{"id":996,"date":"2022-01-27T10:41:32","date_gmt":"2022-01-27T10:41:32","guid":{"rendered":"https:\/\/effortlessmortgage.ca\/blogs\/?p=996"},"modified":"2022-01-27T18:23:28","modified_gmt":"2022-01-27T18:23:28","slug":"the-ultimate-mortgage-guide-to-buy-rental-property-in-canada","status":"publish","type":"post","link":"https:\/\/effortlessmortgage.ca\/blogs\/the-ultimate-mortgage-guide-to-buy-rental-property-in-canada\/","title":{"rendered":"The Ultimate Mortgage Guide To Buy Rental Property in Canada"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"996\" class=\"elementor elementor-996\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-2633ce2a elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"2633ce2a\" data-element_type=\"section\" data-e-type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-62118e2b\" data-id=\"62118e2b\" data-element_type=\"column\" data-e-type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-62dced2a elementor-widget elementor-widget-text-editor\" data-id=\"62dced2a\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><\/p>\n<figure class=\"wp-block-image size-large\"><img fetchpriority=\"high\" decoding=\"async\" class=\"alignnone wp-image-1000 size-full\" src=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/rental-property.png\" alt=\"\" width=\"2240\" height=\"1260\" srcset=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/rental-property.png 2240w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/rental-property-300x169.png 300w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/rental-property-1024x576.png 1024w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/rental-property-768x432.png 768w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/rental-property-1536x864.png 1536w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/rental-property-2048x1152.png 2048w\" sizes=\"(max-width: 2240px) 100vw, 2240px\" \/><\/figure>\n<p><\/p>\n<p><\/p>\n<h2 class=\"wp-block-heading\"><strong><em>&#8220;If you are considering buying your first or next rental investment property &#8211; then, Congratulations!&#8221;<\/em><\/strong><\/h2>\n<p><\/p>\n<p><\/p>\n<p>Buying income properties has long been one of the most rewarding and secure investments for Canadians. Use our mortgage guide to buy rental property to help you in your journey!<\/p>\n<p>In According to the Globe and Mail, <a href=\"https:\/\/www.theglobeandmail.com\/real-estate\/toronto\/article-one-in-three-toronto-condos-owned-by-non-resident\/\" target=\"_blank\" rel=\"noopener\">one in three Toronto condos are investor owned<\/a>. Last quarter (2021), 25% of the all purchase activities were rental properties.\u00a0<\/p>\n<p><b>Our &#8220;Ultimate Mortgage Guide to Buy Rental Property in Canada&#8221; was put together to help you become a successful real estate investor! You will learn:<\/b><\/p>\n<ul>\n<li>How you can qualify for a rental \/ investment property mortgage<\/li>\n<li>Most Asked Questions when buying s rental property\u00a0<\/li>\n<li>Four reasons why you should buy an investment property<\/li>\n<li>How to pick the right rental property<\/li>\n<li>How to find under-valued property<\/li>\n<li>How to grow your rental portfolio<\/li>\n<\/ul>\n<p>\u00a0<\/p>\n<p><b>Let&#8217;s get started! Let&#8217;s talk about what you need to know first&#8230;<\/b><\/p>\n<p><\/p>\n<p><\/p>\n<p><\/p>\n<p><\/p>\n<p><\/p>\n<p><\/p>\n<p><\/p>\n<p><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-0009824 elementor-widget elementor-widget-heading\" data-id=\"0009824\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Qualify for a Rental \/ Investment Property Mortgage<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-3c21b8f elementor-widget elementor-widget-text-editor\" data-id=\"3c21b8f\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>Get prepared to qualify, here&#8217;s what you need to know&#8230;<\/p>\n<h4 style=\"font-family: 'Circular Std', sans-serif; color: #1d293f;\">Down Payment<\/h4>\n<p style=\"font-family: 'Circular Std', sans-serif; color: #1d293f;\">A rental property requires at least 20% of down payment with a major bank or a B lender. However, <a href=\"https:\/\/effortlessmortgage.ca\/blogs\/comprehensive-guide-on-private-mortgages-and-private-lenders-in-ontario\/\">private lenders<\/a> may approve the mortgage with 15% down payment or even 10% down payment depending on the property.