Buying Your First Investment Property

Are you thinking of buying an investment property? There are many things to consider when buying income-producing properties, and it’s important to do your homework!

Here are some things to keep in mind before you begin your search.

Finances

Did you know that qualifying for an investment property mortgage isn’t the same as qualifying for the mortgage you would borrow for your primary residence? Unlike the minimum down payment you have to make on a home that serves as your primary residence (5%), the minimum down payment you will have to make on an investment property is 20%. In addition, the “20% rule” for CMHC insurance does not apply to investment property mortgages, which means you have to purchase CMHC insurance whether you put 20% down or not. [Learn More] 

Understand the Residential Tenancies Act of Ontario (RTA)

With great power comes great responsibility! As a landlord, you’re going to have extra responsibilities, and you must become acquainted with, understand, & respect the Residential Tenancies Act of Ontario (RTA).

Enjoy Being a “Handyman”

When you become a landlord, you are responsible for making repairs. It’s important to have enough savings on hand to handle any unexpected repairs and expenses. This means you may have to deal with late night phone calls when there’s a plumbing disaster!

If you don’t feel as if you can deal with these problems on your own, you can hire a property manager/management company to take care of everything – keep in mind that this can eat up around 10% of the monthly rent.

Income Variance

Unfortunately, there’s no pause button on bill payments. Tenants will come and go, and it may take a while to rent out a newly vacated unit – especially if it needs substantial repairs or refurbishing, reducing your income. You will still have to pay all bills, including the mortgage, property taxes and insurance.

Start Small

Purchasing an investment property can be overwhelming, but it can also be a fantastic way to invest your money and generate income when you’re ready for this big step.

Larger properties can present bigger challenges. Consider starting small – purchase a single apartment, condo, or duplex for example. This can help you get grounded in the idea of investing in real estate and decide whether it’s the right step for you!

As an experienced REALTOR®, I can help guide you through every step of this exciting and enjoyable process! Contact me today!

References:

The Ottawa Citizen: http://ottawacitizen.com/life/homes/advice-from-a-realtor-buying-investment-property-do-your-homework

RateHub: https://www.ratehub.ca/blog/what-potential-buyers-need-to-know-about-investment-property-mortgages/

Canada Mortgage Company: https://www.canadianmortgageco.com/8-things-will-need-to-qualify-investment-property-financing-ontario/

US News: https://money.usnews.com/investing/articles/2016-03-10/8-things-to-consider-when-buying-investment-property

Forbes: https://www.forbes.com/sites/forbesrealestatecouncil/2017/09/11/seven-things-to-consider-when-buying-an-investment-rental-property/#39caa4426dad

Why A REALTORS® Guidance Is Needed More Than Ever

New year, new mortgage regulations. Throughout 2017, Canada’s largest markets experienced record-breaking activity. Tougher federal mortgage regulations took full effect on January 1^st 2018, decreasing affordability for new borrowers, and contributing to slower selling conditions.

GuidelineB-20 is anticipated to have the most impact, as all new mortgage applicants must undergo a stress test regardless of their down payment size. In past years, buyers with a down payment of less than 20% were subjected to a stress test, which requires the buyer to prove they can carry their monthly payments at either their contractual rate PLUS 2% or at the Bank of Canada’s benchmark rate – whichever is higher. Now ALL buyers will undergo the stress test – whether they put down 20% or not.

As Canada’s “big six” lenders (National Bank of Canada, Royal Bank, The Bank of Montreal, Canadian Imperial Bank of Commerce, The Bank of Nova Scotia, and Toronto Dominion Bank) hike their five-year posted and prime rates, that criteria benchmark is expected to get even steeper, increasing to 5.14% from 4.99% upon news of the Bank of Canada’s January rate hike.

While it is always our role as a real estate agent to help clients navigate the market, solid guidance is needed more than ever this home buying season.

Find out more by reading Penelope Graham’s article via Real Estate Magazine online.

Spotlight on the Services of the Quinte Humane Society

Our Community Spotlight would like to honour the good work of the Quinte Humane Society, a non-profit community animal shelter that serves Prince Edward and Hastings counties. They house more than 2,000 sick, neglected, injured and homeless animals each year.

About Quinte Humane Society

Quinte Humane Society was founded in the early 1970s and has been affiliated with the Ontario Society for the Prevention of Cruelty to Animals since 1993. They provide a haven for animals while preparing them for adoption and helping connect them with their forever homes.

Adoption Information

Families who are seeking a pet for adoption can provide a stable, loving environment for their animals. They have adoptable dogs, cats and other animals such as rabbits. For those interested in adopting, the first step is to fill out the society's adoption questionnaire. Next, an adoption counsellor will be in contact to learn more about the individual's ideal pet, their lifestyle and other information that will help them find the perfect furry friend. The shelter will also arrange a meet and greet for the animal with the entire family, including any other pets in the home.

Donate Your Time

For animal lovers, volunteering at the Quinte Humane Society is an outstanding opportunity. The shelter relies on volunteers for many aspects of its operation, including assisting with animal care, walking dogs, running twice monthly bingo sessions and helping with fundraisers and special events. To get started, simply email the shelter or visit them online today to become a volunteer. By volunteering, residents in and around Belleville can help animals in need, give back to the community and connect with other volunteers.

Every animal in need deserves a loving forever home. If you're interested in purchasing a home in the area, consider the services of Marlene Letourneau, a Pawsitive Property Representative. Take advantage of her 13 years of real estate experience, as she guides you through every step in this sometimes complex process. Learn more about her available services by exploring testimonials from Marlene's satisfied clients.

Marlene's Tips for First Time Home Buyers

First-time house buying can be a dark and scary for many – where do you even begin and what should you plan for financially?

It’s no secret that the housing market in our region is going through a major shift and as a Realtor, I can tell you, we haven’t been this busy in a long time. With Spring around the corner, activity in our market will begin to grow. As a Real Estate Agent that has been working in the Quinte Region for more than 13 years, I thought it would be helpful to provide a brief high-level overview of what you should consider before entering the housing market for the first time.

To see my tips, head over to a special article here.

You can also visit me online at www.whenareyoumoving.com.

Marlene Letourneau, Real Estate Representative for Exit Realty Group