Sunday, September 30, 2018

Instant Return on Investment

Ready for the Winter
The townhouse I acquired with a serious discount last month, came with no heating.

The previous owner removed electric baseboards throughout the house and used a gas stove in the basement as the only heat source. She was saving considerably on the monthly utilities!

My brother-in-law being extremely frugal as well is another person I know who uses a wood stove to heat his entire house!

However, I don’t think I’ll be successful finding tenants who’d be thrilled about a similar set up.

Most tenants would be looking for either baseboards on every level or a gas furnace. I don’t blame them!

Can you imagine starting a wood stove early mornings when it’s 30 degrees below zero?! 

I was debating between installing new electric baseboards or using the opportunity to upgrade to a gas furnace. I decided to get quotes and work timeline for both options and go from there.

My amazing property manager received several quotes from multiple reputable vendors. Now, we knew that the costs would be as follows:

1) Electric baseboards: $6,000
2) Gas furnace including ducts: $9,000.

Instant Return: $9,000 makes $4,000 = 44% ROI

A local appraiser let me know that the price of the property would go up by $15,000, conservatively, once the gas furnace is in place. This is a $4,000 net gain on a 9K investment.

44% return - not bad, eh?

An additional benefit is that the property will look more attractive to potential tenants. Many families prefer gas heating, as it typically costs less than electricity.

This property is a condo town house. I learned from the condo manager that, before making any updates, I am supposed to get approval from the Condo Board.

Getting Board's Approval 

The approval process turned out to be much smoother than I expected. I received an “Alteration / Renovation request Form” form from the Board. Then, completed this form and returned the following to the Board before their scheduled meeting:

1) Completed Alteration / Renovation Request form
2) Photos of the locations where the contractor will core through the brick (with the area circled)
3) Contractor’s WSIB eClearance Letter and Insurance Certificate.

My property manager helped me with all three of these!

The Board confirmed their approval and we now have all the work scheduled.

I am very grateful to my Property Manager and his team. 

Can’t wait to start looking for a tenant! I’m sure they’ll love this home and enjoy being warm and cozy during the winter.

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