So your house has appreciated in value, and you want to pull that equity out. What should you think of before you sign all the paperwork?
1. Why do you want to refinance?
Although, it can be a great idea to consolidate your debt into one monthly payment, make sure you have control over your spending. If you consolidate your debt and run your credit card up again, you won't have the equity to give you breathing room. Be cautious when taking funds out of real estate. A good ideas is to use it to improve the value of your house or to buy more real estate.
2. Know your penalities.
If you break your term with your lender early, they will want some money back. Make sure you are very clear about what your penalty will be from your lender so if you know if a refinance is worth your while.
3. Plan your term and mortgage ahead of time.
Try to plan ahead as much as possible. Do you plan on only living in the home for three years? Then get a three year term. Do you want to pull equity out in a year's time? Make your term a year. Are you planning on upgrading to a new house? Make sure your mortgage is portable. Do you plan on paying it off over the next five years? Get a good pre-payment plan.
As always, a good broker will save you time and money as they will be able to decipher the penalties required, and be able to find you the best program the suits your current and future needs.
As always, I remain available to serve your needs.
Joel Olson
Pacific Mortgage
1.250.814.1627
Friday, December 4, 2009
Thursday, November 26, 2009
Anyone can buy an investment Property!
Anyone can buy an investment property. It really can be a very easy process and provide you with some great returns. Here's some things you should know.
1. You only need 5% down
It seems all the time I'm getting asked how much money is needed for a down payment on an investment property. 5 % will get you into any rental property that is either a single-family dwelling or a duplex. 10% will allow you to purchase either a triplex or a fourplex and 15% allows you to buy investment properties that are five units and above. Of course, it is true that these are insured mortgages and you will pay the insurance premium, but if you cashflow is sufficient with this, it makes a lot of sense to put the smaller down payment down. Of course, you can avoid this premium by putting 20% down on 4 units and below and 35% down on 5 units and above. The down payment can come from a variety of sources, maybe its money saved up, from a refinance of another property, a gift from a family member, or from a credit line. If you can get your properties to cash flow well, you may be able to take enough equity out of your personal residence to finance several rental units.
2. Cashflow is King
Many investors make the mistake of buying negative cashflow properties. Make sure that after all expenses like mortgages, taxes, and insurance you will still have a profit. This will allow you to continue to buy properties over and over again. A good rule of thumb is a 1.1 ratio, meaning make sure that your rent covers the expenses by 10%. This will ensure you can continue to buy investment properties over and over again. Not to mention, negative cash flow can put you in a bad financial position should something happen.
3. Watch Your Personal Financials
When investing 4 units and below your personal financial picture still plays a major component in getting approval, but once you go five units and above it plays less of a factor. That being said, there's some things you should keep in mind. Keep a good tab on your credit. Too many inquires, Overlimit balances, and of course late payments can really slow you down. Also, watch the amount of personal debt you carry, only borrow to buy more real estate or to renovate your rentals.
4. Establish Good Team Members.
Establish a relationship with a realtor that we find you something that fits your criteria. If you use the same realtor over and over again, they will be more likely to send you listings before they send them to anyone else. Consider using a property manager, they are usually 10% of the gross income. A poorly managed property will affect the cashflow very quickly, so consider a good property manager a cheap price too pay. Finally, find a good lawyer and accountant, there are many more risks associated with rental real estate in Canada, and it's important to have the right people looking out for your legal and tax positions.
The advantage of leverage is that you can buy a lot more real estate for less money than you can with any other investment. In addition to this, a few properties that are being rented at modest cash flow will see you obtain a sizable nest egg for retirement without ever having to save through RRSPs or Mutual Funds.
As always, I'm available to serve you in any way to help you reach any of your real estate investment goals.
Joel Olson
Pacific Mortgage
joel@c3revelstoke.ca
1.250.814.1627
1. You only need 5% down
It seems all the time I'm getting asked how much money is needed for a down payment on an investment property. 5 % will get you into any rental property that is either a single-family dwelling or a duplex. 10% will allow you to purchase either a triplex or a fourplex and 15% allows you to buy investment properties that are five units and above. Of course, it is true that these are insured mortgages and you will pay the insurance premium, but if you cashflow is sufficient with this, it makes a lot of sense to put the smaller down payment down. Of course, you can avoid this premium by putting 20% down on 4 units and below and 35% down on 5 units and above. The down payment can come from a variety of sources, maybe its money saved up, from a refinance of another property, a gift from a family member, or from a credit line. If you can get your properties to cash flow well, you may be able to take enough equity out of your personal residence to finance several rental units.
