This is not a new subject – if you have been speaking with me, you can hear the frustration in my voice. As a mortgage broker but also a tax-paying citizen, I am frustrated, because the government is impacting my ability to live comfortably and afford the lifestyle I and you pay for, through our taxes. Home ownership has become a privilege rather than a right in this country and that is a huge shame!
October 2016, we saw a shake-up to the industry when the government first started playing with the rules. Through the guise of controlling foreign buyers, it did nothing to impact them, however it definitely impacted us in our buying power and in some cases by 20%. Now looking forward, that will be further impacted again in January, 2018. Regardless if we put 20% down or not, we now have to qualify at the qualifying rate (currently 4.89% + 2%), which is the new stress test. This will impact your ability to qualify!
DCR or debt coverage ratio, is one if not the most important thing to factor when it comes to commercial financing. However, it is one of the most overlooked aspects so I thought I would touch upon it’s importance here.
Last month, I closed on a very difficult commercial deal – a 12-plex in Orlando, FL. When looking at it initially the numbers looked strong and keep in mind at first glance they always will as they are put together by the realtor to get it sold. It is not until I as the broker or the lender do further due diligence with proper numbers, backed up by P/L and rent rolls, that the true numbers come out in the wash.
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.
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.
We have all been keeping an eye on what has been happening with our neighbours to the south and wondering how the so called Trump effect will affect us in Canada.
Many of my Canadian clients who have been investing in many US markets continue to pursue investing in the US as they don’t feel that the Trump effect is something to worried about.
Furthermore, with low property prices, low vacancy rates, high cash flow and most importantly no bidding wars, there are many opportunities to get into the market without breaking the bank – even with the exchange rates as they are!
Many of my clients, myself included still plan to invest in the US but are wondering what options exist for financing, so I thought this would be a great primer on how to finance your properties as a Canadian investing in the US.
January is a time of year that new resolutions get made and also broken! For instance usually try to start some kind of diet or exercise program, only to give up by February.
For those that are looking at their debts – especially after Christmas with higher spending than usual, they may endeavour to start a budget or stick to a budget or even get some help with credit counselling.
For investors, this may be a great time to reflect on the past year’s successes or misses. For instance at the start of the previous year, you may have set a goal to buy 1-4 properties during the year or you may have wished to start lending your money instead of becoming a landlord or you may have started off great only to be brought to a full stop due to the inability to qualify for a mortgage or lack of a down payment.
So what do you do when your credit has suffered, you have credit issues or debt issues and you cannot qualify?
Booya and the Government changes the mortgage rules again!
This past week the Trudeau Government took us all by surprise by announcing new mortgage qualification rules. The mortgage industry and the media have gone wild with speculation and concern about the future of our industry, but what does this mean for you and how do you navigate these changes going forward?
Currently in place, the Government has required homeowners with less than 20% down to qualify at the BOC rate of 4.64% for any term less than a 5-year fixed rate. Effective October 17, 2016, this requirement will apply to all insured mortgages, including fixed-rate mortgages with terms of five years or more.
Wholesaling has always intrigued me but here in Canada the deals don’t exist here as they do in the US, so the same money that you can make in the US doesn’t always exist here. Furthermore, you can buy 2-3 properties in the US vs. 1 property in Canada.
This article speaks about investing as a Canadian but the same rules apply for any foreign investor!
Not knowing much about wholesaling, I dove into researching different companies in the US and also spoke to various wholesalers, who I am very grateful to for sharing their knowledge and experiences.
This story takes place in modern day times! The story is about a real estate investor who has to decide between two properties. One property is in the bustling and over-priced city of Toronto and the other property is in a smaller community to the west known as Kitchener.
The Toronto property is in Guildwood – a sought after area of Scarborough but backs on to a Go Train track. The home is beautiful and offers a main floor with the potential for a basement apartment but it would need renovations to make it happen. The price is $749,000.
The property has been sitting on the market for 31 days in a sought after area because of it’s close proximity to the train tracks. What happens in a few years when my client wants to sell this property – will he have the same issues as the current owner? Even in a seller’s market? Probably!
The Kitchener property is in a sought after area with schools and shopping nearby and also has the potential to add a basement suite but the separate entrance would have to be built-in. The asking price is $325,000.
Seems like a no-brainer right? But let’s look at the numbers to see what makes more sense!
As a real estate investor I dreamed of having a horde of rental properties but with prices where they are, down payment requirements, land-lording issues in some cases and finding good deals, I turned instead to private lending.
I liquidated my last property after completing two Rent-to-Own deals but have kept my Four-Plex as it is a JV deal that is too good to get rid of plus it keeps me in the game so to speak.
At this point in my life, I am looking to put more focus on my retirement goals and initially I thought I could do that by having rentals, however I realized that I like the low-key approach to investing rather than looking for great deals, trying to find partners with money and chasing down tenants for rent.