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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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