Amortization Periods

VancouverBC

VancouverBC

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#1
Nov 17, 2007
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#1
Hello folks,

I`m new to REIN but im learning a lot from reading the forums and reading the two latest books (Real Estate investing in Canada, and 97 tips). I also own 3 properties which do not have positive cashflow but I will change that with future investments as I become more educated through books, and REIN membership. Thanks for all the great info.

I have a question about amortization periods for fixed rate mortgages. (I did a search here, and in the books but found very little related to it). Are there any "rules of thumb" you follow when deciding on a 25 vs. a 40? I didn`t even know 40 was available in Canada until recently so its a new subject for me. Any input is much appreciated. Do we simply assume that we go 40 if its the only way to generate positive cash flow?
 
VancouverBC

VancouverBC

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#3
Nov 17, 2007
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QUOTE (RobMacdonaldCMT @ Nov 17 2007, 01:08 PM)
Hello,



Here's an answer that I had posted for another investor. It should answer your question.



http://myreinspace.com/rein_members_only/Financing/89-1529-long_amortization_periods.html



Feel free to contact me if you need more information.



Rob Macdonald

General Manager




Hi there,



I have not submitted the membership forms yet so I can't view the forum. But I do thank you, and will refer to that as soon as I have access (hopefully in the next few days).



Thank you
 
RobMacdonald

RobMacdonald

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Oct 16, 2007
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#4
Sorry about that. Here`s the copy.

There really are no limitations to having all your properties on 35 - 40 year ammortizations other than the fact that you`re paying more interest over the long term to the bank. This is one step up from paying interest only on a line of credit, and typically you can get a slightly better rate on a fixed or variable mortgage versus a LOC. The decision will really depend on your overall strategy as an investor. Are you looking for cashflow? Is captial appreciation your main focus? Are your debt service ratios tight, and therfore you need the additional cashflow to qualify for future deals?

These are all questions that a good mortgage broker should be asking you when you are looking for financing. Your financing should be in line with your long term goals.

Rob Macdonald
General Mananager
866-988-832
 
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