Money to invest, little income -

[brucetrott]

hello,

I`ve had a look on the beginning and getting started posts here and appreciate the advice. I`d also like some advice or a reality check, or both.

my situation is that my wife and i have about $150k in liquid assets that we`d like to start investing in real estate. The catch is that our income at the moment is about $30k. I`m not working, although I plan to start soon, and we would at least double, probably triple or quadruple when I do.

My idea is to buy as many rental properties (houses that have been turned into rental units) with the smallest down payment possible, and have the rent cover the mortgage. I`d prefer the type of property that has a basement + main + 2nd level unit split.

we live in toronto where house & rental prices are high. I would prefer to purchase in Toronto but also been looking in London & Guelph.

The 5% downpayment thing for homes in Toronto is a non-starter due to housing prices here, but might be possible in those other cities.


Given our low income, will this be possible? Or is it a bad idea? What kind of financing would be available?

 

[housingrental]

A few thoughts:

You won`t be able to put down only 5% - rules have changed

Even in London and Guelph you`ll have hard a hard time getting much cash flow from smaller properties - maybe a few hundred a month when things go well and negative when repairs and vacancies occur.

You might have some difficulty in obtaining desirable financing with a $30K income...compare options and costs but it might be desirable to partner with someone on a property who can access loans at cheaper rates.

 

[Sherilynn]

I am unsure if forum members have access to the Joint Ventures section of this website, but that is something you may want to consider. In a joint venture, there is usually a money partner and a real estate expert partner, and both share equally in the profits (or losses) from cashflow and the eventual sale. Some JV partners will need you to be able to qualify for a mortgage, but some (such as myself) will not.

An added bonus is that you are not limited to investing in your geographical area because usually the money partner is pretty hands-off. The money partner would get regular updates and reports, but would not need to ever visit the property or have any contacts in the area (such as contractors, lawyers, etc) to complete the deal or manage the investment. So you can invest in any city or town in Canada.

For example, there are several Alberta cities that rate among the highest in the world for real estate investing. JV`s can open those doors for you.

(BTW, Edmonton has an excellent secondary suite program. I have legalized a few basement suites and there are millions in City grant money still up for grabs.)

Regards,

Sherilynn

 

[NeilUttamsingh]

QUOTE (brucetrott @ Aug 22 2010, 02:05 PM) hello,

I`ve had a look on the beginning and getting started posts here and appreciate the advice. I`d also like some advice or a reality check, or both.

my situation is that my wife and i have about $150k in liquid assets that we`d like to start investing in real estate. The catch is that our income at the moment is about $30k. I`m not working, although I plan to start soon, and we would at least double, probably triple or quadruple when I do.

My idea is to buy as many rental properties (houses that have been turned into rental units) with the smallest down payment possible, and have the rent cover the mortgage. I`d prefer the type of property that has a basement + main + 2nd level unit split.

we live in toronto where house & rental prices are high. I would prefer to purchase in Toronto but also been looking in London & Guelph.

The 5% downpayment thing for homes in Toronto is a non-starter due to housing prices here, but might be possible in those other cities.


Given our low income, will this be possible? Or is it a bad idea? What kind of financing would be available?


Brucetrott,

Sometimes when you look at your `big picture`, the decision making process becomes easier.
As Adam mentioned, you cannot do 5% down payment anymore.

You mentioned that you want to buy several rental properties.
A reality of this is that either you and your wife, or someone else (mortgage partner) is going to have to qualify for a mortgage(s).

What is your `big picture`? Do you want to work with mortgage partners/jv partners right off the bat, or do you and your wife want to build things at first on your own.

Being clear on these details will help you with your decision as to what you do.

Perhaps you wait until you are working again, so that you have a higher combined income, which will help with regards to obtaining financing.

Best Regards,
Neil.

 

[Thomas Beyer]

QUOTE (brucetrott @ Aug 22 2010, 11:05 AM) ...

The 5% downpayment thing for homes in Toronto is a non-starter due to housing prices here, but might be possible in those other cities.


Given our low income, will this be possible? Or is it a bad idea? What kind of financing would be available?

20% down is required these days for investment properties !

Add`l thoughts - give your low income: Make some more income/money. To do that: Work hard. VERY HARD. Become the best in your ASSIGNED TASK. That task is VERY small in the beginning. Show that you can do more than what is asked of you .. but do what is asked of you EXCEPTIONALLY WELL (most fail there as they envision flying Donald Trump`s jet .. but fill in the paperwork sloppily for the first MLS listing .. !!)

Get a mortgage broker on your team ASAP to give you an idea of mortgage with your low income .. as some (but not all) of the property rent will be credited for add`l mortgage !

Become educated.

Do 3 deals minimum with your own money or with money of people very close to you (grannie, uncle, dad, ..)

Buy your own home first and sub-let rooms/basement ! Ideally a crappo that you can fix up and add some value .. in a decent location. Then sell and do it again with a slightly bigger home. This tax free approach to wealth creation will take about 6 years doing 3 houses with one house every 2 years !


Related reads:


5 ways to make money http://myreinspace.com/public_forums/General_Discussion/61-3347-5_ways_to_make_money.html

Do what you love: http://myreinspace.com/public_forums/Real_Estate_Discussion/62-16722-Love_what_you_do_-_Do_what_you_love_.html

How to get started http://myreinspace.com/public_forums/General_Discussion/61-4391-How_to_get_started_.html

How did I get started: http://myreinspace.com/public_forums/Real_Estate_Discussion/62-15422-Is_my_goal_of_200K_annual_income_feasible.html