new investor with some questions

[Tmacwhirter]

Hey, I'm from Ontario and I'm very excited to buy my first investment property. I just finished reading the book Real Estate Investing in Canada and do have some questions though and would really appreciate if someone could help me out. Something I really have had on my mind is coming up with the funds to put that 20% down payment on each property. If I planned on buying many properties each year which are triplex's and bigger, how am I suppose to come up with 20% down on each property with my money? Or can you get that down payment from a bank and also get the mortgage? I'm in Niagara Falls, Ontario and was wondering if anyone on this site meets with any groups in the area. I would love to get to know some other investors to broaden my knowledge of the business.



Thank you, I really appreciate any of your help.

 

[housingrental]

1) Do not plan on buying many properties each year. One every many years is more than most people will ever have or need.



2) Plan on putting down more than 20% on each property.



3) Many investors get funds from:



a) Saving money from their personal / other business income / other business sale



b) Refinancing their investment properties



c) Raising funds from others



Take a read through additional REIN books for additional perspective.

 

[Tmacwhirter]

My goals are to build a large portfolio of investment properties. Buying one every couple years would not let me reach my goals. How do investors who buy many properties a year continue to find funds for the down payments?



Thank you for your reply

 

[Thomas Beyer]

[quote user=Tmacwhirter]Something I really have had on my mind is coming up with the funds to put that 20% down payment on each property. If I planned on buying many properties each year which are triplex's and bigger, how am I suppose to come up with 20% down on each property with my money?



...

My goals are to build a large portfolio of investment properties. Buying
one every couple years would not let me reach my goals. How do
investors who buy many properties a year continue to find funds for the
down payments?




Cash for initial house purchase(s) can come from a variety of sources:

a) Working, followed by savings.

b) parents / grandma / rich uncle etc.

c) inheritance

d) re-finance existing assets

e) credit cards / line-of-credit

e) luck / theft / gambling





Once you have bought a few, enhanced them, and sold them, possibly in 5 or 10 years, then (and only then) can you ask others to invest with you after you have demonstrated that you be prudent with your own money !



Thus,

g) OPM - Other People's Money



Reset your expectations to reach your goals. Don't expect others to fund your dream ! Help them achieve theirs .. and in return they will help you !



REIN provides a great real estate petri-dish but it needs some cash for the 2nd or 3rd or 4th home first.



Start with your own home .. it needs only 5%. More thoughts on this "how to get started" and "5 ways to make money" on my blog.

 

[invst4profit]

http://www.e-laws.gov.on.ca/html/statutes/english/elaws_statutes_06r17_e.htm



http://www.ltb.gov.on.ca/en/index.htm



http://ontariolandlords.ca/forum/





Creating wealth in this business is a very long and slow process initially requiring deep pockets. At least deep enough to get started on your own. Once you establish a proven track record you then may be able to attract OPM (other peoples money) to continue your growth.

The investor believing that a meteoric rise to riches is to be expected does not yet have a handle on the business. Give yourself 10 years to get established and then see where it will take you.



Along with your education on investing there are other educational tools essential to your survival. The first two links are mandatory reading. You need to know the regulations governing this business to avoid the pitfalls of the business and prepare for the inevitable "bad tenant" evictions.



The third link is a resource that will enable you to fast track with your understanding of the Ontario legislation. Reading and experiencing are two entirely different things. There is no need to learn from your own costly mistakes when you can learn from grass roots landlords on the ontario landlords forum. Operating in Ontario is different than every other provence so be prepared.

 

[Tmacwhirter]

Thanks for the help everyone!!!

 

[housingrental]

The question to ask your self is how realistic is your goal?



Do you have a lot of $ to start with? Do you have a lot of expertise? Why is that your goal? [quote user=Tmacwhirter]My goals are to build a large portfolio of investment properties. Buying one every couple years would not let me reach my goals. How do investors who buy many properties a year continue to find funds for the down payments?



Thank you for your reply

 

[jonathanb]

I found Peter Kinch's "Real Estate Action plan" to be a decent read. There is a fair amount of info on setting goals and raising capital.

It may be worth your while to check it out.



Good luck,

Jon

 

[stevegwhite]

Look into an owner occupied 4-plex (anything larger doesn't count) and you can get in with a lower down payment and easier qualifying. You can live in it for a few years then move into another one and rent out your old apartment.



If you don't have a house yet that's your best bet for buying big without much to start. You can take out as large an RRSP loan just before the deadline as you can and use your tax refund to pay back into the loan. Work a side job to pile as much into the loan as possible and you may find yourself with $25,000 quite quickly that you can use on an owner occupied plex unit with the governments first home program. Note, I bought a house this way, not a plex, so you'll need to find an experienced real estate investing mortgage broker to verify I haven't left anything out.



Also, look into niche areas of investing. Have you considered buying a smaller townhouse in St. Catherines and renting to Brock students? You'll find that fully furnished, clean units will often bring in more for the 9 months than a long term tenant. You'll want to screen carefully, find a safe neighbourhood and charge slightly higher rents to weed out the weeds. Offer more, but charge more and rent by the room. Just follow the laws for rooming houses.



Other than that, keep reading. Read everything including financial and
inspirational books (Think and Grow Rich, Richest Man in Babylon, As a
Man Thinketh, Who Moved My Cheese etc). And put together a great team and ask lots of questions.