Positive cash flow with small down payment?

by Dina
(North York, Toronto )

Hi Tom and Nick,

First of all, we are very impressed by your expertise and positive attitude.

We are new immigrants-2 years in Canada. We rent an apartment in a high rise building in North York. Instead of buying our own first property, we are thinking of buying one for investment.

Some info- our combined annual income is $100,000, bank suggested us 3.09% mortgage rate.

The problem is that we have a very small down payment- $20,000. We have two questions:

1) Is it still possible to find positive cash flow properties with such a small down payment? We worked with MLS and Mortgage Calculator and whenever we checked, monthly mortgage was more than rent.

2) My husband thinks that we need to buy investment property only in the area we are ready to live ourselves. In case property stays vacant for several months, we have to be ready to move into it to avoid losing money. What do you think? Is it true?

Thank you very much,

Comments for Positive cash flow with small down payment?

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Apr 01, 2013
RE: Oshawa?
by: Tom Karadza

Great question and observation about Oshawa.

We are currently active and help investors in Oshawa, but are often hesitant for the exact reasons you mention. The "average family inocme" in Oshawa is usually much higher than the provincial average and the population growth is good. We just prefer the employment situation to be more stable. However, because of its proximity to Toronto and after watching this city for more than 7 years now we're fairly comfortable getting a positive cash flowing starter home or duplex in Oshawa. So yes, if the property was right and the numbers were good we would consider it.

Hope that helps!!

Feb 12, 2013
by: Dina

Thank you very much for your helpful answer!
What do you think about Oshawa? I checked stats and saw that Oshawa experienced a significant population growth. However, my concern is GM plant there with all its problems. What do you think? Would you consider Oshawa?

Jan 29, 2013
RE: Positive cash flow with small down payment...
by: Tom Karadza

Hi Dina!

Thanks for the feedback.

Yes, it's possible to get positive cash flow but you have to buy the property in cities outside of Toronto ... like Ajax, Barrie, Hamilton etc.

In our opinion you don't have to invest in only the city you live ... you want to invest for cash flow and if that's not possible in your area (in North York it's difficult right now) then we're all for going elsewhere. We do exactly that ourselves. As for the property going vacant ... use someone who knows the area that you're buying and can share with you the demand for rentals. We rarely see good properties sit vacant for months on end unless the owner isn't taking the steps necessary to rent it out. There are always people looking to rent good places. You just want to verify the numbers and work with a Realtor or Investor who knows the area before you buy. You're more than welcome to come out to one of our classes to learn how we do this www.CanadianRealEstateTraining.com

Hope that helps!

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