MAXIM BAGINSKIY
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investments examples

Condo apartment. Toronto downtown. 856 sq. ft. 2 bedrooms + den, 2 Bathrooms . Locker. No parking. Maintenance 520. 4 years old condo. Perfect condition. Bought for 500 thousand (below market price by 5-10 thousand). Downpayment (10%) was 50,000. Closing, including land transfer tax, appraisal, inspection and etc. was 14,800. As a result, out of pocket cost was 64,800.

Mortgage is formalized by 2.6% and amounted 450,000 for 30 years. Annual  Taxes 2,800. 45 credit insurance. Fire insurance is not considered as a tenant pays .

Monthly expenses: Mortgage payment 1,798. Taxes 233. Insurance 45. Maintenance 520 = 2,596. About 850 dollars of this money is going to principal every month. The apartment has been rented out for 2,900 a month. 304 remains from the rent payments + 850 paid to the principal = 1,154 per month or 13,848 per year.

ROI (return on investment) = 13,848 / 64,800 X 100 = 21.4% per year. In other words invested 64,800 work at 21.4% per annum, just from the rent. Pay Back Period is about 4.7 years.

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New construction Condo Downtown Toronto. Project CORE Condos 775 sq. ft. 2 bedrooms + den. Locker. No parking. Purchased for 425,000. Deposit of 85,000 is paid within 2 years. Construction period is 4 years. The same apartment in new building in the similar area costs about 510 thousand. Accordingly the invested deposit of 85,000 at the time of completion will bring you income of 85,000. Money during the construction period will work at more than 25% per year (more, because the deposit is being paid during two years). To close the deal, you will need to pay about 20,000. (Levi fixed in 5000 for this project). Subject to financing with 10% down payment on closing, you can take back 22,500 from the project.  The mortgage will be 382.500. So your out of pocket cost will consist of 42,500 down payment + 20,000 closing = 62,500. Your equity in this apartment will be 85,000 by that moment.

Then the interest rates on mortgage should be considered, rental rates and the cost of the apartment at the time of closing, and on this basis there may be several scenarios. 1) Apartment for sale 2) Apartment for rent. If rental rates and lending rates allow, the best variant will be renting out an apartment for 1-2 years and then refinancing with a view to take back equity (leaving only 10% in down payment). Then you come to the fact that there is no longer invested money in the apartment and it brings to you steady rental income. This can be only equity payment or equity payment plus the remainder of the rent in good variant. Some types of mortgages allow you to take equity  every month. Thus the apartment in which there is no money invested starts to bring you a steady passive income.

In order to demonstrate what money is in question I'll take the example of the apartment, taking into account the fact that in 4 years of construction: 1) property prices didn’t rise, rental rates remained stable, interest rates on loans have not changed. All figures are rounded to the nearest $ 10.

The first year you have a 30 year mortgage of 382.500 with a rate of 2.5%. Mortgage payment  1,510 + maintenance 500 + mortgage insurance 50 = 2,060. 730 dollars of this money are paid to the principal each month. Your money invested in the project is 62,500. Rent of this apartment is currently 2,700 per month. Accordingly, you have 640 left from the rent + 730 paid to the principal = 1,370. 16,440 per year. Your money work at 16,440 / 62,500 x 100 = 26.3% per annum.

You can leave everything at the same level or do refinancing after a year. In this case you take out your invested 62,500 from the project and your mortgage becomes 382,500 + 62,500 = 445,000. Herewith you have your 65,000 in equity of the apartment and you took all the money you originally invested in the project.

Mortgage payments began to consist of 1,755 + maintenance 500 + credit insurance 60 = 2,315. 850 of them goes to principal each month. Each month you will have the rest of rent 385 + 850 paid to the principal = 1,235. Your income will be 14,850 per year. Finally, having invested 85,000 you completely returned your money in 5 years, got passive annual income of 14,850 and have 65,000 in apartment equity.

And pay attention !!!  All these examples are without the growth of real estate prices.But if you take a schedule of growth in property prices over the last 40 years (during that time there were sharp rises,  falls and correction) the average Canadian property (as well as property in most developed countries) goes up by about 6% per year. If we take the last example, the apartment you bought during the construction phase for 425,000, while its real price was 510,000, then 6% per year is 30,600 more. The same 6% can be added to previous examples. It is only necessary to consider that the real estate market does not always go up, there are stagnation and falls. Accordingly, you should be ready to wait for the right moment to sell. If the property is chosen correctly and after renting out you will not only cover your costs but also have extra money left, then you have nothing to be worry about.  It is WIN WIN TECHNOLOGY.


Newmarket. Detached house about 2700 sq. ft. 4 Bedrooms, 3 Bathrooms. The house 16 years old. Perfect condition. Lot size is 50x130 ft. Bought for 530 thousand (below market price by 30-40 thousand). Downpayment (10%) was 53,000. Closing, including land transfer tax, appraisal, inspection and etc. was 12,000. As a result, out of pocket cost was $ 65,000.

Mortgage is formalized by 2.6% and amounted 477,000 for 30 years. Annual Taxes 3,200. Insurance (credit and fire) 1,200 a year.

Monthly expenses: Mortgage payment 1,906. Taxes 267. Insurance 100 = 2,273. About 900 dollars of this money is going to principal. The house was rented out for 2,550 a month. 277 remains from the rent payment  + 900 paid  to the principal = 1,177 per month or 14,124 per year.

ROI (return on investment) = 14,124 / 65,000 X 100 = 21.7% per year. In other words invested 65,000 work at 21.7% per annum, just from the rent. Pay Back Period is about 4.5 years.

