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This
is an Insurance article by an independent author and jml
Insurance takes no responsibility for its accuracy or content Investing
in a Rental Property By Donna
Lewczuk Over
the last few years, relatively weak stock markets (compared to the late 90’s)
along with continued global economic uncertainty have changed the way many Canadians
are investing their hard earned dollars. More and more Canadians are venturing
into the rental property market, some swayed by the real estate appreciation that
we’ve seen over the last few years. Others want to add real estate to their investment
mix to better diversify their investment portfolios. Condos
and Multi-Units Approximately
25 per cent of the condominium units built in Canada will be used as rental apartments.
Additional investment is occurring in multi-unit residential properties such as
duplexes, triplexes, and fourplexes, as well as single-family detached housing.
Canadians are looking to have the rent from these investments at least cover their
costs and, over the long term, gain a reasonable return on their investment. Consider
Your Mortgage and Financing Needs Carefully Investors
who consider adding real estate assets are often confused about their mortgage
financing options. Since the Bank Act allows only up to 75 per cent of the value
of a property to be in uninsured financing, many investors who put 15 per cent
down use an insured mortgage for the difference. The
cost of the insurance premium can be as high as 4.5 per cent, which can translate
into a $10,000 cost on a $225,000 mortgage. Even so, not all investors can meet
the strict requirements that go along with an insured mortgage on rental property.
These
requirements include having a relatively high net worth and demonstrating that
you can carry the mortgage payments in addition to your other debts without factoring
in all of the rental income you will receive. This certainly doesn’t leave room
for many Canadians who want an investment property. Another
option if you have a good amount of equity in your principal residence is to take
some of that equity out, typically through a line of credit, to get a big enough
downpayment that then may qualify you for a regular first mortgage. Financing
Made Easy To
simplify the process, you can also now consider those lenders who have mortgage
products specifically designed for small investors who own or are purchasing a
residential investment property. Canadian investors can now access up to $500,000
without costly mortgage insurance premiums, or leveraging the equity in their
principal home. Up to 85 per cent financing inclusive of applicable fees is available
for single family units or up to a fourplex located in major urban centres. Properties
on well and septic systems located in a town or subdivision can also qualify.
Typically, 75 per cent financing is available for condominium units and all properties
must generate a positive cash flow. Perhaps
now more Canadians can heed the wisdom offered by many financial professionals
and diversify, diversify, diversify by including real estate in their investment
portfolios. Donna
Lewczuk has worked in the financial services industry for almost 20 years. The
last 3 years have been as a mortgage consultant and speaker. Although she arranges
mortgages for all different needs, her specialty is dealing with clients who are
struggling with financial overload. Donna has helped numerous clients save hundreds
and even thousands of dollars a month. And also to sleep better. If finacial stress
is getting you down, even if you feel your case is hopeless, please visit Donna's
website for more information. http://www.donnasmortgages.com
or by email at lewczuk.d@mortgageintelligence.ca. Article
Source: http://EzineArticles.com/?expert=Donna_Lewczuk
The
information supplied on this page is by a third party and jml Property Services
do not take any responsibility to its accuracy ©jmlpropertyservices01/06
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