Our Favorite Real Estate Investment Financing Tips

Real Estate Investing Audio CD

Real Estate Investment Financing is riddled with hurdles and unanswered questions. When one bank denies your investment property mortgage request another mysteriously approves you.

In Canada there's an obvious need for better service in this area. As an investor in Canada you are left to figure out investment financing, mortgage insurance, property insurance and property taxes on your own.

It can be daunting, especially for you first time. And just when you don't think it can get any worse try and find a bank or mortgage broker or financial planner that will help you lay down a 5-10 year plan that maps out how you can buy more than 4 or 5 investment properties in Canada.

Unless you are willing to put 20-25% down on each investment property not many people have answers for you. We've mapped out some information on investment property mortgages as a guide for you here:

Investment Property Mortgages page...

And you can find some "gotchas" around real estate investment financing here:

Financing Investment Properties...

Here are our Favorite Real Estate Investment Financing Tips

  1. Hunt for a mortgage broker, banker of financial planner with actual real estate financing experience. Someone with experience will not only streamline the mortgage process but they will also be able to give some guidance.

    For example, if you're looking to get a 5% down investment property mortgage there are mortgage insurance fees that need to be accounted for in how you structure your investment.

    Some of these fees are high and you don't want to be surprised by them on the day of closing.

  2. It's always a good idea to look into the property tax rates in the area so you get an idea of how much you're going to pay. Most cities and towns will have them posted right on their website.

    You can also usually see prior year's rates and get an idea of how fast they are trending up.

    Here's what the page looks like for Oakville, Ontario, Canada.

  3. Try to develop a relationship with at least one bank and one mortgage broker. I don't believe most Canadians know this but not all banks will have access to the best investment property mortgages and not all mortgage brokers will have access to all of the available mortgage products on the market.

    Both are extremely valuable to you. Once you find a good one treat them with care. We've been saved many times by the sharp eye and experience of these contacts.

  4. One day a bank may have no decent investment financing mortgages and the very next they may have a 10% down open mortgage at the best interest rate possible.

    Make sure you are getting the latest information. Real Estate investment financing products change almost monthly at every Canadian bank. Be on the look out.

  5. Before you commit to your investment financing get in touch with your insurance company. I've seen insurance companies distance themselves from certain investment properties.

    If you don't have insurance on the property before closing the investment financing will fall apart. You don't want to be left scrambling for insurance the day before closing.

  6. This next tip really isn't about the real estate investment financing itself. It's more about the source of the advice you're getting.

    After a mortgage broker or real estate professional knows that you're an investor you may find them emailing you little flyers outlining the details of what they believe is a good real estate investment.

    And because it's coming from a professional you may be tempted to believe their opinion. When these deals cross our desks we're often shocked. The prices are too high, the rents are unrealistic and the exit plan doesn't exist. Take advice from actual investors only.

  7. If part of your investing plan involves possibly selling the property before the term of the mortgage is up make sure you check out the penalties you'll have to pay to break the mortgage early.

    It'll usually be about 3 months interest and you'll want to factor that into your numbers. Some real estate investment financing will waive most of the penalty if you move the mortgage from one property to another within a certain time frame.

And there you have it. Some of our real estate investment financing favorites.

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