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Newmarket. Detached house 2500 sq. ft, 4 Bedrooms, 2 Bathrooms. The house  18 years old. Good condition. Lot size is 55x110 ft. Bought for 500 thousand (below market price by 10-15 thousand). There is a GO Train station in walking distance. Downpayment (10%) was 50,000. Closing, including land transfer tax, appraisal, inspection and etc. was 11,500. As a result, out of pocket cost was $ 61,500.

Mortgage is formalized by 2.65% and amounted 450,000 for 30 years. Annual Taxes 3,400. Insurance (credit and fire) 1,100 a year.

Monthly expenses: Mortgage payment 1,810. Taxes 283. Insurance 92 = 2,185. . About 830 dollars of this money is going to principal. The house was rented out for 2,250 a month. 65 remains from the rent payment + 830 paid to the principal = 895per month or 10,740 per year.

ROI (return on investment) = 10,740 / 61,500 X 100 = 17.5% per year. In other words invested 61,500 work at 17.5% per annum, just from the rent. Pay Back Period is 5.7 years.

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Newmarket. Detached house about 2500 sq. ft, 4 Bedrooms, 3 2 Bathrooms. The house 12 years old. Good condition. Separate entrance to walk-out basement. The basement is partially finished. Lot size is 44x115 ft. Bought for 528 thousand (below market price by 10-15 thousand). Downpayment (10%) was 52,800. Closing, including land transfer tax, appraisal, inspection and etc. was 12,200. As a result, out of pocket cost was $ 65,000.

Mortgage is formalized by 2.5% and amounted 475.200 for 30 years. Annual Taxes 3,500. Insurance (credit and fire) 1,200 a year.

Monthly expenses:  Mortgage payment 1875. Taxes 292. Insurance 100 = 2,267. . About 900 dollars of this money is going to principal every month.  Additionally 40,000 were invested and 2 bedroom apartment  was finished in the basement.

The house (without basement) was rented out for 1800 a month. Basement was rented out for 1100. 633 remains from the rent payments + 900 = 1,533 per month or 18,396 per year.

ROI (return on investment) = 18,396 / 105,000 X 100 = 17.5% per year. In other words invested 105,000 work at 17.5% per year, just from the rent. Pay Back Period is about 5.7 years. After completion of construction work the house has risen in price significantly and now refinancing and partial refund is possible, and  that will allow to rise income to 23% per annum. Freed 50 thousand are possible to be invested in the next project.

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Keswick. Detached house about 2700 sq. ft. 4 bedrooms, 2 Bathrooms. The house 22 years old. Excellent condition, new roof. Lot size 55x130 ft. Bought for 380 thousand (below market price by 15-25 thousand). Downpayment (10%) was 38,000. Closing, including land transfer tax, appraisal, inspection and etc. was 7,000. As a result, out of pocket cost was $ 45,000.

Mortgage is formalized by 2.5% and amounted 342,000 for 30 years. Annual Taxes 3,100. Insurance (credit and fire) 1,000 a year.

Monthly expenses: Mortgage payment 1,349. Taxes 258. Insurance 84 = 1,691. About 650 dollars of this money is going to principal .The house was rented out for 1,900 a month. 209 remains from the rent payment + 650 paid to the principal = 859 per month or 10,308 per year.

ROI (return on investment) = 10,308 / 45,000 X 100 = 22.9% per year. In other words invested 45,000 work at 22.9% per annum, just from the rent. Pay Back Period is about 4.4 years.

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Keswick. Townhouse 1900 sq. ft. 4 bedrooms, 2 Bathrooms. 5 years old. Excellent condition. Bought for 330 thousand (below market price by 10-15 thousand). Downpayment (10%) was 33,000. Closing, including land transfer tax, appraisal, inspection and etc. was 6,000. As a result, out of pocket cost was 39,000.

Mortgage is formalized by 2.5% and amounted 297,000 for 30 years. Annual Taxes2,400 Insurance(credit and fire) 900 a year.  

Monthly expenses:  Mortgage payment 1,172. Taxes 200. Insurance 75 = 1,447. Every month about 560 dollars of this money is going to principal. The house was rented out for 1600 a month. 153 remains from the rent payment + 560 paid to the principal = 713 per month or 8,556 per year.

ROI (return on investment) = 8,556 / 39,000 X 100 = 21.9% per year. In other words invested 39,000 will work at 21.9% per annum, just from the rent. Pay Back Period is about 4.6 years.

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Condo apartment. Toronto downtown. 780 sq. ft.  2 Bathrooms. Locker. No parking. Maintenance 480. The condo 6 years old. Perfect condition. Bought for 460 thousand (below market price by 10-15 thousand). Downpayment (10%) was 46,000. Closing, including land transfer tax, appraisal, inspection and etc. was 14,000. As a result, out of pocket cost was 60,000.

Mortgage is formalized by 2.6% and amounted 414,000 for 30 years. Annual Taxes 2,600. 35 credit insurance.  Fire insurance is not considered as a tenant pays.

Monthly expenses:  Mortgage payment  1,665. Taxes 217. Insurance 35. Maintenance 480 = 2,397. Every month about 780 dollars of this money is going to principal. The apartment has been rented out for 2,700 a month. 303 remains from the rent payment + 780 paid to the principal = 1083 per month or 12,996 per year.

ROI (return on investment) = 12,996 / 60,000 X 100 = 21.7% per year. In other words invested 60,000 will work at 21.7% per annum, just from the rent. Pay Back Period is about 4.6 years.

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