Investor · Kitchener-Waterloo, Ontario · Member since 2008 · 1k+ posts · 1k+ votes
10y
@Jeff Beler@Tahric FinnGuys, stop looking for properties. You have to focus on finding motivated sellers who need to sell and then offer a solution to their problem. That's how you create good deals.
To do this you need to generate your own leads. The trick is to position yourself as either the 1st person they call, or the last person they call.
1st position: In this case you want people calling you who have a pressing time constraint that prevents them from getting their property market ready, listing it, negotiating and waiting to close. They need to sell NOW and they're willing to take a below-market price to get their cash fast.
Last position: In this case you want people calling who have tried everything to sell their property and have nearly lost hope that it's ever going to happen. They probably owe as much as the house is worth and can't lower their price to get it sold because they'll have to pay their agent out of their pocket, and they can't afford that. They're willing to let you just take over their payments.
Now go figure out how to get in contact with those people and you will find that there is an abundance of deals everywhere.
Are you talking about using a property's rent to qualify for the it's own mortgage?
Absolutely.
Another point is that some lenders will only include the rent if there is an annual written lease ... as opposed to the default tenancy {i.e. no written lease} or a written month-2-month lease.
Real Estate Investor · Waterloo, Ontario · Member since 2017 · 21 posts · 8 votes
9y
I wasn't really referring to using a property's own income to qualify it's own mortgage. I'm talking about once you have a mortgage on the books, I've found that the bank is less inclined to use as much of the income to qualify for other mortgages...if that makes sense.
I wasn't really referring to using a property's own income to qualify it's own mortgage. I'm talking about once you have a mortgage on the books, I've found that the bank is less inclined to use as much of the income to qualify for other mortgages...if that makes sense.
In our experience it has made no difference in the inclusion rate.
Brampton, Ontario · Member since 2017 · 47 posts · 10 votes
9y
Hi, I thought I would introduce myself.
I am a real estate investor in the GTA. I have been investing mainly for appreciation and not cash flow over the past few years. This strategy has worked out very well for me, however I plan to balance my portfolio out a bit by investing into cash flowing properties. Looking at multi family and small-midsized apartment buildings.
Looking forward to discussing things and maybe even meeting some other investors from here. Who knows, might even find some partners from here looking to make larger purchases of apartment buildings.
I plan to be fairly aggressive in the next year or two and make as many solid acquisitions as possible before focusing back on the Hotel/Restaurant industry.
Kingston, Ontario · Member since 2016 · 2 posts · 3 votes
9y
Hello everyone,
New here at BP. I've been reading a lot to learn about REI in the last few months, as my boyfriend and I are looking at building a portfolio of units down the road. I'm originally from Montreal but wouldn't invest there as things are now. We're currently located in Kingston and I've been looking at this market mainly. Anyone investing in this area here? With Queens University a LOT of the rentals are student oriented, but very few houses are currently for sale for this segment (4+ beds) and prices are quite high for old properties. I'm not sure either about how well things go with these kinds of rentals, if they are a lot of trouble...
I have a local realtor that found a few rentals and almost all of them can't break into positive cashflow, except one duplex that has been renovated in good part and might run me 115-175$/month. I'm still waiting to get numbers on another one which might also have decent numbers.
Anyone here in the area? I'd love to hear from you and your thoughts.
The inclusion rate used by residential lenders varies as does how they arrive at that rate.
A few years ago, I had compiled a spreadsheet capturing how our lenders were approaching rental income, so what I have below is most probably out of date:
Lender Income inclusion Notes
Scotiabank 70% Calculated as Income - 30% expense allotment
- property tax (unclear if this was included in the
determination of net income or deducted afterward)
Note: We placed two mortgages with CIBC this year and the inclusion rate was lower (around 65%) ... not sure if this is the new normal or because we are over their magic number of seven mortgages.
Property taxes and mortgage payment are deducted from the calculated Net Income to determine the debt coverage ratio from the lender's perspective.
It you are insuring the mortgage (say through CMHC) then lenders will use the CMHC guidelines which allow 50% of the gross rental income to be included.
Some lenders will use 50%, even if you are not insuring the mortgage ... and as credit tightens, more will move to lower inclusion rates.
Investor · Toronto, Ontario · Member since 2014 · 148 posts · 34 votes
9y
@Roy N. - I appreciate that thank you. You're the second person to mention CIBC now to me in the last week. I close on my third place this Friday and want to continue to grow but was worried about the income inclusion rates
When performing our diligence on a residential, we conservatively assume that the lender's inclusion rate will be 50%. If it is more, then the surprise is pleasant.
