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Is it time to invest? You want to jump into the real estate market, have you been sitting on some equity that you need to maybe move around? We have a great option for you as becoming a real estate investor. I have a special guest speaker with me today that’s gonna take us through some of the pitfalls and highs of investing in real estate. For all the details check us out at teamlogue.ca.
Hi name’s Miles Kulik mortgage broker with The Mortgage Group servicing over 2,500 clients over the last number of years and we’re looking forward to helping those investment clients that are available today. Morning Sarah here. I’m having my morning Starbucks with Myles a fabulous financial advisor a mortgage broker and we’re here to talk a little bit about investing. We have a lot of questions from our clients about how they can buy a rental property or an investment property there’s a lot of changes in our mortgage rules these days and a lot of variables that we’re facing with in the financial world of Ontario and buying and investing in real estate. So I’ve asked Miles to give us sort of some of the fear factors and some of the jump off points that people should consider before jumping in and just making that purchase.
As Sarah said there is that basically get your ducks in order it’s kind of there we’ve talked about that for a long time now but as rules have changed and the markets change it’s never been as important and we always say meet with someone financial advisor, mortgage broker to sit down and go over where do I stand today and build a plan you know we always call, I call it the roadmap to success you know when you’re building going on a trip you want to have your roadmap upfront and that’s the the key ingredient to success in the investment marketplace today. Sit down early and go over the math in front of you and making sure that you’re building that budget or business you know for success in the future.
So we have clients always say to us, “Sarah we own this property we have this much equity in this property can we easily take the equity out and buy say townhomes say condo like fabulous condo?” like this where we’re getting people to buy a new build can they easily take that equity out to buy the next property? You’re giving the equity other property is available to them there’s multiple ways to do it and it is easy there are ways to do it the nice opportunities are really people look at what they call lines of credits and basically what happens is that they have equity in the home they’re allowed to leverage up to 80% of that property towards a line of credit sometimes they take a mortgage sometimes it’s purely interest only it’s really how they want to organize that get out of that property.
Ok so what are some of the immediate changes that have affected people to getting that liquidity maybe as fast as we used to be able to get the equity. So as everything as the pendulum swings in different directions and definitely swung in one direction to make it a bit more difficult from the qualification perspective what’s happening now is we’re now seeing lenders change the criteria of how they calculate the debt and previously it was balance only. Right now they’re looking at limits and so that does come into play when we’re calculating what they call the total debt service which is basically all your debts combined.
“How much do I qualify for?” What we want to look at is you know what is the limit right how is that affecting us but the key ingredient to that though also is looking at the entire market who’s offering what to me? Where do I qualify for a certain percentage with different institution and making sure you’re looking at market read versus what institutions written and I think just to clarify that for people you should be shopping lenders and that’s why we always refer people to you. Yes all those lenders are really determined who’s offering the best package for what you’re trying to accomplish.
Yeah most definitely and again at one point I’m vanilla ice cream was you know is everywhere it was all over the place now we’re looking at we call it Neapolitan you know what I mean and I like to relate everything to food I love food so you know looking at it is that everyone’s offering a bit different and I really want what is the best for you and that’s the opportunity that you should.
Well we really appreciate the help that you provide our clients and guiding them and I think if anyone’s investing in real estate they should obviously hire professional mortgage broker to shop the best positioning for them.
With regards to do you have put more cash down, less cash down, what did your rental ratio and then obviously hire a professional agent right? Most definitely. Most definitely. We were talking with that just a little bit ago you know? Go to someone who actually is in the game, you know someone who invests in real estate, someone who’s invested in real estate in the past you know? They have the experience, not just the open the book and what is it gonna tell me is someone who’s actually felt maybe a little bit of pain to you know?
Yeah most definitely.
I think that real life experience has so much more value than just looking at what would it tell me in the book here. Absolutely we’re constantly trying to position our clients again great equity climb where they’re buying fabulous renters but to understand that it is it’s a long-term gain. Yes most definitely and you know and the point that you made a great point without even maybe the Americans but someone who that says, hey I can find the property I’ll put you in the right path with a very financial people I can help you look to lease to the right people give you the pitfalls of a renter you know what to look for what not to look for in a renter. That’s a full package and that’s that’s more so than just finding a home and then walking away from the product right. It’s a great time to be invested it’s more balanced is easier to buy a product right so we encourage our clients to get out there and start looking.
Never a better time than when the market is maybe a balanced situation versus I’m rushing into something, maybe the price is a little bit more than what the cash flow can get. A balanced market to me would say now I can find the right rental income to offset that debt. I have on a balanced market. Alright so it makes a lot of sense at this point we definitely have more properties available and more renters available so it’s time to be an investor. Most definitely.
Thank you so much your help today, I appreciate it. You’re welcome. Thank you.