How to Raise Money

4 Replies

What will be the challenges of getting credit from the bank to start real estate investment when I only have $30,000 on my bank account? How to encounter these challenges?

P.S.I am a newbie in this industry, and I am not sure yet how much credit I require from the bank.

Windahyanti:

Welcome to BP!

As an owner-occupant, you could eligible for a high-ratio mortgage with as little as a 5% down payment {first-time home buyer} or a regular owner-occupant insured mortgage with a 10% down payment.   Depending upon your income and other debt obligations, this could potentially amplify your savings (30K) into a total purchase of $300K - $600K.

In much of Canada, this would enable you to purchase a small multi-family property (2-4 units), provided you planned to live in one of the units.  In the greater Vancouver area, purchasing power of $300K - $600K is not going to buy you as much.  However, if you are willing to be away from downtown, say in Burnaby, Port Moody, or Coquitlam, you could probably find a nice duplex with separated utilities in this price range.   If you look close to SFU, you will have a student tenant market available.

Now, if you plan to invest remotely, there are places - say in eastern Canada (Maritimes) or in the U.S.A rust-belt / mid-west - where your 30K will go a lot further (In parts of the mid-west U.S.A. where you could purchase a duplex for 30K).

Please take the time to read through the materials here on Bigger Pockets, much of it is universally applicable, but in the areas of financing, regulations and taxation it will be U.S.A. biased ... however, there are many Canadians here on the site who can field questions for you.

Medium greenapartmenthires 1024x1024Roy N., Louer Louer Ltd. | 1.506.471.4126

Thank you @Roy N.  I will try to get myself familiarized with the BiggerPockets board..^^

Counter-intuitively, the larger in deal size ($2MM+) you go, the less this will be an issue as the banks will largely be looking at the equity in the deal and the property as the collaterally (not your personal balance sheet). 

Of course, you'll need to be able to partner with someone that has that kind of capital or syndication experience in order to take down larger deals.

Originally posted by @Cole Davis :

Counter-intuitively, the larger in deal size ($2MM+) you go, the less this will be an issue as the banks will largely be looking at the equity in the deal and the property as the collaterally (not your personal balance sheet). 

Of course, you'll need to be able to partner with someone that has that kind of capital or syndication experience in order to take down larger deals.

The lender will still look for a track record, assets/net worth, and financial stability.  True the deal will need to carry itself, but lenders also want assurance you have the fiscal acumen to underwrite success.

Medium greenapartmenthires 1024x1024Roy N., Louer Louer Ltd. | 1.506.471.4126