Other cautions:
We have encountered residential lendors who will not include revenue from tenants at will (i.e. verbally under the default periodic monthly tenancy) or even those on a written month-2-month tenancy. They will only look at annual leases.
We have also encountered residential lenders who would not include income from {technically} commercial properties {even one 5-unit which was financed using a residential mortgage}, but would include the debt.
Real Estate Investor · Owen Sound, Ontario · Member since 2013 · 53 posts · 25 votes
9y
@Justin H., I recommend talking to someone at Meridian about their commercial side. Even if you aren't large enough yet for them to consider you, it's worth sitting down with them to figure out how to get large enough over time. Once you move over to the commercial division, they drop the shenanigans and consider deals logically using the debt coverage ratio.
Real Estate Investor · Tennessee · Member since 2016 · 46 posts · 3 votes
9y
Hi everyone,
I grew up and lived in Brantford my whole life, before studying in Waterloo, and now living in London (England). My family is still in the city, and I have a student rental 5 minutes from campus.
I can attest that realtors have been contacting me regularly over the sharp increase in prices, opportunity to sell for much more than I paid, etc.
Let me know if you have questions about the city. I do have limited experience outside of Brantford, but also have close family in Hamilton, so I'm starting to learn more about that market as well.
Real Estate Investor · Sarnia, ON - Ontario · Member since 2016 · 16 posts · 5 votes
9y
Hey All! Southwestern Ontario here. Seems Toronto, Hamilton, & KW are covered by all you folks. I live & invest in Sarnia, Ontario....we believe it's a best kept secret where prices have remained lower than most. The problem with our city is that the local chemical & energy industry has diminished over the last 10 years going off shore. With that being said our local College has attracted so many more international students in the last 3-4 years. Although I don't dabble in student rentals (as of yet), I'm sure they aren't hard to fill. Sarnia is definitely worth a look, but don't tell everyone! It's a secret ;)
Contractor · Toronto, Ontario · Member since 2013 · 65 posts · 5 votes
9y
Toronto and GTA here, actually looking for fixer uppers right now. Currently own some buy and holds being rented also have have a connection in beautiful St Lucia if anyone is interested in buying there.
Specialist · Toronto, Ontario · Member since 2012 · 2k+ posts · 891 votes
9y
The real estate market in the GTA is so hot right now that the only thing on my mind is to get listings. Good luck paying fair market value of whats out there..
A very good play right now is development. Sounds expensive but you can always get a few people together.. I am talking about purchasing a property whether its raw land or a small bungalow on a 10 acre lot and change the use for a builder to build on.. Not as easy as I am saying it obviously..
Investor · Markham , ON · Member since 2017 · 7 posts · 0 votes
9y
Hi Everyone
My husband and I are from Markham and just bought our first SFH in London. Market is crazy there right now and am pretty sure we wont be able to afford again in a few years.
Right now I'm eyeing Sarnia and Windsor for the price point. Can anyone share info about tenant profile in these cities?
Real Estate Agent · Ottawa Ontario · Member since 2014 · 61 posts · 29 votes
9y
Hi @Velle So . Your tenant profile will depend of the property and location. I think this is the case in any city. You will get anything from 500 in low income areas to 1600 in popular neighbourhood. Hope this helps. If you have any more questions feel free to contact me.
semi retired · Toronto, Ontario · Member since 2015 · 17 posts · 4 votes
9y
To my fellow Canadian Investors,
I just closed on a four unit in Hamilton, Ontario and I am looking for a referral on a capable contractor who does work in the Hamilton area. Would be a rather big job - remodel of three units and adding a basement unit which is completely unfinished at the moment.
Winnipeg, Manitoba · Member since 2017 · 3 posts · 0 votes
8y
Hi everyone, what are your views on the GTA market? I am not a local but I have a rental house in Brampton.
My questions are
1. Are you guys are hopeful that property prices will hold steady or appreciate in next few years with interest rate rate on rice?
2. Is there anyone in for him who has properties in GTA bought in 2016 or 2017 that are positive cash flowing? If they are negative cash flowing, what is your strategy? Hold on as negative cash flow will be offset by strong appreciation in Toronto sooner or later. Any feedback will be much appreciated. Thanks.