<\/p>\n<h4 style=\"font-family: 'Circular Std', sans-serif; color: #1d293f;\">Rental Income<\/h4>\n<p>The more income you earn from your investment property, the easier it is to qualify for an investment property mortgage. Typically, lenders will take into account 50% &#8211; 85% of your rental income when qualifying you for a mortgage. Our experienced advisors can help you select the best mortgage lender based on your rental income.<\/p>\n<h4 style=\"font-family: 'Circular Std', sans-serif; color: #1d293f;\">Debt Service Ratio<\/h4>\n<p>Debt service ratio measures your ability to meet your monthly expense and debt obligations based on the income you earn. To qualify for an investment property, lenders will look at your personal income and expenses, as well as take into account the income and expenses from the investment property.\u00a0<\/p>\n<p>Maximum Total Debt Service (TDS) ratio is 44% for most of the bank lenders, but can go up to 60% with B lenders. Private lenders do not have any limit on TDS.<\/p>\n<p><strong>Here is the high-level formula lenders use to calculate Total Debt Service (TDS) ratio:\u00a0<\/strong><\/p>\n<p><em><strong>For Principle Residence<\/strong><\/em> (*PITH Stands for Principle, Interest, Property Taxes, and Heating)<\/p>\n<p>TDS = (PITH* + Other Monthly Debt Payments)\/Income<\/p>\n<p><em><strong>For Investment Property<\/strong><\/em>, the formula changes into the following:\u00a0<\/p>\n<p>TDS = (PITH of Principle Residence + PITH of Rental Property + Expenses of Rental Property + Other Monthly Debt Payments)\/(Employment Income + Rental Income)<\/p>\n<h4 style=\"font-family: 'Circular Std', sans-serif; color: #1d293f;\">Documents You Need to Provide<\/h4>\n<p>To qualify for an investment property mortgage, you will need to provide the following documents:\u00a0<\/p>\n<ul>\n<li>Proof of Personal Income (T4, Notice of Assessment (NOA), etc.)<\/li>\n<\/ul>\n<ul>\n<li>Proof of Rental Income (lease, bank statements, Schedule T776, etc.) \u00a0<\/li>\n<\/ul>\n<ul>\n<li>Market Rent Assessment &#8211; a new investment property requires a market rent assessment<\/li>\n<li>Proof of Sufficient Down Payment &#8211; note that some lenders do not allow gifted down payment for rental properties<\/li>\n<\/ul>\n<p>\u00a0<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-0cdf231 elementor-position-left elementor-vertical-align-top elementor-widget elementor-widget-image-box\" data-id=\"0cdf231\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image-box.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-image-box-wrapper\"><figure class=\"elementor-image-box-img\"><a href=\"https:\/\/calendly.com\/mortgage-advisors\/quick-chat-clone?back=1&#038;month=2022-01\" target=\"_blank\" tabindex=\"-1\" rel=\"noopener\"><img decoding=\"async\" width=\"150\" height=\"150\" src=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2021\/10\/Women-150x150.png\" class=\"attachment-thumbnail size-thumbnail wp-image-837\" alt=\"\" \/><\/a><\/figure><div class=\"elementor-image-box-content\"><h3 class=\"elementor-image-box-title\"><a href=\"https:\/\/calendly.com\/mortgage-advisors\/quick-chat-clone?back=1&#038;month=2022-01\" target=\"_blank\" rel=\"noopener\">Do You Have Any Questions?<\/a><\/h3><p class=\"elementor-image-box-description\">Book a 15-Min Chat to ask any questions you have on qualifying and getting a mortgage for your rental property.<\/p><\/div><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-8d51131 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"8d51131\" data-element_type=\"section\" data-e-type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-5c82fe9\" data-id=\"5c82fe9\" data-element_type=\"column\" data-e-type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-8eb28c1 elementor-widget elementor-widget-heading\" data-id=\"8eb28c1\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Most Asked Questions When Buying A Rental Property<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-178fe21 elementor-widget elementor-widget-text-editor\" data-id=\"178fe21\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>Being able to get financing is the most important factor to your journey to become a successful real estate investor.<\/p>\n<p>Whether you can get approved for rental property mortgages is the difference between being able to own 1 rental property vs 10 rental properties.<\/p>\n<p>Let\u2019s examine a few key things to understand when financing a rental property.<\/p>\n<h4>What is an Investment or Rental Property from a Financing Perspective?\u00a0<\/h4>\n<ul>\n<li>An Investment Property is a real estate asset that is purchased for earning rental income.