During the month of November, Robin Spiers with Robin Spiers & Associates, and I were in search for an investment property. I’ve had a few people ask about how this all works so I thought it was perfect timing to let you all in on how it works.
The entire process begins with a search. For this particular property, it was all Robin’s hard work in coming up with some potential options. When Robin sent me the listing I immediately knew this was a contender. Just take a look at the gorgeous windows in this home!
Viewing the Home
When looking at an investment property, there are things on my list that I look at:
- What is the overall state of the home?
- The overall state of the kitchen.
- What is the overall state of the bathrooms?
- And large ticket items:
Adding Up the Numbers
After Robin and I look at the home, I come up with a very rough budget to renovate based off of what Robin believes he can sell the home for. For this particular home, it is going to be listed for over one million dollars so I know that the design and products that I choose have to jive with that number. For example, the appliances that I am going to use will be all Smart Appliances (in a sexy black stainless steel).
Presenting this to Investors
When Robin and I look at our numbers, and if the margins are a good investment, we commit to investing in the property. For this particular investment property, Robin and I let our group of capital investors know about this great property. Although Robin and I were willing to do this one on our own, we had a lot of interest.
Robin put together four scenarios for this property. In the scenarios listed below, the numbers include renovation costs and carrying costs based off holding the property for a total of 6 months. I would have 3 months to renovate, and Robin would have 3 months to sell. Here is what we presented based on scenarios.
- A ‘worst case’ scenario where after the renovation, investors would receive a 0.89% ROI.
- A ‘good case’ scenario where after the renovations, investors would receive a 17.38% ROI.
- A ‘better case’ scenario where after the renovations, investors would receive a 29.21% ROI.
- A ‘great case’ scenario where after the renovations
, ,investors would receive a 41.03% ROI.
For this particular property, we had to turn away investors! The home itself is such a great home, the location is in a very desirable neighbourhood, and the design plan (if I do say so myself), is beautiful. I did a little Facebook Live from my office to talk a little about my plans.