looking to purchase rental property in Bradford

[crispino]

Hello, I have been reading Don campbells books and they are great and very informative.
My husband and I have put our first offer on a house in Bradford. We are very excited and scared at the same time..as this is our first. My question is should we use our home equity line of credit and put the full 20% down to avoid CHMC costs and mortgage the rest? or should we use our money as a down payment and mortgage the rest? or put as little down and mrtge the most of it?
Please advise and thanks.

 

[ToddEDM]

QUOTE (crispino @ Oct 10 2007, 09:09 PM) <br />Hello, I have been reading Don campbells books and they are great and very informative.<br />My husband and I have put our first offer on a house in Bradford. We are very excited and scared at the same time..as this is our first. My question is should we use our home equity line of credit and put the full 20% down to avoid CHMC costs and mortgage the rest? or should we use our money as a down payment and mortgage the rest? or put as little down and mrtge the most of it? <br />Please advise and thanks.<br /><br /><br /><br />
i too was wondering this... put just enough to keep CMHC out , or put as much as possible from HELOC

 

[markl]

This is a very specific question that can`t be answered without knowing details like income credit scores all that fun stuff as well as your intentions how long a hold period what is your exit strategy how many more homes do you plan to buy?

It also depends on the property ie what the rents are can they support the new CMHC rental mortgages or not.

This is where an experienced mortgage broker comes into play. If you would like you can email me and I can introduce you to mine who is also a REIN member

Regards,

Mark Loeffler
[email protected]

 

[EdRenkema]

Mark makes some good points re your personal situation.
Here is my 2 cents. If this is a rental you are buying and the cashflow will cover the expenses + mortgage + interest from HELOC then by all means use the HELOC. My strategy has been to pay down my personal mortgage as much as possible and use a HELOC to finance rentals (or any investment). This effectively makes your personal mortgage interest tax deductible.
Ed R

 

[timk519]

QUOTE (roadortrail @ Oct 11 2007, 01:57 PM) My strategy has been to pay down my personal mortgage as much as possible and use a HELOC to finance rentals (or any investment). This effectively makes your personal mortgage interest tax deductible. Not to mention that every dollar you pay in personal mortgage interest sucks up ~$1.40 of pre-tax earned income, while interest costs on rental property is paid with pre-tax money.

 

[crispino]

QUOTE (markl @ Oct 11 2007, 10:41 AM) This is a very specific question that can`t be answered without knowing details like income credit scores all that fun stuff as well as your intentions how long a hold period what is your exit strategy how many more homes do you plan to buy?

It also depends on the property ie what the rents are can they support the new CMHC rental mortgages or not.

This is where an experienced mortgage broker comes into play. If you would like you can email me and I can introduce you to mine who is also a REIN member

Regards,

Mark Loeffler
[email protected]

Well, this is our first, so hopefully we will be buying more rental properties. Our credit scores are good and we plan on holding the rental property for a couple of yrs, about 5..depends on the market of course. The potential rental income on the property is approx $2k a month. The mortgage pmnt would be about $1200 mnth// using our heloc as the down pmnt--then we would have to pay another $340 on the HELOC-- so total approx $1600 between the mrtge ane the HELOC-- what do u think???

 

[WSJ]

You need to add expenses like property tax, insurance, maintenance and 5% vacancy. If that still give you positive cash flow, then there is potential.

Other factors to consider (but not limited to):
location
potential for rent increse
any defer maintenance

Good luck,

Wen Jiang

p.s. You can email me if you need to: [email protected]

 

[DonCampbell]

Hi,

Grab your copy of Real Estate Investing in Canada, and in the back is a copy of the Proeprty Goldmine Scorecard as well as a Property Analyzer Form. (around page 240)

Using these tools will tell you whether the property is a good investment or not. Please don`t move ahead until you have done your complete due diligence and number crunching. Mortgage payments and Linces of Credit costs are just the beginning.

 

[MikeMcCrae]

There are no real simple answers to these pretty common questions. Everyones situation is different and requires a different plan. Haveing a very clear long term goal will help you work thru and find a lot of answers. Work with your broker to come up with a long range plan that looks at several scenarios.

 

[crispino]

QUOTE (DonCampbell @ Oct 11 2007, 02:48 PM) Hi,

Grab your copy of Real Estate Investing in Canada, and in the back is a copy of the Proeprty Goldmine Scorecard as well as a Property Analyzer Form. (around page 240)

Using these tools will tell you whether the property is a good investment or not. Please don`t move ahead until you have done your complete due diligence and number crunching. Mortgage payments and Linces of Credit costs are just the beginning.

We did our due diligence and the property will carry itself after expenses..so it looks ok..
We are approved for a mortgage for the property...my only concern was the down payment. I do want to avoid the CHMC cost..so I think it`s best to take the Down pmnt from the HELOC - we have factored the monthly pmnt in here as well..and the numbers still work.

So I hope this works...plus there are multiple offers on the house...so this is a great first time investment experience...on pins and needles..LOL I guess we will see what happens.

Wish me luck!

 

[askmer]

QUOTE (crispino @ Oct 11 2007, 07:37 PM) We did our due diligence and the property will carry itself after expenses..so it looks ok..
We are approved for a mortgage for the property...my only concern was the down payment. I do want to avoid the CHMC cost..so I think it`s best to take the Down pmnt from the HELOC - we have factored the monthly pmnt in here as well..and the numbers still work.

So I hope this works...plus there are multiple offers on the house...so this is a great first time investment experience...on pins and needles..LOL I guess we will see what happens.

Wish me luck!

I am about to do the same. However, when using the HELOC, don`t u pay a higher rate of interest than if u factored the cost of the CMHC mortgage into your mortgage ?? the interest on a mortgage is less than on a HELOC.