Ottawa, Canada Real Estate Investor

6 Replies

Hello RE investor, 

Currently got hooked up to this forum .I have gathered lot of information on this platform and podcast. but most of information was related to US market. I am from Ottawa ,canada and looking to make my first deal.  I have few question in term of financing, i hope i would get some guidance from you guys...

How do you  guys finance your down payment? Are there lenders in canada who provides loan for RE investment for less than 20% downpayment? Do you guys take loan from big banks or any private lender or any other means? I already have primary residence so based on my Income, i dont think Bank will give me more loan for my investments. 

Does lender check personal income for investing in RE? or they dont care  [as much as i have required downpayment 20%(?)]as its income generating investment.

It's still tough to buy as an inexperienced investor without 20% down unless you're living in it. Some lenders will accept leveraged down payments, and almost all will accept leverage against your primary residence. The only other way to do it is to find a partner to bring cash as well. 

Bhushan, I can tell you what I did over the last few months which led to my first deal in Cornwall which was 9 units. I live in Ottawa as well.

A couple key things I learned about financing were: 4 units or less, is a standard mortgage, those buildings are priced based on market value of similar multi's or single family homes. With 4 or less units, you have to provide 20% down and your eligibility for the mortgage is based on your income as well. For multi-family 5+ you get a commercial loan, the eligibility of the loan is mostly based on the income the property generates and if it can carry it self after the bank runs their calculators and cost assumptions. This requires a 25% down. The bank I choose to work with was Desjardins Casse Special, being a smaller co-op style bank they worked with me every step of the way and were able to tell me they would back a purchase within 24hrs of sending them the listings. I also had all my paperwork and financial information set up with them prior to making offers... By having everything set up prior I developed a relationship with the agent, without ever meeting them until the day I signed for the mortgage.

Financing the down payment: Before I started going to showings I unlocked the equity in my house. I applied for a HELOC. There were some fees to set it up however it was completely worth it. When I spoke with the bank, I was clear that I would use a HELOC + Cash to cover my 25% down and it wasn't an issue whatsoever.

Identify the investment type you want to do, identify the area, connect with experts if you plan on using them, start making offers. Best of luck!

Originally posted by @Paul H.:

Bhushan, I can tell you what I did over the last few months which led to my first deal in Cornwall which was 9 units. I live in Ottawa as well.

A couple key things I learned about financing were: 4 units or less, is a standard mortgage, those buildings are priced based on market value of similar multi's or single family homes. With 4 or less units, you have to provide 20% down and your eligibility for the mortgage is based on your income as well. For multi-family 5+ you get a commercial loan, the eligibility of the loan is mostly based on the income the property generates and if it can carry it self after the bank runs their calculators and cost assumptions. This requires a 25% down. The bank I choose to work with was Desjardins Casse Special, being a smaller co-op style bank they worked with me every step of the way and were able to tell me they would back a purchase within 24hrs of sending them the listings. I also had all my paperwork and financial information set up with them prior to making offers... By having everything set up prior I developed a relationship with the agent, without ever meeting them until the day I signed for the mortgage.

Financing the down payment: Before I started going to showings I unlocked the equity in my house. I applied for a HELOC. There were some fees to set it up however it was completely worth it. When I spoke with the bank, I was clear that I would use a HELOC + Cash to cover my 25% down and it wasn't an issue whatsoever.

Identify the investment type you want to do, identify the area, connect with experts if you plan on using them, start making offers. Best of luck!

 

Nice Paul.Thanks for the input. Hows yours investment so far? Any issues in managing 9 units? Did the property appraise in value? I noticed multifamily properties are appraising in slow pace than individual home or townhomes,condos etc.

I am also considering of tapping into my home equity. based on current crazy prices in Ottawa, i am sure i should easily tap at least 50k worth of equity.

Originally posted by @Bhushan Bhirud :
Originally posted by @Roni Elias:

If you do not want to do a bank loan, could look at private lender or partner up with someone and split profits.

 Where can i find resources to find private lenders?

I would check here on the site and if you have a city see if you can find a local private lender. Be very careful as there a lot of scammers out there. Talk to the person, get references, and so forth.