Category: Investing

Points to Remember Before Investing in Real Estate

  1. Location: The value of a property is estimated by its location. So, make sure to have the clear picture of the location. Investors should take time to research the locality. Get a decent idea of the locality and see if it suits your purpose or not.
  2. Legal Issues: People often end up buying property that comes with legal issues. So, before considering the investment you must ask for the legal documents to get assured that it is free from any kind of mortgage related issues. The buyer should not have any fear of third party claimant. Also, find out the registered owner of the property and be sure to get the true copy of the land title.
  3. Property Rates: Due to booming real estate market the prices of property has soared to great heights. You might end up paying more for a property that is readily available in the nearby area at a lower price. So, you must do compare property rates of the locality before taking the final call.
  4. Start with more focused investment: First have a clear idea of the kind of house you are planning to buy then make up your mind to invest money. Set your

Apartment Investing Boom

The age of these people who are renters is about 18-35, and in the next 10 to 15 years, the number of people in this age group is going to increase by five to seven million, which means apartments are going to be in even more demand than they are currently. Signs are definitely showing apartment investing to be a wise choice for people interested in commercial real estate investing.

Apartments also make an excellent source of income as well because you can have multiple renters under one roof, but only one building that you have to maintain. Also, the value of apartments is based on your net income, so whether the income increases or the expenses decrease, you will still be making money on them. If you pick good areas for your apartments, usually the rents will rise as well, which means you will make even more money from those apartment buildings over time. It is also relatively easy to get funding for apartments as well.

Knowing Where to Buy

Of course one very important thing that is essential if you are planning on investing in apartments is to know where you need to buy. When purchasing apartments, you …

Mortgage Investing

Many Canadians who have owned a home for a number of years have seen the value of their home rise at the same time that they have been chipping away at their mortgage. The result of this is many Canadians who may be cash poor, but equity rich. One mistake many make is that because they don’t have cash to invest (in real estate, especially after recent changes in Canada upping the minimum down payment for a rental to 20%), they won’t be able to purchase a property. However, if you own a home and have equity in it you may be pleased to find out that you can access funds to invest.

You just need to utilize the power of leverage better. So how do you do that? You already have!

When you purchased your home, you more than likely had a deposit of 5%-10% and had a mortgage for the balance. You used “OPM”, Other People’s Money, and started to build value in that investment. Keep in mind, your investment did not appreciate based on just what was borrowed, but on the value of your home (i.e.: $ 5000.00 down on a $ 100 000.00 home you are …

Identifying Investment Opportunities

Look At Historical Prices

Your aim with real estate is always going to be to buy as low as possible, so it is a good idea to have a look at the historical trends of an area you are considering investing in. This way you will have an idea about what you should be expecting to pay and will thus be able to spot a bargain.

In particular, you want to be aware of how much a property can sell when the market is at its peak, so you can get a good idea of how much profit there is to be made and how long you will need to wait until you can achieve that price again.

Analyse Profit and Risk

Never go into an investment opportunity without having first analysed the risk that is involved and comparing it to the potential profit that can be made. Ensure that any building you purchase has been thoroughly examined and you know about any issues so that you can account for them in your budget.

You should always have an estimated profit figure in mind whenever you make a purchase and you should know exactly what you need to do to …

Investment Property Loan Types

Residential Property Investment Loans

Residential property investment mortgages have similar qualification guidelines as standard owner-occupied mortgages. Although, they do have higher down payment and credit score requirements. Below is a summary of the general guidelines for residential investment mortgages.

  • Credit Score Requirement – The minimum credit score requirement is typically 680 or above for investment mortgages.
  • Debt to Income Ratio – Typically, the debt ratio limit for an investment mortgage is 40% of the borrower’s verifiable income. Besides W2 income, the borrower’s last 2 years tax returns will be needed to calculate the income that can be used from other rental properties or other sources of income.
  • Down Payment – Investment property mortgages require at least 15% down, but the down payment requirement increases with lower credit scores and the greater the number of units in the property.
  • Income – Lenders typically will only use rental income if the borrower has a two-year history of owning rental properties. This is usually documented via the tax returns and schedules.

