All Forum Posts by: Jan Walczak

I'm in process of wanting to tear down an existing old home to build a new one. The old home has a mortgage on it. What are the steps to take with your bank? I'm assuming you would have to inform them of your decision and then insurance would no longer be valid but how does the process work? 

Scenario:

Current home value: 1m

Mortgage: 650k

Construction: Will be financed through HELOCs + Cash (I will NOT take a construction loan)

New home value: 1.5m

I'll keep the numbers simple to better explain my question.

I own a 1m home with a mortgage of 400k in Toronto (60% equity). There's 600k I would like to get access to.

- Is there a general rule or ratio at which you should withdraw equity (Refi / HELOC)?

ex 1) 50% ratio (I get 100k from bank - Mortgage is now 500k)

ex 2) 60% ratio (I get 200k from bank - Mortgage is now 600k)

The reason I ask is as far as I understand the more equity you have stuck inside your home the less your money is working. Is there a ratio you follow to ensure optimal usage of home equity?

@Theresa Harris Thank you for clarifying. This particular property has been a rental for less than a year. So to your previous note in a different situation there may be no point of moving if that property has been rented for a very long time. Going back to my question regarding documentation. If all a persons documentation, health card, drivers license, bills, all is connected to that address could he/she in theory claim it as principal residence? I'm inquiring into how CRA do their due diligence.

Hi everyone,

I'm considering selling one of my properties next year but would like to sell as principal residence to avoid capital gains tax. What documentation/proof do I need to provide CRA as means of proof? 

Ex.

- drivers license

- bills (gas/hydro)

Of course I would have to move in to this property as well. Could I still have a lease and tenants living with me?

Hi Joseph,

Given the current state of the GTA, finding cashflow is possible but difficult. I have friends looking in London and Hamilton. Most opportunities will involve a reno. Aiming for breakeven could also be a move you could consider as appreciation the last few years has been significant so if you carry your property rented on break-even you will have opportunities to take out money in a year or two via HELOC or Re-Fi to further your investments.

Hi everyone! What are your SCALABLE STRATEGIES for repeat real estate investing without renovations? ex. only buying condos or ready to rent homes.

Do any of you have recommendations on SCALABLE STRATEGIES for repeat real estate investing without renovations? ex. only buying condos or ready to rent homes.

I’m primarily trying to understand how to do this in the Toronto or nearby areas market. From my research I know you can do:

1. Buy, rent, save up for next down payment (20%), repeat. Seems slow as it depends on you having income for the down payments.

2. Buy, reno, rent, refi, repeat. I myself or my nearby circle do not have contracting experience so this particular route is difficult.

3. Buy, rent, refi. I’ve read about re-financing once equity builds and then using those funds to purchase. Is there a hard figure at which you should refi? Ex. x% equity built, then re-fi?

Any others?

I’m a beginning investor in Toronto, Canada. One strategy I’ve read people recommend is: Buy, rent, refi. Re-financing once equity builds and then using those funds to purchase however I’m not understanding the finances behind it.

Here’s a hypothetical example (Actually based on a home purchase by one of my friends in the junction):

Original purchase price: 450k

New value: 950k

HELOC available: 280k

Even if you took the HELOC out for the next property (ex. a 500k purchase) you're now paying interest on the mortgage and HELOC simultaneously. Rental income in the GTA will rarely cover both. You'll be cashflow negative equivalent to the interest of the HELOC.

Purchase price: 500k

Heloc: 120k (20%) - approx $500 monthly interest

Mortgage: 380k - Approximately approx $2000 monthly interest and principal

All other operating costs (condo fees etc.): $1000

In this scenario let's imagine that you might be able to get 3k (doubtful but lets dream!) in rent, that HELOC puts you -$500 monthly as your total costs are $3500k. In summary I'm not comprehending how using a HELOC as downpayment works financially as you're hit with interest on all capital in the property.

Hi everyone!

What do you use for financial analysis to define ROI? A google spreadsheet, online tool, website?

What do you consider a good ROI for investment? 10%? 15%?

Curious to understand this as well. There's only so many mortgages you can take. Once you've taken a few, your debt ration is through the roof and you can no longer borrow money.