The numbers on a two unit home
A 20-year projection for a Richcraft Tandem Series home at $863,800.
Both units rented: $2,700 upstairs and $2,000 in the basement.
Monthly cash flow
+$151
Year 1, after the mortgage
Cash to close
$203,760
Down payment, closing costs, appliances
Cap rate
4.88%
Year 1 net income / price
Cash-on-cash
0.89%
Year 1 cash flow / cash invested
Break-even rent
$4,546
per month, both units
Annual return, 10 years
9.90%
IRR, vs 4% in savings
Home value and mortgage over 20 years
Assumptions
- Purchase price
- $863,800
- Closing costs and appliances
- $31,000
- Down payment
- 20% ($172,760)
- Mortgage
- $691,040 at 4.20%
- Amortization
- 30 years
- Monthly mortgage payment
- $3,364.69
- Upper unit rent
- $2,700/month
- Basement unit rent
- $2,000/month
- Property tax, year 1
- $7,500
- Insurance, year 1
- $2,200
- Maintenance
- 6% of the full rent potential
- Vacancy
- 2% of rent
- Rent and expenses grow
- 2% a year
- Home value grows
- 2% a year
- Selling costs
- 6% of the sale price
Mortgage interest compounds semi-annually, the Canadian standard for fixed-rate mortgages.
Year by year
| Year | Rent collected | Expenses | Mortgage | Cash flow | Mortgage balance | Home value | Equity |
|---|---|---|---|---|---|---|---|
| 1 | $55,272 | $13,084 | $40,376 | +$1,812 | $679,213 | $881,076 | $201,863 |
| 2 | $56,377 | $13,346 | $40,376 | +$2,656 | $666,883 | $898,698 | $231,814 |
| 3 | $57,505 | $13,613 | $40,376 | +$3,516 | $654,031 | $916,671 | $262,641 |
| 4 | $58,655 | $13,885 | $40,376 | +$4,394 | $640,633 | $935,005 | $294,372 |
| 5 | $59,828 | $14,163 | $40,376 | +$5,289 | $626,666 | $953,705 | $327,039 |
| 10 | $66,055 | $15,637 | $40,376 | +$10,042 | $547,422 | $1,052,967 | $505,545 |
| 15 | $72,930 | $17,264 | $40,376 | +$15,290 | $449,873 | $1,162,561 | $712,688 |
| 20 | $80,521 | $19,061 | $40,376 | +$21,084 | $329,790 | $1,283,561 | $953,771 |
If you sold after 5, 10 or 20 years
After 5 years
- Home value
- $953,705
- Selling costs
- -$57,222
- Mortgage payoff
- -$626,666
- Net sale proceeds
- $269,816
- Total cash flow
- +$17,667
- Cash invested
- -$203,760
- Profit
- $83,723
- Total return
- 41.09%
Annual return (IRR)
7.28%
After 10 years
- Home value
- $1,052,967
- Selling costs
- -$63,178
- Mortgage payoff
- -$547,422
- Net sale proceeds
- $442,367
- Total cash flow
- +$58,185
- Cash invested
- -$203,760
- Profit
- $296,792
- Total return
- 145.66%
Annual return (IRR)
9.90%
After 20 years
- Home value
- $1,283,561
- Selling costs
- -$77,014
- Mortgage payoff
- -$329,790
- Net sale proceeds
- $876,757
- Total cash flow
- +$217,533
- Cash invested
- -$203,760
- Profit
- $890,530
- Total return
- 437.05%
Annual return (IRR)
9.80%
11 Ottawa projects offer two unit homes
From Caivan Communities, eQ Homes, Landric Homes + Group Heafey, Minto Communities, Richcraft Homes.
About these numbers
These are estimates based on Ron's assumptions, not a guarantee or financial advice. Prices, rents, interest rates, taxes and insurance change, and every buyer's situation is different. Rental income is taxable, and these figures are before income tax. Talk to Ron, your mortgage specialist and your accountant before you buy.
Want these numbers for a specific project?
Ron can run the same projection on any two unit home in Ottawa, using your down payment, your rate, and current rents for that area.
Or call Ron at (613) 890-0444