Tag Archives: First Rental Property

Items to Consider When Aquiring Rental Property

If you’re ready to purchase your first rental property or still on the fence asking yourself if you’re making the best decision, I am here to assure you that the choice to buy your first rental property is rarely a simple one but once you have done so, you’ll never turn back.
You’re probably asking yourself why should you listen to me, but I have purchased and sold over 10 rentals within the last year or two. I’m here to say that if I simply looked out for these particular 5 items which I will share with you, I would happen to be a much more content camper. Instead, I had to learn the difficult way, one building, and one tenant at a time.

 

These 5 essential items consist of:

 

 

 

What’s the expected profit from your rental property?
• First lets say that you’re taking a look at a duplex for $200,000
• Through your market research and also the details you obtained from your appraiser, you have determined that the current market rents for your region are X.
• Next you should have received a pro-forma associated with expense for the building consisting of the mortgage, insurance coverage estimate, property tax amount, utilities (in the event the renter isn’t having to pay them) and the property management expenditures.
• Your goal is to have this building placing Excellent Cashflow in your wallet from the first day.
• Not all areas are capable of supporting the rent necessary to cover the mortgage and the costs. My suggestion, don’t purchase within the areas where you know that this will not necessarily work. You are looking at places where you can have favourable cash flow, in the end you’re in this to generate income right?

 

Choose a neighborhood with lower vacancy rates compared to the remainder of the city.
• From my personal experience, it’s best if you look to invest in a rental home inside a healthier community. There are a handful of factors behind this; one is that you’ll be thinking about a greater rental payment as well as 2, the vacancy rates usually are lower.

 

Take your time in choosing a qualified tenant.
Taking your time and efforts to choose the right tenant will help you decrease risks in the foreseeable future. An even better qualified tenant also means reduced expenses along with problems as time goes on available for you, the owner.

 

For your first apartment or two, the house that you purchase ought to be in move-in condition.
• Since you will be active in making sure a home is completely leased out when you take control of it, the best thing that can be done is purchase a unit that’s move-in ready. Now I am not including the small work which includes making cosmetic adjustments for example cleaning or maybe painting a room or two nevertheless the changes should not include things like major fixes.

 

Purchase low and sell HIGH – continually be on the look out for properties that are listed under the current market price.
• Low sale price does not always mean low value or even low rents
• How do you find these types of deals? Ask. Ask every person you know. Take time to get acquainted with the location you are looking for.
• Be on the look out for pre-foreclosures, foreclosures, as well as homes that have been on the market for a year.
Ok now what do you do? Go obtain a rental unit naturally. Still need assistance figuring out what you can manage? Try out our handy mortgage calculator canada that can assist you calculate payment choices, schedule of payments and much more. Also, follow FamilyLending.ca on Twitter and facebook!

 

Mortgage Rates Stay Low – But For How Long?

 

Bank of Canada Governor, Mark Carney, confirmed on Wednesday that he has no immediate intentions to raise mortgage rates; however, Carney did confirm that “some” of the stimulus currently bolstering the system would be “eventually withdrawn.”

 Carney made these statements following the release of fresh data from the Canadian Real Estate Association stating that some of Canada’s urban housing markets are grossly overvalued. Even though the pace of Canadian home sales is currently in line with the 10 year-average, prices are continuing to escalate, rising a staggering 8.6% nationally during the month of May. Home prices are surging in cities like Vancouver, Toronto, and Montreal, which has Carney worried about unfounded excess.

 Factors Affecting the Surge

While Carney has been careful to avoid referring to the current housing market as a bubble, the signs all point to impending problems. Elevated levels of ‘multiples’ inventories, increased development, and heavy investor demand are three of the factors currently driving housing and condo prices through the roof. Unfortunately, information from Statistics Canada doesn’t support the current spike in demand. Recent stats show that the average Canadian families’ income (including earnings, investments, and private pensions) fell 3.2% in 2009, making it the first significant drop in market income since the early 1990’s. So who exactly is driving the demand for investment properties? Realtors point to an influx of foreign investment interest, specifically from Asian nations.