\u00a0Plain and simple. Mortgage lenders consider it to be a \u201crental property\u201d when you need to use rental income to qualify. If you are buying a second property but do not need the income to qualify, you can get a mortgage using a standard\/non rental program.<\/li>\n<\/ul>\n<h4>Can I Live in a Part of My Rental Property?<\/h4>\n<ul>\n<li>Yes. If your property has more than one self-contained unit (think of a basement unit that has its own kitchen and bath room), and you plan to live in one and rent out the rest, the property is considered \u201cowner occupied\u201d as opposed to \u201crental property\u201d. In this case, the part that\u2019s rented out is a \u201crental suite\u201d. <strong><em>Standard qualification Rules<\/em><\/strong> for owner occupied properties apply to rental suites.\u00a0<\/li>\n<li>The upside of renting a part of the property is that you can add your rental income from the rental suite to your employment income to help you qualify for a bigger mortgage. Lenders typically consider only 50% to 80% of discount to the rent earned from a rental suite in order to account from vacancies and added expenses.\u00a0<\/li>\n<\/ul>\n<p><strong>Rental property mortgages are complex.<\/strong> Fortunately we have mortgage advisors at the Effortless Team who specialize in rental properties. They can help you structure your deal to get you approved.<\/p>\n<p><em><strong>Wonder if you can afford multiple investment properties? Keep reading to find out!<\/strong><\/em><\/p>\n<h4>How Many Rental Properties Can I Finance in Total?<\/h4>\n<ul>\n<li>Major financial institutions finance between 5 and 20 rental properties per owners. The more properties you have, lenders impose stricter qualification ratios making it tougher to qualify for more mortgages.<\/li>\n<\/ul>\n<h4>Can I Buy an Investment Property with Friends and Family?<\/h4>\n<p>Yes. Because investment properties can be lucrative, you may choose to team up with friends and family to co-invest and share the benefits. If you are contemplating this option, here are a few things to think about:\u00a0<\/p>\n<ul>\n<li>Create a co-ownership agreement. Owning a property together in some ways is like being married. Everything looks great in the beginning, but you may have disagreements from time to time. There is also the possibility of a break-up (sorry for being syndical but life happens). So, it\u2019s important to set the ground rules such as what happens if one party wants to sell, who handles the maintenance, etc.\u00a0<\/li>\n<\/ul>\n<ul>\n<li>Each of you is responsible for 100% the mortgage regardless of how much of the investment property you own.\u00a0 No, I\u2019m not kidding. If your co-owner fails to make the mortgage payment, the Lender can foreclose on the entire property and go after your wages if the Lender is unable to recover the entire mortgage amount from the sale (in certain provinces).\u00a0<\/li>\n<\/ul>\n<h4>Can I Purchase an Investment Property Under a Name of a Corporation?\u00a0<\/h4>\n<p>A Personal Holding Company (\u201cHoldco\u201d) can be an effective structure to purchase and hold investment properties.<\/p>\n<ul>\n<li>A Holdco is an extension of a person and can not be running an active business. Immediate family members must hold all shares of the holding company. This structure provides you a certain level of protection against potential liabilities and some flexibility for tax planning. Therefore, it can be especially beneficial for people who have more than one investment properties.<\/li>\n<\/ul>\n<p>Many lenders require additional documentation when qualifying mortgages for a personal holding company.<\/p>\n<p><strong><em>If you have specific questions about financing a rental property through a Personal Holding Company, one of our Advisors would be happy to answer your questions.\u00a0<\/em><\/strong><\/p>\n<h4>What are Some of the Key Product Features for Investment Properties?<\/h4>\n<ul>\n<li><strong>Amortization:<\/strong> An Investment Property mortgage can have amortization up to 30 years.\u00a0<\/li>\n<\/ul>\n<ul>\n<li><strong>Mortgage Default Insurance:<\/strong> Since you need to provide more than 20% of down payment, Lenders do not require you to purchase default insurance.<\/li>\n<\/ul>\n<p><strong>Financing a rental property is very different than getting a mortgage on your primary residence. <\/strong><\/p>\n<p>The two most important things are the Total Debt Service Ratio (TDS) and down payment.<\/p>\n<p>The more income you earn from your rental property, the more favourable your TDS ratio will be, the easier it is to get approved for a mortgage. Our experienced mortgage advisors can help you plan ahead and ensure your numbers work before you commit to an investment property purchase.