Last week we were all taken aback when the Federal Government released the latest round of mortgage rules. It was not just one new rule but four new rules and it could certainly impact Real Estate Investors to name just segment.
By now we as professionals have all had time to process the changes, blog about it and even bitch about it! We need to take a step back, put things into perspective and focus our efforts on the consumers, who are our clients and potential clients.
As a mortgage broker, I focus on investors and many of the investors I work with, focus their efforts on pre-construction and rent to own to name just two methods. In light of the new mortgage rules, I wanted to discuss how they might impact real estate investors investing in these two particular areas of pre-construction and rent to own.
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.
Recently I was approached to finance a commercial building in Hamilton, Ontario.
The property was a vacant and former rooming house and the clients wanted to transform it into a retirement home. The clients were a retired nurse and two personal support workers, all of whom had experience working with seniors, however they did not have experience operating a retirement home.
I love real estate investing. Over the last few years I have learned from many investors, which got me thinking about some of the successful investors out there – what separates them from the rest? I started to study these individuals and have realized that they all share the same habits and traits that make them successful investors.
Becoming successful at anything requires skill, determination, education, motivation and most of all a great desire to be great at that one thing. Becoming a successful real estate investor is no different! Thus these 7 traits have come to define many of the successful investors that I have studied. For this post I have defined 7 traits but I am sure there are many more.
This is not my usual mortgage article but I hope you will read on anyways. I am writing about how being a mortgage broker makes me grateful everyday!
I am an avid blogger – I love writing and sharing my knowledge and experience but that last two weeks have been a mental struggle for me. I finally stopped beating myself up and sat down to think why I was struggling and realized it was because I had forsaken my daily gratitude habit, because I have been so busy with work and life in general.
I have learned through various strategies, readings, courses that having the practice of being grateful not only brings peace into my life but the ability to focus and expand that gratitude into all areas of my life, including work and family.
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.
In Canada we have two past times or conversations that get people heated up! One is the weather and the other is real estate. The last few years have given people lots to talk about – even those that are not directly in the real estate industry.
We speculate when the market crash or softening will happen; where prices and interest rates are headed and what will happen when the market does soften. We have all come to expect bigger and better, even when bigger and better is not necessarily affordable.
I personally don’t want bigger and better as I don’t want to be burdened with a huge mortgage but what do you do when you live in a house that you are outgrowing? What are your options?
Every once in a while as investors, we come across an amazing deal and usually that deal is a deal because it needs a lot of work – otherwise known as a “handyman special”.
Then the question becomes what is the best way to financing this opportunity and which lenders will consider the “after repair” value and not the “as is” value. Currently there are very few options that exist to renovate properties using the “after repair” value.
Options using the “as is” value literally suck! You can do a purchase plus mortgage, where the lender will give up to 10% or $40,000 max. of the “as is” value for renovations and after all is said and done, you get to include that cost into the mortgage. However the caveat is that you must have those funds in your pocket to begin with. Another way might be to take it out of your existing HELOC or unsecured LOC, but then you are worried about timelines, paying it back, over-extending your lines of credit and worse if another opportunity comes along you have now tied up that money into the current property, waiting to flip it!
Furthermore, how far is 10% of the value going to get you? Not very far in most cases! The rest comes from your own pocket and if you are like me there are typically other uses for that money.
I got a call today from an investor client, who is tired of losing out on bidding wars for existing homes and is considering putting an offer on a pre-construction stacked townhouse. Last year she had purchased a pre-construction condo as an investment but this year she was purchasing a stacked townhome as a second home for her son, who had just graduated school and did not have a job yet, which meant he could not qualify for a mortgage on his own. She had a pre-approval in place for 5% down on a purchase.
She was concerned that even with the 5% down she planned to put down. the builder was insisting on a 20% down payment and all of it was due in 90 days, with no firm closing date. She asked if there was a work-around. I suggested she show the pre-approval to the builder and see if she could reduce it.
She was taken by surprise by the demand for a 20% downpayment and so I thought this would be a timely article as many people are unaware of all the costs and demands that come with pre-construction. Here are some things to consider.
As a real estate investor, I took the time to get educated in various aspects of real estate before proceeding with my first investment property purchase. However, at some point I knew that getting educated was only part of the process – at some point I would have to pull the trigger, so to speak and actually purchase the property to meet my investing goals.
Everybody has reasons for starting their real estate investing career – mine started because I thought it would be a great way to supplement my income. I never expected to evolve and learn what I have learned to date. I keep expanding my goals and hopefully this post will inspire to keep expanding yours as well. I am now involved in residential, commercial and private lending for other investors and with so many different ways to invest the overall goal is to not only grow my own passive income but to also enjoy the journey.