 Finding the Silver Lining

While many potential home buyers see the rise in home prices as an impediment to homeownership, it isn’t all bad news. Even though home prices are skyrocketing, mortgage rates have remained at historic lows… for now, at least. These lows can’t last forever, and if Carney’s comments are any indication of future increases, home buyers can expect hikes to come fast and furious once they hit. As long as mortgage rates stay low, Carney warns that Canadian financial authorities will remain vigilant and ready to move at the first sign of any imbalance.

 How to Take Advantage of Low Mortgage Rates

Borrowers with strong credit and stable jobs are in a prime position to save big by refinancing their mortgage in order to take advantage of record lows. While the low rates have sparked a surge in refinancing activity, many homeowners are oblivious to the fact that they could be saving more money on their mortgage. Homeowners throughout the country can begin their journey to lower mortgage payments online by answering a quick and easy mortgage pre-approval questionnaire. If you’re a first-time home buyer looking to purchase your first piece of real estate, don’t wait to secure your mortgage rate. The rate you see tomorrow could be three times higher than the current offer.

 As with any market, it pays to act fast. Now’s the time to review the up-to-date rates and refinance your mortgage.

 Chantielle Kennedy writer for FamilyLending.ca

Home Inspection Checklist for Canada

 

  • A home inspection by a qualified inspector is a vital step when buying any home. Before committing to a purchase, the homebuyer should hire a home inspector to ensure the home is in proper condition. Except in British Columbia, where licensing is required, home inspectors are not regulated in Canada. If for no other reason than that, it’s important that the homebuyer understands what she should expect from a proper home inspection.

Exterior

  • According to Griffin Home Inspection Services Inc., a Canadian home inspection company, homebuyers can expect a complete inspection of the exterior of the home and its functions. This includes the roof, exterior wall cladding, flashings and trims. It also includes anything else on the outside of a home, including doors, decks, balconies, rain gutters, retaining walls, driveways, patios, walkways, railings and steps. The final written home inspection report to the homebuyer should detail the condition of each of these things. The home inspector should inspect the roof by getting up on it—not from the ground.

Interior

  • The interior of the home, including floors, walls, ceilings, stairs, railings, the garage, countertops, cabinets, doors and windows will be inspected by the home inspector, and the conditions of each should be accurately detailed in the written report. The total time to complete a thorough home inspection is approximately two to three hours, and most of this time will be devoted to the interior and the systems of a home.

Systems

  • Homes are systems, not just walls and a roof. They have intricate components that keep them functioning, safe and healthy for the occupants. Systems examined during a home inspection include mechanical ventilation systems, air conditioning, heating, electrical systems and plumbing systems. If there’s a fireplace in the home, the chimney and flue must be inspected, as well as components of any gas fireplace or wood stove. The conditions of these systems will be detailed on the home inspection report.

Support

  • The support systems of the home will be inspected. This includes both the foundation and the framing of the home.

Repairs

  • The final written home inspection report should explain what repairs need to be made to the home, if any. Home inspectors will not perform repairs themselves. Be wary if a Canadian home inspector recommends a company to perform the repairs. This is forbidden by the Canadian Association of Home and Property Inspectors. An appearance of conflict of interest can place the credibility of the home inspector in question.

Mold

  • Home inspectors in Canada are not required to test for mold. Mold is a frequent problem in homes, and unsuspecting homebuyers risk buying homes that pose serious health risks because of toxic mold lurking in the walls. Most home inspectors in Canada will not pull back carpeting or drywall to check for mold. A 2010 Canadian Broadcasting Corporation investigative report said the company hired five home inspectors to inspect a home infested with mold, and no inspector found it.

Homebuyers wishing to be certain the home they are considering is not infested with toxic mold may need to hire a qualified mold inspector in addition to the home inspector.
Contact FamilyLending.ca for more information.

Home Inspection Checklist for Canada | eHow.com


Here Is A Method That Is Helping Home Owners Save Thousands On Their Mortgage

There is an age old debate that exists in the mortgage industry.  This debate is centered on what entity is the best mortgage provider.  Some argue that it is the major banks that are the best option, while others are convinced that the mortgage broker industry is the best bet.

