennan & Associate Inc. Property will be renovated before the tenant moves in and should not require repairs after rented resulting in lower maintenance costs Buy/Hold (4 – 6 years), keep property in good shape renting to equity building tenants. Attempt to sell property to tenant after holding period.


C.

Property Proforma’s

A. Cash Flow Summary B. Total Investment Projection


23 Ashdale Court Barrie, Ontario Purchase Price

$175,000

After Repairs Appraised Value

$210,000

(market Comparables)

Financial Breakdown Sale Price Down Payment First Mortgage

$175,000 $35,000 $140,000

(new financing, variable rate @ 2.3%, 35 yr Amort.)

Second Mortgage

$0

Income Market Rent

Monthly $1,325

Annual $15,900

Expenses Property Taxes Insurance Repairs and Maintenance Factor Property Management Total Expenses

$-193 $-75 $-50 $-0 $-318

$-2,318 $-900 $-600 $-0 $-3,816

Cash Flow Before Debt Payment

$1,007

$12,084

First Mortgage Payment (interest + principle) Interest on investor’s investment

$-586 $-64

$-7,032 $-770

Cash Flow Mortgage Principle Reduction

$357 $261

$4,284 $3,470

TOTAL CASH FLOW

$618

$7,754

PRE-TAX CASH ON CASH RETURN

19.5%

RETURN ON EQUITY

35.2%


23 Ashdale Court Barrie, Ontario ESTIMATE INVESTMENT PROJECTION Down Payment

$35,000

Renovations

$5,000

Approximate Closing Costs Inspection

$350

Value Appraisal

$0

Up Front Property Taxes

$1,100

Legal Costs and Land Transfer

$3,785

Tenant Acquisition Costs

$0

Staying Power Fund (3 months rent)

$3,975

Total Required Cash Investment

$49,210

Estimated Funds available after re-financing

$28,000

On going investment

$22,000


D. Pictures

23 Ashdale Barrie, Ontario

Separate dining room

Living room has large front window

Large eat in kitchen, requires new flooring and painting


Newer carpet in all 4 bedrooms

Basement rec room needs flooring, Ceiling and touch ups

Bathrooms need updating and paint

Windows were replaced in 1998, deep back yard, furnace installed 2000, side and rear entrance


Property Investment Barrie