2. Cashflow is King
Many investors make the mistake of buying negative cashflow properties. Make sure that after all expenses like mortgages, taxes, and insurance you will still have a profit. This will allow you to continue to buy properties over and over again. A good rule of thumb is a 1.1 ratio, meaning make sure that your rent covers the expenses by 10%. This will ensure you can continue to buy investment properties over and over again. Not to mention, negative cash flow can put you in a bad financial position should something happen.
3. Watch Your Personal Financials
When investing 4 units and below your personal financial picture still plays a major component in getting approval, but once you go five units and above it plays less of a factor. That being said, there's some things you should keep in mind. Keep a good tab on your credit. Too many inquires, Overlimit balances, and of course late payments can really slow you down. Also, watch the amount of personal debt you carry, only borrow to buy more real estate or to renovate your rentals.
4. Establish Good Team Members.
Establish a relationship with a realtor that we find you something that fits your criteria. If you use the same realtor over and over again, they will be more likely to send you listings before they send them to anyone else. Consider using a property manager, they are usually 10% of the gross income. A poorly managed property will affect the cashflow very quickly, so consider a good property manager a cheap price too pay. Finally, find a good lawyer and accountant, there are many more risks associated with rental real estate in Canada, and it's important to have the right people looking out for your legal and tax positions.
The advantage of leverage is that you can buy a lot more real estate for less money than you can with any other investment. In addition to this, a few properties that are being rented at modest cash flow will see you obtain a sizable nest egg for retirement without ever having to save through RRSPs or Mutual Funds.
As always, I'm available to serve you in any way to help you reach any of your real estate investment goals.
Joel Olson
Pacific Mortgage
joel@c3revelstoke.ca
1.250.814.1627
Friday, November 20, 2009
Why Brokers are Better Than Banks?
Perhaps, one of the most frequent comments that I'm asked is why should I use you over the bank I've been using my whole life? Even before I became a mortgage broker I learned the definte advantage over using brokers over banks.
1. Rate are ALWAYS better
This is a guarantee, not just a hopeful statement. Why? First of all, we don't compete with Banks, we use banks. That's right brokers are clients of everything from Royal Bank, TD Bank and Scotiabank to your local credit union. We know and use all their products. So, whatever the bank is offering we can get you too!!! It's not that one bank has better products than us, we already have all their products. Additonally, these banks give us huge volume discount. That's right, because we give them millions in volumes each year they agree to heavily discount their rate for our clients. You could've gone to the same bank for years, and by using a broker you will still some substatial rate discounts.
2. More Products
There are no bad mortgage products, just bad products for bad people. A bank carries only a limited amount of products and many banks will not carry enough products that will be sufficent for all your mortgage needs through your life time. You can save a lot of time and money, by being able to use a product that has all the terms that will benefit your situation.
3. Bankers only need to know about a few mortgage products.
Bankers are not pushing mortgages. They're pushing credit cards, loans, lines of credit, bank accounts, life insurance, mutual funds, and stocks. As a result, a banker needs to have working knowledge of all these products. A mortgage broker only needs to know mortgages, and a good one will know what all banks and lenders have to offer.
4. Long-Term Relationship
This is probably a banker's most important agrument against a broker. However, a long-term relationship with a mortgage broker will enable you to access the best products at the best time. Remember, just because one lender fits you today, doesn't mean five years down the road that same lender will have the product that suits you.
5. Flexibility
Most bankers need actual appointments. Mortgage brokers rarely need any appointments, and if they do it will be on a time that works for you and not during regular business hours. Your banker won't be available after hours to answer questions that you may have, but a mortgage broker will.
So, fire your banker and switch to a mortgage broker. I would be happy to run the numbers on your mortgage and my services have no obligation and they're free.
Joel Olson
Pacific Mortgage
1.250.814.1627
joel@c3revelstoke.ca
1. Rate are ALWAYS better
This is a guarantee, not just a hopeful statement. Why? First of all, we don't compete with Banks, we use banks. That's right brokers are clients of everything from Royal Bank, TD Bank and Scotiabank to your local credit union. We know and use all their products. So, whatever the bank is offering we can get you too!!! It's not that one bank has better products than us, we already have all their products. Additonally, these banks give us huge volume discount. That's right, because we give them millions in volumes each year they agree to heavily discount their rate for our clients. You could've gone to the same bank for years, and by using a broker you will still some substatial rate discounts.
