Finding the Sweet Spot!

Please enjoy the following article from Canadian Real Estate Wealth

New investors are always looking for advice on the best place to start, and invariably, writes industry vet Paul Kondakos, the six-plex comes into view.

Given the current Canadian economic and institutional landscape, might I suggest “starting with six,” six-plex, that is.

I think that the purpose built six-plex offers new investors their best opportunity to become a real estate investor as it sits in the sweet spot of a Venn diagram, where those three circles overlap. The number three, in fact, represents  the key things going for six-plexes.

Manageability

Most new investors want to be involved with their real estate investment as they see it being a new adventure (and rightfully so), they want to gain valuable knowledge and experience and they want to save the costs associated with hiring a superintendent and/or property manager. Managing six units may seem like a daunting task at first, but once you dive in, you will realize that it is not all that difficult as long as you are a well-organized individual who has a few hours to spare every week. While managing one unit (eg. condo) is an easier task, the superior return from a six-plex more than offsets the extra effort. Tips to help with efficient management of the property include:
•  Ensure close proximity to property
•  Try to get post-dated cheques from tenants
•   Prepare a list of contractors (plumber, electrician, handyman)

Cap Rate

The cap rate for a multi-unit residential property typically has a directly proportionate relationship between the number of units and cap rate (until it reaches a plateau and levels off). For example, the cap rate for a six-plex is higher than a triplex, which is higher than a single unit. While geography and location play a critical part in determining the cap rate for a typical six-plex, it is safe to say that the cap rate range is somewhere between 5 per cent to 6 per cent, which is significantly better than most condos and triplexes.

The six-plex lets real estate investors start to take advantage of economies of scale and thus provide a better return. Tips for those looking to maximize the return on a six-plex:
•   Look outside the big urban centers and look to smaller towns university towns such as Kitchener-Waterloo, Guelph, Hamilton, etc.
•  Look for purpose built six-plexes as they have better re-sale value and typically require less maintenance

Low Interest Rate

A low interest rate is the lynchpin to making the six-plex the best place to start for new investors. The math is simple, the cheaper your mortgage interest rate, the bigger the potential spread (difference between interest rate and cap rate) and bottom-line profit. Mortgage rates vary based on whether a property is classified as “residential” or “commercial” and a six-plex is financed as a commercial property as a rule.

We have some great deals on commercial mortgages, so contact us if you would like to know more.

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Rentals with 10% Only Down Payment!

Since the implementation of Bill B20 it has been mandated that investment property will now require 20% minimum as a down payment.

But here at Mortgage Intelligence Oshawa we are able to offer 10% down to our top tier clients for purchases in Durham Region.

If you have excellent credit, experience buying and holding rentals and you have the down payment from your own resources we can look at your application with only 10% down. So don’t let the lack of a larger down payment stop you from buying that next investment property.

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UOIT Provides Investment Opportunity in Durham Region

If you are an investor you should consider student housing as an option. Durham Region has grown enormously and Oshawa and Whitby have benefited greatly from the influx of students to UOIT, Durham College, and Trent University.  Students come from around the globe to study in this modern facility. The problem is finding good student housing.

Here at Mortgage Intelligence we have helped many of our Investor clients find great properties to accommodate 4-5 students annually, thus creating positive cash-flow from inexpensive real estate.  If you would like to sit and have a discussion about whether this may be right for you, please contact us today.

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5 Questions All Condo Investors Must Ask!

Before buying a Condo here are 5 questions you MUST ask.

If you would like to discuss rate for buying Condos or have questions about down payment requirements, please use the form below.

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Well Mr. Flaherty, You Sure Did It This Time!

The sudden drop in investor interest has sent shock waves through the industry because, just since 2007, investors have come to dominate the GTA condo market.

In an effort to stop consumer debt from rising,The Minister of Finance has  whacked the Housing Market with a sledge hammer!

As a professional in the financial field I have often scratched my head at the way he went about curtailing consumer spending. His new lending rules have made it harder to buy a home while consumers are still on a spending spree and now the housing market is falling into a slump.

These are your Government dollars at work ladies and gentlemen!

I have traveled the world extensively and I know one thing for certain. House prices in all major cities of the world are sky high. So why anyone would want to put the breaks on this hard because Toronto and Vancouver housing is expensive is mind-boggling. Not to mention the results of the severe tightening aren’t solving the consumer debt issue one single bit!

Think of each and every sector of the economy that employs someone who’s job is related to housing and you can easily predict how much our economy is going to suffer with the hardline actions of the Minister of Finance.

When I saw the article in Moneyville today I thought it was important to share it on this blog. So here’s the link folks.  Read’em and weep!

This blog is just me thinking out loud but I would like to hear what you have to say on the subject so leave me a comment below.

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Real Estate Investing For Dummies

Learn the Lingo of Real Estate Investing!

We’ve all seen the series of books and ebooks for Dummies, I own a number of them myself!  I love the simplicity of use for these great publications so when this came across the screen I wanted to share it with those of you who are thinking of investing in Real Estate or are new at the game.

As with any new endeavour, its important to get the lingo and this “Cheat Sheet” from Dummies is easy to grasp and helpful.

Please use the form below to leave us a question or comment. We love to know if you enjoyed our blog.

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One Day Great! The Next Day Terrible!

REIN Sheds Light On The Truth

The news about housing markets changes almost daily and depending on what part of the country you live in, it’s Boom or Bust!

I recently joined a group called DurhamREI short for Durham Real Estate Investors.  Anyone can join, but this group is of particular interest to those who now invest in Real Estate in Durham Region or wish to jump into it.

Today, I found an article that gives great insight into the recent past, current and near future of Real Estate expectations for Canada.  I liked that it address a lot of concerns investors face and how we can prepare for the next 2 years.

I hope you enjoy this informative article as much as I did. Please visit REIN, the National site for Real Estate Investment in Canada for the full article.

If you have a question or comment please use the form below, we love to hear from our readers!

Featured Seminar

Multi-Family Residential Investing Seminar

Saturday November 10^st, 2012 9am-5pm

The Durham Corporate Centre, 105 Consumers Drive

Unit #2, Whitby, Ontario

In the “Multi-Family Residential Investing Seminar” Coridian Capital Inc. is pleased to offer this case-study based workshop on how to successfully invest in multi-family residential properties.  This interactive course allows investors to     learn from real life examples .  The main objective is to provide a clear path and process on how to integrate multi-family property into your portfolio.

Please visit: http://durhamrei.ca/special-event.html to register for this Seminar.

Building Equity Isn’t that Tough!

At a time when house prices aren’t really increasing very much it’s still possible to build equity without a great deal of effort!  In the past few years many folks opted for 35 and 40 year Amortizations so building equity can be a challenge. Here’s a simply way to do it by just choosing the way you pay your mortgage

Purchase Price $400,000 Down Payment $20,000 $380,000 CMHC Premium $10,450 Mortgage $390,450 Monthly Bi-weekly Acc Bi-weekly Payment @3.19 $1886 $943 $1,000 Balance after 5 yrs $334,945 $347,658 $316,627 Equity $55,505 $65,804 $73,823 As you can see in the example above, by making bi-weekly or additional payments they can create a lot of equity in only 5 years, regardless of what is happening to house prices.  These numbers grow even faster if you bump up the payments annually or put that tax return down as a lump sum.

Calling all Real Estate Investors in Durham Region

Did you know that membership is free at Durham Real Estate Investors.

Meet with like-minded people who enjoy buying and holding or buying and selling Real Property In the Durham Region.

The DurhamREI began 2008 by with a small group of Real Estate Investors meeting informally to share problems and solutions that they were facing.