Your Investment Journey
1. Your Starting Investment
Your 6-unit building needs $335,776 to get started. This is your 20% down payment. The bank provides the other 80% ($1,343,106) as a construction loan. Total project cost: $1,678,882, which includes your $400,000 land and $1,050,000 for the complete design-build package.
2. The 6-Month Build
While others take 18 months (losing $216,000 in rent), we deliver in 6. Your finished building generates $102,600 per year after all expenses - that's real profit before mortgage payments.
3. The Bank's Valuation
Banks value buildings based on income. Your $102,600 annual profit means the building is worth $2,052,000 (using a 5% cap rate). You just created $373,118 in instant equity!
4. Getting Cash Back
The bank gives you a new mortgage of $1,381,627 (5% interest, 30-year term). After paying off the construction loan, you get $38,521 back. Plus, the government refunds your $218,882 HST payment. Total cash in your pocket: $257,403.
5. Your Final Position
Here's the simple math: You put in $335,776. You got back $257,403. So you have just $78,373 of your money left in the deal.
But you own $670,373 worth of the building (your equity). If you sell tomorrow, that equity turns into cash. Plus, you're making $2,477 profit every month after all expenses.
Total wealth created in year one: $957,049. That's a 285% return on your initial investment.
