Contractor · Toronto, ON · Member since 2019 · 30 posts · 3 votes
Hi, I live in Toronto, Ontario (Canada) and have $150k in equity in able to access. I would like to start purchasing student rentals which would have a purchase price of around $400k. I'm not able to be approved for a mortgage as my dti will be too high after pulling out equity. I'm considering partnering up with a friend and buying in cash. Would this be the best use of this money? Also, what would be the best form of taking out the equity?
Hi, I live in Toronto, Ontario (Canada) and have $150k in equity in able to access. I would like to start purchasing student rentals which would have a purchase price of around $400k. I'm not able to be approved for a mortgage as my dti will be too high after pulling out equity. I'm considering partnering up with a friend and buying in cash. Would this be the best use of this money? Also, what would be the best form of taking out the equity?
Thanks
Eric,
Where would you be buying the properties, in Canada or the US? If you are buying in the US you could do a DSCR loan which essentially will take into account the market rent produced by the property. As long as the market rent is determined to be higher than the total mortgage payment you will be good to go (You could also have the mortgage be higher than the rent but the terms will be extremely unfavorable). If the properties you are trying to buy are in Canada, I would not be able to hep answer this for this. Please reach out with any questions.
As long as the numbers work then it would be a great use of your equity.
And the best way to take it out would be another numbers review. If you do LOC then you only pay back interest and may have a lower monthly payment for this to create more cashflow from the student housing investment. These are always variable interest rate.
If you do a mortgage, then you could do a fixed interest rate for a set term of say 3 or 5 years so that you always know what your payment with be and this would also pay down some of the principal at the same time.