Commercial Property Investment Loans

Commercial loans typically have higher rates, greater fees, and shorter terms than residential mortgage. The two most important factors for lenders on this loan type include: a positive …

Property Investment Deal

Get inside information

Competing real estate agents who are working an area are some of the best sources of inside information. Doing this kind of leg work pays off. When you are scouting a location, you can learn a lot about the property you are in interested in by asking them about what’s currently in the market. Moreover, aside from the address you wish to acquire, you will also get plenty of information about the neighboring properties. As a result, you have enough data to determine whether you are purchasing the property you have in mind, and if there are better options you are not previously aware. Make sure that the real estate professionals you speak to are trustworthy and have established a good reputation.

Work with a proficient property manager/licensed real estate agent

While doing your own homework, you will still benefit from hiring a licensed real estate agent who can provide advice, and guide you through the process as well. If you are investing on a property because you want to rent it out, they can also provide you with relevant information regarding property law. Later on, these experienced property managers can help you understand the details of …

First Home Investors

Educate Yourself

Learning about the property market is a must if you want to be involved in buying and selling real estate. Apart from researching information on the internet, you can also make personal visits to areas you would like to invest in. Get in touch with the locals there, real estate agents and property managers and ask them about amenities, vacancy rates and home values.

You also need to attend open homes and auctions to get first hand information about property prices and the types of homes that sell in your preferred areas. Make sure that you buy a property in a high-performing area where growth will be consistent moving forward.

Manage Cash Flow

Proper management of your funds is also a must. Being a first time investor, you need to be careful about how you spend your money and manage your income.

If you want to rent out your investment property, how are you going to cope with interest rates and when you can’t find tenants. Determine the possible income you could generate and foresee expenses ahead of time. Consider long vacancy periods, unexpected maintenance costs, upgrades and higher insurance premiums.

Think Long Term

When you’re preparing to …

Investing in Apartments

Many investors have thought about apartment buildings, but just do not know where to start. They have perceived barriers in their way, and simply never get started. This is a shame because apartments are one of the most profitable places you can invest, and one where you can start with very little, and grow your wealth fast.

I have worked with some of the top apartment owners in the country, and they all share several common traits.

Here are the most important things you need to keep in mind when investing in apartments:

  • Always be learning.
    All of the most successful investors I know are constantly working on their education. They are also all voracious readers and read several books per month. This commonality is not at all surprising because it is a trait found in successful people in all areas of business. If you are serious about getting started investing in apartments and becoming a success, you will need to dedicate yourself to education on the subject. Sign up and read the industry trade magazines. Attend the seminars and trade shows that you find interesting. Continue to read books not only on real estate, but other business, finance,

Mortgage Options For Investment Properties

  • Loan Terms – Only 15 and 30 year fixed rates or 7 or 10 year ARM products are available for investment properties.
  • Down Payment – The down payment requirement can range anywhere from 15% to 25%, which is determined by the borrower’s middle credit score, number of properties owned, and type of property being purchased.
  • Credit Score(s) – Investment loans typically require a middle credit score of at least 700. When an individual has a middle credit score greater than 740, they will likely be offered better rates and terms.
  • Number of Properties – Lenders will typically offer financing to individuals who currently have 4 mortgages or less. Financing is available for individuals who currently hold 5 to 10 mortgages, but they will have to meet additional restrictions and requirements.
  • Rent Loss Insurance – Lenders will typically require proof of six months of rent loss insurance for each investment property they finance.
  • Reserves – Lenders will require a minimum of six months mortgage payment reserves for each investment property they finance. If an individual currently has less than four mortgages, they will typically only have to show an additional two months reserves for each of the other rental properties that

Reasons Apartment Investing Makes Perfect Sense

  • Less competition. The same irrational fear of larger numbers that keeps some investors away from apartment buildings also gives the advantage to the investors who do seek the knowledge and take action in this market. It keeps the lower-level investors away from bidding on deals.
  • Less owner management. Because of the higher margins, it is often advisable to hire professional third-party and reputable management companies that are familiar with the day to day maintenance and management of properties. This luxury is often not affordable to the owners of single family real estate.
  • Lenders are on your side. In single family homes, lenders often only care about the comparable sales and appraisal to determine the value of your investment. They are not “as” concerned about the financials as they are in multifamily real estate. This is good news for you because lenders will scrutinize the numbers as hard, or harder, than you will and if the deal does not make sense, many will not make the loan for you in the first place.
  • Higher “return on energy”. Due to the nature of commercial real estate, securing a property with 25% equity in a $1 million building is equal to $250,000. Conversely,