 

The reality is that the average person has limited to no knowledge of the mortgage industry. As a result of this, they may believe that there are no differences between banks and mortgage brokers and the mortgage products that they offer.

 

In fact, it is no secret that sometimes the mortgage broker industry is looked upon as a sub par option when compared to major banks.  Unfortunately, the general public has a misconception that mortgage brokers are not looking out for the best interest of their customers.   This friends, could not be further from the truth.

 

I can tell you from my first hand experience that obtaining a mortgage through a mortgage broker, in most cases is the best option versus obtaining a mortgage through a chartered bank.  Here is the reason why:

 

Mortgage Brokers Work With Multiple Lenders

 

Mortgage Brokers like FamilyLending.ca have established relationships with multiple mortgage lenders.  It is not uncommon for a mortgage broker to know and work with 40 or more different lenders.  These lenders can be major banks, medium sized mortgage companies, or new, up and coming private mortgage lenders.  Because the mortgage broker, in this case FamilyLending.ca, has multiple relationships with a variety of lenders, they also have the ability to pick and chose mortgage interest rates and mortgage terms for their customers.

 

Mortgage Interest Rates Offered By Banks

 

If a customer obtains a mortgage from a bank, the bank is going to offer this customer their available rates on their mortgage products.  If the customer is not happy with the rate offered, and they are proactive enough to make a request for a reduced rate, chances are they may obtain a slight discount on the interest rate.  Please note though that just because the customer asks for the discount here does not necessarily mean that they will obtain it. 

 

Mortgage Interest Rates Offered By Mortgage Brokers

 

Due to the fact that Mortgage Brokers work with a large network of lenders, this allows them to have more flexibility when picking an interest rate for their customers.  For example, if a customer asks to have the most competitive mortgage interest rate currently available, chances are that the mortgage broker will be able to deliver on this for their customer.  This is simply achieved by the mortgage broker surveying their existing lenders in order to see who has the most competitive interest rate offer.  Once it is determined which lender has the desired interest rate for the customer, the mortgage would be set up through this particular lender.

 

Mortgage Terms Offered By Banks

 

The mortgage terms offered by banks are pretty much set in stone.  This is not necessarily a bad thing.  Banks are very much set on their ways and don’t easily deviate from their business strategies.    However, what this does mean is that there is very little to no flexibility at all when it comes to adjusting the mortgage terms.  Examples of mortgage terms would be things such as the maximum amortization allowed on a mortgage.  Most recently in Canada the maximum amortization length of a mortgage was reduced from 35 years to 30 years on March 18th 2011.  As a result, this means that most, if not all of the major banks in Canada will only be offering a maximum amortization of 30 years.  This is done by the banks in order to keep in line with the rule changes implemented by the Government. 

 

Mortgage Terms Offered By Mortgage Brokers

 

Again, due to the fact that Mortgage Brokers work with many different lenders, this means that they also have many different options in picking the appropriate mortgage terms for their customers.  For example, in using the example above, if a customer requests a mortgage amortization length longer than 30 years, chances are that the Mortgage Broker can deliver on this for their customer.  The Mortgage Broker is not limited to selecting the mortgage products for their customers from traditional lenders such as banks.  Therefore, they may choose to obtain the mortgage for their customer from a lender that offers amortization periods longer than 30 years.  There are still some lenders out there that are offering up to 40-year mortgages, despite the mortgage rule changes that occurred on March 18th 2011.

 

Overall, I am personally a fan of obtaining mortgages through Mortgage Brokers.  The majority of the mortgages that I have obtained have been through mortgage brokers, and I have been very happy with my decision regarding this.  I can confidently say that mortgage brokers have helped to save me thousands of dollars.  Not to mention, their advice has been instrumental in helping me to make thousands as well. 

 

 

 

Best Regards,

 

Neil Uttamsingh

 

Neil Uttamsingh is the President of First Rental Property.  He provides knowledge and confidence to individuals looking to buy their first rental property.  Follow Neil’s blog @ www.firstrentalproperty.com
Contact FamilyLending.ca for more information.