2. More Products
There are no bad mortgage products, just bad products for bad people. A bank carries only a limited amount of products and many banks will not carry enough products that will be sufficent for all your mortgage needs through your life time. You can save a lot of time and money, by being able to use a product that has all the terms that will benefit your situation.
3. Bankers only need to know about a few mortgage products.
Bankers are not pushing mortgages. They're pushing credit cards, loans, lines of credit, bank accounts, life insurance, mutual funds, and stocks. As a result, a banker needs to have working knowledge of all these products. A mortgage broker only needs to know mortgages, and a good one will know what all banks and lenders have to offer.
4. Long-Term Relationship
This is probably a banker's most important agrument against a broker. However, a long-term relationship with a mortgage broker will enable you to access the best products at the best time. Remember, just because one lender fits you today, doesn't mean five years down the road that same lender will have the product that suits you.
5. Flexibility
Most bankers need actual appointments. Mortgage brokers rarely need any appointments, and if they do it will be on a time that works for you and not during regular business hours. Your banker won't be available after hours to answer questions that you may have, but a mortgage broker will.
So, fire your banker and switch to a mortgage broker. I would be happy to run the numbers on your mortgage and my services have no obligation and they're free.
Joel Olson
Pacific Mortgage
1.250.814.1627
joel@c3revelstoke.ca
Thursday, November 19, 2009
Why you need to buy a house now!!!
Opportunities last for a short amount of time...right now is the best opportunity to buy a house that we've seen in years or will see for many years to come.
Here's Why:
1. Prices are cheap...
We may not be seeing deep discounts like the US, but there is no question that houses are cheaper than they were a year ago, and at worst prices are stable. Don't be fooled by the listing prices either, some people have had their houses on the market for months. They could be very interested in a deep discount, you never know unless you ask.
2. Rates are low....
Interest rates are lower than they've ever been. With rates staying in the low 4% for fixed rates and 2.15% for variables, that house that was too expensive for you last year, is going to be amazingly affordable this year. Take this with a grain of salt though, eventually rates will go up, and you will pay more when you renew, but there's no sense not taking advantage of these rates in the meantime. Besides, it's a good idea to buy that house that might have potential for a secondary suite or extra room rental, so you can get it ready now and offset the bigger mortgage later.
3. Sellers are flexible...
Some people are sick of having their house on the market, so they will take creative offers that will work towards your situation. If you need a longer closing date or help with the downpayment, now is the time to ask. You'll be surprised what they say yes too.
4. Motivated Realtors, Mortgage Brokers, Lawyers, etc.
Finally, people are slower so it means much more timely service than every before from professionals.
So, don't delay, call me today and find out where you'll pre-qualify.
Joel Olson
Pacific Mortgage
1.250.814.1627
joel@c3revelstoke.ca
Here's Why:
1. Prices are cheap...
We may not be seeing deep discounts like the US, but there is no question that houses are cheaper than they were a year ago, and at worst prices are stable. Don't be fooled by the listing prices either, some people have had their houses on the market for months. They could be very interested in a deep discount, you never know unless you ask.
2. Rates are low....
Interest rates are lower than they've ever been. With rates staying in the low 4% for fixed rates and 2.15% for variables, that house that was too expensive for you last year, is going to be amazingly affordable this year. Take this with a grain of salt though, eventually rates will go up, and you will pay more when you renew, but there's no sense not taking advantage of these rates in the meantime. Besides, it's a good idea to buy that house that might have potential for a secondary suite or extra room rental, so you can get it ready now and offset the bigger mortgage later.
3. Sellers are flexible...
Some people are sick of having their house on the market, so they will take creative offers that will work towards your situation. If you need a longer closing date or help with the downpayment, now is the time to ask. You'll be surprised what they say yes too.
4. Motivated Realtors, Mortgage Brokers, Lawyers, etc.
Finally, people are slower so it means much more timely service than every before from professionals.
So, don't delay, call me today and find out where you'll pre-qualify.
Joel Olson
Pacific Mortgage
1.250.814.1627
joel@c3revelstoke.ca
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