rent-to-own project proposal - 18 sharon, brampton

Joint Venture OpportunitySemi-detached House in Brampton

4 Bedroom, 2 Bath 18 Sharon Court, Brampton, Ontario

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

www.happinessinspiration.com Thomas Wong - 18 Sharon Court

The Project• The property is a semi-detached house in a convenient location in

Southern part of Brampton.• The house is originally listed for $249K. The décor is a bit dated

and needs upgrade.• We got the offer accepted to buy the property for $225K. The

current closing house is set for October 12, 2009.• We are planning to spend about $10,000 to improve the property.

The after repair is between $255K-$260K• We have a confirmed rent-to-own tenant, signed a Lease Option

agreement. The tenant already paid $4,000 toward the purchase deposit. The tenant is planning to move into the property by November 1, 2009.

• Using Lease Option program as the exit strategy, potential profit in 4 year will be around $72K


The Opportunity

• Project Finder/ Real Estate experts invest

– 5% of cash investment ($3,224)– Over 50 hours of time and expertise

• Cash partners invest:– 95% of the cash investment ($61,251)

• Split profit 33-68 ($23K - $49K)


Key Features of the Property

• 4 bedrooms, 2 full baths semi-detached house with large pie shaped lot

• Convenient location in Southern Brampton• Attached storage shack• Separate entrance to basement• 2 Kitchens• Newer roof (2007)• Long driveway for 3-4 car parking


Renovation plan for the Property

• Upgrade the main floor kitchen

• Upgrade the flooring on the main floor (ceramic and laminate flooring)

• Painting at required area

• Upgrade the fuse panel to circuit breaker panel.


Profile of the tenant

• A family of 2 (mother and young adult son) • The lady works for Rogers for over 10 years and the son

works for TD Bank.• Their combined income is about $55,000• The mother credit score is about 650. • They only need to save a bit more down payment to get

a good mortgage.• They already signed a lease with option to purchase

agreement and got $4000 from them to confirm their participation in the rent-to-own program. The total initial deposit from the tenant will be $7,000.


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

Current Purchase Price: $225,000 Monthly Market Rent: $1,500

Land transfer tax Other Ont. City $1,975

Rehab cost/setup cost: $10,000

Closing legal fee $2,500

Avg. Annual Appreciation 5%

Assignment fee $5,000

Adjusted Cost base: $244,475

Annual property tax: $2,900

After Repair Market Value: $254,000

Annual Insurance: $600

Financing:

1st MortgageInitial Cash Investment $64,475

1st Mortgage Amount 80% $180,000 DCR(Free Hold) 1.31Interest rate 4.5%

# of Amortization Years 35

2nd Mortgage RRSP 2nd Mortgage Amount2nd Mortgage Interest rate 14%

Total Mortgage $180,000

18 sharon -


Benefit to Lessee

Lessee's Point of View:4 Year Lease Opt.

Down Payment $7,000Monthly Rent $1,440

Monthly Option Premium $255Monthly Condo Fee $270

Total Monthly Payment $1,695

Addition Monthly Option Bonus $200Purchase price

at the end of lease term 302,900$ Down payment credit at

purchase $28,840% 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: 4 Year Lease Opt.

Total Gross Income during Lease Term: $ 362,420

Profit before Mortgage Payment: $ 103,945

Net Profit after Mortgage Interest: $72,338

Average Annual Net Profit: $18,084

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)


Joint Venture Profit - 2

Option NOT Exercised:4 Year Lease Opt.

Total Gross Income during Lease Term: $88,360

Profit before Mortgage Payment: $74,360

Net Profit after Mortgage Interest: $42,753

Average Annual Net Profit: $10,688

(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% $3,224 32%

Partner #2 Investors 95% $61,251 68%

Option Exercised: 4 Year Lease Opt.

Net Profit after Mortgage Interest: 72,338$

Partner #1 (deal finder) Profit 23,148$ ROI 718%Partner #2 Profit 49,190$ ROI 80%


Map of the Area


Questions & Answers


Sample Pictures of Projects


We turn real estate opportunities into

Happiness Inspirations

rent-to-own project proposal - 18 sharon, brampton

Real Estate

joint venture profit

joint venture opportunity

southern brampton

baths semidetached house

lease option program

lease option agreement

cash investment

potential profit