- Joined
- May 8, 2019
- Messages
- 51
In my understanding, it's critical for a real estate investor to find a mortgage broker or banker who is prepared to include the rental income in calculating the TDS.
As we invest in more properties, part of the wall we may hit is this TDS obstacle (to have more mortgages) but in my understanding, it won't be the case if the lender includes the rental income in calculating the TDS.
Also the 110 Percent Rule as explained by Campbell, Don R.. in his book "Real Estate Investing in Canada" (p. 178). Wiley. Kindle Edition.
Am I right to think like that? So it's fundamental to invest only in properties which will bring positive cash flow to grow our properties' portfolio?
TDS formula = Total Debt Service Monthly Payments / Your Monthly Income
As we invest in more properties, part of the wall we may hit is this TDS obstacle (to have more mortgages) but in my understanding, it won't be the case if the lender includes the rental income in calculating the TDS.
Also the 110 Percent Rule as explained by Campbell, Don R.. in his book "Real Estate Investing in Canada" (p. 178). Wiley. Kindle Edition.
Once you have three properties, certain banks will consider your properties as a portfolio, and will analyze them as a group. They are looking for one key number—the number 110. They want to see rents that total 110 percent of debt expenses (mortgage payments + property taxes + condo fees). If they do see 110 or more, they no longer include these mortgages into your personal debt service calculation. And suddenly, your debts-service ratio drops dramatically, leaving you with the option to purchase many more properties.
Am I right to think like that? So it's fundamental to invest only in properties which will bring positive cash flow to grow our properties' portfolio?