FLIP to Yourself



Purchase price $600,000.00 
20% down $120,000.00
Closing costs $13,000.00
Renovation $120,000.00 
Mortgage balance $480,000.00
Refinance 80% of $859,900.00. (80% if you are going to live in the home, 75% if it’s a rental)Refinance value $687,000.00 
Costs to refinance $3000.00
Carrying costs 3 months while renovating if vacant = $6000.00
Total Cash invested $262,000.00 ($120,000 down + $13,000 closing + $120,000 renovation + $3000 refinance + $6000 carrying)
Total Cash pulled out of the deal $207,000.00. ($687,000 new mortgage - $480,000 previous mortgage)
Total cash left in deal $55,000.00
You have a $859,900.00 renovated basement home with a suite near the proposed skytrain route for $49,000.00 cash invested
Equity in house $172,900 -$55,000 cash still  invested in the deal = $118,900.00

What if you don’t have $262,000.00 but you do have 5% down and you want to move into the home?You can borrow from someone who has money invested in TFSA’s who is arms length. 

You can negotiate to pay them 28% per annum, at a cost of 14% for a 6 month term = $32,480.00 no payments paid at the end of the 6 months plus a 1% fee $2,620.00 plus fees to register a second mortgage and release the 2nd mortgage at the time of refinance $3000.00. Total costs to borrow $38,100.00.

If you bought this home with 5% down you would have had to pay a CMHC fee of 4% on $570,000.00 ($600,000.00 -5% down $30,000) at a cost of $22,800.00 .  Actual cost to borrow $262,000.00 is $38,100 -$22,800 saved in CMHC= $15,300.00