which lenders to use first

[andrewi]

Hi all,

I remeber reading/hearing from Peter Kinch that to save `cap space` you should borrow for your 1st 3 properties from a non-chartered bank. Did he men to include your principla residence as 1 of the 3 or can you do your Principal with a chartered bank and its your next 3 properties( rentals) that should be done with non-chartered banks.

I am now finally going to do this and I have to renew my principal residence now. I can get a slightly better deal with RBC with a re-advanceable LOC with similiar product from Firstline but with a few bass points higher on the variable and 0.5% higher on the LOC.

Any advice?
Thanks,
Andrew

 

[gwasser]

QUOTE (andrewi @ Nov 24 2010, 07:43 PM) Hi all,

I remeber reading/hearing from Peter Kinch that to save `cap space` you should borrow for your 1st 3 properties from a non-chartered bank. Did he men to include your principla residence as 1 of the 3 or can you do your Principal with a chartered bank and its your next 3 properties( rentals) that should be done with non-chartered banks.

I am now finally going to do this and I have to renew my principal residence now. I can get a slightly better deal with RBC with a re-advanceable LOC with similiar product from Firstline but with a few bass points higher on the variable and 0.5% higher on the LOC.

Any advice?
Thanks,
Andrew

Go talk with a mortgage broker = save money and set yourself up for multiple properties

 

[andrewi]

Thanks,

My current broker is suggesting Firstline but I was second guessing if that was what peter KInch meant as he had not said if the Principla residence was in the 1st three.


Andrew
QUOTE (gwasser @ Nov 24 2010, 10:13 PM) Go talk with a mortgage broker = save money and set yourself up for multiple properties

 

[bizaro86]

QUOTE (andrewi @ Nov 24 2010, 10:47 PM) Thanks,

My current broker is suggesting Firstline but I was second guessing if that was what peter KInch meant as he had not said if the Principla residence was in the 1st three.

Andrew

I`m not sure what Peter recommends, but I suggest you consider your own overall plan as well. If your intentions are to purchase 2 dozen properties in the next 5 years, then cap space will be an issue for you. If your goals only require you to buy 6 properties total, then one extra at the Royal might not be a big issue for you, and you might want to take the interest rate savings. Your broker might not be a disinterested party in this decision if it means the difference between getting a commission or not.

Of course, the best laid plans of mice and men are sometimes out of their control anyway. I bought my principal residence with a mortgage from a non-bank lender through a broker. That lender was purchased very shortly thereafter by Scotiabank, and merged in, so my principal residence mortgage is now with them, opposite of my original intentions.

Michael

 

[andrewi]

Thanks Michael,

I probably will do max 3/4 in 5 years. I did mention my rates at RBC to the broker and he is now looking around to see if he can match it elsewhere. He doesn`t get anything if I go to RBC. For one, he`s checking National Bank now.
Lets see what happens.

And, you`re right, a lot of stuff is out of our control. I just try to make the best decision I can with what info I have at the time.

Andrew

QUOTE (bizaro86 @ Nov 25 2010, 10:17 AM) I`m not sure what Peter recommends, but I suggest you consider your own overall plan as well. If your intentions are to purchase 2 dozen properties in the next 5 years, then cap space will be an issue for you. If your goals only require you to buy 6 properties total, then one extra at the Royal might not be a big issue for you, and you might want to take the interest rate savings. Your broker might not be a disinterested party in this decision if it means the difference between getting a commission or not.

Of course, the best laid plans of mice and men are sometimes out of their control anyway. I bought my principal residence with a mortgage from a non-bank lender through a broker. That lender was purchased very shortly thereafter by Scotiabank, and merged in, so my principal residence mortgage is now with them, opposite of my original intentions.

Michael

 

[2ndstory]

QUOTE (andrewi @ Nov 25 2010, 11:09 AM) Thanks Michael,

I probably will do max 3/4 in 5 years. I did mention my rates at RBC to the broker and he is now looking around to see if he can match it elsewhere. He doesn`t get anything if I go to RBC. For one, he`s checking National Bank now.
Lets see what happens.

And, you`re right, a lot of stuff is out of our control. I just try to make the best decision I can with what info I have at the time.

Andrew

Rates are secondary imo. Find a broker who is local for you and understands the market in your area. Ask the broker if they have any clients that are investors. Be up front with them and tell them you are planning to acquire more properties over time. I am very happy with the one I have now, but went through a couple to get to them. Peter Kinch`s book is great and has some good advice that will help you be able to ask the questions you should.

Nik

 

[bizaro86]

QUOTE (2ndstory @ Nov 25 2010, 12:20 PM) Be up front with them and tell them you are planning to acquire more properties over time.

This is an important factor. It depends how MANY more properties you`re planning to aquire. If this is the last property you`re ever going to buy and then you`re going into harvest mode, that`s different than if it`s your first property and you intend to buy 5 per year for the next ten years.

The right answer for each person depends on their plan.

Michael

 

[andrewi]

Thanks for the tips guys...I do wnat to get that book from Peter too

Yeah, I did tell him I wanted to acquire 3 to 4 in the next 5 years. But not if he has done this before. He seems to be in line with respect to setting it up with a re-advancebale LOC and talks about how we cna use that for the DP on future rentals.

Its just that I wasn`t sure if it mattered who the lender was for the 1st few properties.

Andrew

 

[kboughen]

FirstLine (CIBC) and RBC are both Charter Bank Lenders. If you would like the option to build a portfolio of up to 12 or 16 properties, it is important to consider Non Deposit Lenders (Merix, DLC, Street) for the first four purchases, the reason is these types of non bank Lenders are not able to work with you once you own 4 rentals. After these first four, you can then move to the Banks under portfolio financing rules

Even if you decide you will only own a few properties, and will only use Charter Banks, it is very important that every mortgage is structured in a way that will allow your ratios and DCR to qualify for future purchases.

 

[RobMacdonald]

If your plan is to buy 3 or 4 units in the next 5 years, you most likely won`t have any issues. If your plan expands after a few years, then you can look at moving the existing mortgages to a different lender in order to free up some cap space with a portfolio lender.

As mentioned above, your cap space alternatives are part of your overall plan and that depends on hwo you`re going to qualify for the financing. As you start out, make sure you`re working with a mortgage broker that has experience with real estate investors.

As an FYI, Firstline wouldn`t necessarily be my first choice for first property.