Recently James, a non-resident from Singapore purchased a property in Toronto. We completed the deal from start to finish in 10 days, which was highly stressful for both the borrower, realtor and mortgage broker – yours truly.
Everyday, I was faced with lender delays, appraisal delays’ and many phone calls back and forth to verify details. It was not clear that we would be able to close and both James and the seller could not extend closing, which led to further stress. James was leaving back to Singapore on July 29th and the sellers were closing on another property on July 30th. Our closing was set for July 27th. Deadlines all around were tight. The only positive was that the realtor already had the status certificate reviewed by the lawyer, before the purchase agreement was signed, which saved us time in the process, enabling me to send that in with the paperwork to the lender.
I realized that it was the lack of explanation on my part that facilitated this occurrence and thought that this example would be a great learning tool for your purchases in Canada.
Everyday, I open up my inbox and I see countless messages or promotions from Private Lenders – both individual’s and institutional privates, seeking to compete in this ever-changing mortgage landscape.
Gone are the days, you could call a private lender and ask them to fund your client’s troubled file. Now they are also requiring more paperwork (even when they say they don’t) and their rates and fees are getting higher and higher! Private Lenders are feeling the squeeze too!
Why is this?
For one the market cannot rebound or absorb the over-inflated numbers we were seeing from the last two years. For instance, clients who were over-bidding on properties and in some cases paying over $100,000 to get into that property are now looking for a way out. However, they are in negative equity situations, which means they are stuck with the their current lending options or selling at a loss to get out from the overwhelming debt.
As a mortgage broker the worst question to get asked is “what’s the best rate you can get me?” When you shop for rate alone, you are unfortunately missing the bigger picture!
Let’s look at why this makes a difference when purchasing property in Canada and the US.
When you buy in Canada rate might be a good focus for you, because there are so many lenders competing on rate alone and with the high property prices rate is the main focus, because it indicates in many cases whether we can cash flow or not.
Guest Post by Yvette Barnes, Real Estate Salesperson at Right at Home Realty
We’ve heard a lot since the Federal and Provincial governments weighed in on the GTA housing market. Has the market cooled? It depends.
Prices soared last November because there were no listings. This April revealed 21,600 new (‘active’) listings – 33.6% more than April 2016. Our ‘active’ listing supply is 3% higher than this time last year. The May statistics verify new listings are about 47% more than the same period in 2016. In 2017, TREB reports a year-over-year growth of 20-25%; March was at 30%. This suggests the market has returned approximately 5% of the price increases gained.
As the summer approaches, I start to get inquiries from Canadian non-resident or expat clients, inquiring about how to purchase properties in Canada.
Many of these clients are Canadian citizens but they are working and living abroad in countries, such as, Dubai, Singapore, Abu Dhabi and England just to name a few countries. Canada, luckily enough is very favourable to foreign investment, and while these clients are not considered foreigners, once they live outside the country for a number of years, and no longer pay taxes at home, they are not considered citizens and thus do not enjoy the same financing benefits for residents of Canada.
Thus, I thought a good primer would be good. Let’s look at a recent example.
As a mortgage broker, I always strive to think out of the box, in order to stay competitive.
With that in mind, over two years ago, I went to the US (specifically Florida) and started making contacts with realtors, other mortgage brokers, lenders and wholesalers, just to name a few.
Once I had my contacts established and verified, meaning I would only work with referral sources that had been verified and could back up their offerings with proper protocols in place, I was then able to hit the Canadian market and start marketing this source of business. It has not been easy and has taken a lot of work but in the end, it has definitely worth it, as I have been assisting countless investors in Canada to invest in both residential and multi-family properties.
This is not my typical mortgage article but was important for me to write so I hope you like it!
As a self-employed entrepreneur and solo mortgage broker, it can get lonely and difficult in this business and having only been doing this for 3.5 years, I have had my days when I wanted to quit! I am sure I am not alone.
Last year was the best year I ever had and I was riding that wave until the new mortgage rules arrived in November of 2016. Where we as brokers were restricted by the new rules the government had initiated, I was hearing time and time again how the banks were not playing by the same rules.
Contrary to the so-called Trump Effect, the exchange rate and the low Canadian dollar, now is actually the BEST time to invest in revenue properties in the US.
Regardless of these issues, people always need a place to live, and with the ever-fluctuating market in the US, there are many opportunities to take advantage of low prices and the financing that is available to both Canadian and US investors.
For instance, you might consider purchasing wholesale properties in Tampa, vacation rentals in Orlando or turnkey properties in Atlanta, just to name a few of the available opportunities that exist.
There are so many amazing investors to learn from but one that I admire the most agreed to share her tips on why knowing your tenant profile, should be one of the most important things you keep in mind before buying that investment property.
For instance, when she goes property shopping into a specific market, she always has her tenant profile in mind before looking at investment properties. Specifically, she likes having young families with children so she will look for properties near great schools and with 3 bedrooms and 1 ½ or 2 bathrooms; or she might like to attract a single mom and her children and thus will look for a home that either has two units (upper and lower unit) or a house that can be converted easily and legally to two units (upper and lower) or two side by side semi’s. Again, in this instance she would look for a property near the best schools and nearby shopping areas, as it will be highly attractive to families with children and for ease and convenience in their busy lives.
Nothing drives me crazier than when somebody says “I can’t afford the down-payment ” or “I can’t afford to save”, but they are driving around a car that leases for $750/month!
This post was inspired by a new investor client that was thinking of getting into his first property. He had done the meetup’s, the courses, and tons of research on the areas he wanted to invest and was really prepared so I assumed he would have no problems financing his first purchase.
He had decided that since he was young and had time before getting married and having a family, he would purchase a duplex. He would live in one unit and rent out the other. He had found the perfect property that needed some work but he was able to get it for a steal – in Hamilton no less!