Lots of information, lots of questions!

by Brad
(Saskatoon, SK)

I just read over your real estate investing for beginners page and signed up to get sent your free information. There is a few questions i have for you.

You said, "And if you had the original 25% to put down on the property wouldn't it make sense to buy two properties instead of one?"

That sounds like an excellent idea in theory, but from my limited experience thus far in the real estate world is that for a rental property in Canada banks want at least 20% down to avoid the CMHC insurance. I found that if you claim, "i am going to live there!" you can get around it and pay only 5% down. The con to doing that though is that you cant claim any potential revenue from that property as income counted towards your mortgage qualification, and can you get in trouble for this?

I also have a question about the "homes buying homes" concept that you raised. I know that it is possible to use equity in one house as a down payment for a second house, but again it comes back to the bank giving the loan's. Yes you can use the equity but generally banks will only let you borrow up to the point that you have 20% equity left in the first house. That poses a huge issue if you only put 5% down to begin with, am i missing something?

Another interesting thing i read recently was buying properties under a business instead of through yourself, to separate yourself from liabilities and in my case to keep rental income, and personal income separate What is your opinion on that, is it relevant in Canada? and what are (if any) the differences when trying to get a mortgage?

I realize I have covered A LOT of topics here, but i would really appreciate your feed back!