Unique Financing Dilemma

[Neil1]

Hi Everyone,



A friend found a legal triplex to buy. Currently, the seller leaves in the plex and does not rent out any unit.

My friend plans to move in upon closing and do the same - not rent out any unit or maybe rent out just one of the units.



Can he put 5% down?



I heard 1 or 2 units - 5% down with CMHC is possible

3 or 4 units - minimum 10% down with CMHC is possible



If he moves in instead of renting out the triplex, can he put only 5% down as a primary residence?





Thanks,

Neil

 

[Sherilynn]

CMHC guidelines state that 10% down is required for owner-occupied properties with 3 or 4 units. It doesn't matter whether or not he rents out the other 2 units. So according to the guidelines, 5% down would not work.

 

[Neil1]

[quote user=Sherilynn]CMHC guidelines state that 10% down is required for owner-occupied properties with 3 or 4 units. It doesn't matter whether or not he rents out the other 2 units. So according to the guidelines, 5% down would not work.


A bizzare case then where hoping for illegality, praying the third unit is illegal so you can tell the bank you are buying a duplex, makes sense for the purpose of putting 5% down

Thanks,

Neil

 

[Neil1]

[quote user=Sherilynn]CMHC guidelines state that 10% down is required for owner-occupied properties with 3 or 4 units.



Are basement units counted for this purpose?

Say he moves in to a duplex with a basement unit.

so 3 units in total where one of the units is a basement unit and in one of the 3 he is going to live.

Would 5% down work?

Thanks,

Neil

 

[Dan Golby]

Why wouldn't he rent the other units out?

 

[Sherilynn]

[quote user=Neil1]Are basement units counted for this purpose?
Yes.



Except that in many municipalities, you are unable to legalize basement suites in duplexes, so you may want to check out your local regulations before proceeding.

 

[Sherilynn]

[quote user=DanGolby]Why wouldn't he rent the other units out?


We started by buying suited properties for low money down and living in one suite while we renovated the other and then rented it out. At one point we decided that it was unreasonable to subject tenants to the noise of our rambunctious children, so we left the suite vacant until we bought another residence.

 

[Thomas Beyer]

It is a legal triplex ? Or a duplex ? Or single family house with additional units that could be rented ? Can he qualify not using any rental income ? Renting " illegal " units is quite common and widely tolerated. What is the zoning for this property ?



also: 5% down with CHMC fees and closing is essentially 100% borrowed and as such a high risk strategy to start with. Perhaps try a bank with 10% down anyway! perhaps with some gifted $s from friends or parents , or some " cash back " mortgages.

 

[Dan Golby]

[quote user=Sherilynn][quote user=DanGolby]Why wouldn't he rent the other units out?


We started by buying suited properties for low money down and living in one suite while we renovated the other and then rented it out. At one point we decided that it was unreasonable to subject tenants to the noise of our rambunctious children, so we left the suite vacant until we bought another residence.




Good point, forgot about the renovation factor!