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-c2a1465 elementor-position-left elementor-vertical-align-top elementor-widget elementor-widget-image-box\" data-id=\"c2a1465\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image-box.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-image-box-wrapper\"><figure class=\"elementor-image-box-img\"><a href=\"https:\/\/calendly.com\/mortgage-advisors\/quick-chat-clone?back=1&#038;month=2022-01\" target=\"_blank\" tabindex=\"-1\" rel=\"noopener\"><img decoding=\"async\" width=\"150\" height=\"150\" src=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2021\/10\/Women-150x150.png\" class=\"attachment-thumbnail size-thumbnail wp-image-837\" alt=\"\" \/><\/a><\/figure><div class=\"elementor-image-box-content\"><h3 class=\"elementor-image-box-title\"><a href=\"https:\/\/calendly.com\/mortgage-advisors\/quick-chat-clone?back=1&#038;month=2022-01\" target=\"_blank\" rel=\"noopener\">Do You Have Any Questions?<\/a><\/h3><p class=\"elementor-image-box-description\">Book a 15-Min Chat to ask any questions you have on qualifying and getting a mortgage for your rental property.<\/p><\/div><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-ee33df1 elementor-widget elementor-widget-heading\" data-id=\"ee33df1\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Four Reasons Why You Should Buy a Rental \/ Investment Property<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-9fa0e0a elementor-widget elementor-widget-text-editor\" data-id=\"9fa0e0a\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h4>1) Stable Cash Flow<\/h4>\n<p>With the low vacancy rates across Canada and high demand of housing, rental properties are one of the most reliable ways to generate cash flow.<\/p>\n<p>Below is the vacancy rates last year. The average vacancy rate for Ontario markets is 3.2%. One really importance thing to point out is that \u201clow vacancy rate\u201d is not just limited to the bigger cities like Toronto. Now we see even lower vacancy rate in smaller markets such as Brantford and Guelph.<\/p>\n<p>This is why rental income is one of the most reliable and risk free cash flow income you can have. Low vacancy means you can be certain that 97% of the change the rental unit will delivery the income you expect to earn. There is no other income stream that provides such certainty.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-9978998 elementor-widget elementor-widget-image\" data-id=\"9978998\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"468\" height=\"218\" src=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/1-rental-vacancy-rate-2021.png\" class=\"attachment-full size-full wp-image-1059\" alt=\"\" srcset=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/1-rental-vacancy-rate-2021.png 468w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/1-rental-vacancy-rate-2021-300x140.png 300w\" sizes=\"(max-width: 468px) 100vw, 468px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-b04b242 elementor-widget elementor-widget-text-editor\" data-id=\"b04b242\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>Now, let&#8217;s take a look at the average rental income across Ontario markets.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-4e215b8 elementor-widget elementor-widget-image\" data-id=\"4e215b8\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"468\" height=\"244\" src=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/2-average-rent-in-ontario.png\" class=\"attachment-full size-full wp-image-1060\" alt=\"\" srcset=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/2-average-rent-in-ontario.png 468w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/2-average-rent-in-ontario-300x156.png 300w\" sizes=\"(max-width: 468px) 100vw, 468px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-93250ec elementor-widget elementor-widget-text-editor\" data-id=\"93250ec\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>You can see that the difference in average rent for a one bedroom apartment in Ontario is not that large. Sure, it is more expensive to live in Toronto.<\/p>\n<p>The average rent for one bedroom apartment in Toronto is $1,536 per month. However, one bedroom rent in smaller markets are not too far behind. Ottawa is a close second at $1,379 per month and Barrie has the 3<sup>rd<\/sup> highest rent rate for one bedroom apartment at $1,346 per month.<\/p>\n<p>This is great news for aspiring real estate investors. You do not need to be able to purchase a $1.5 million dollar duplex in Toronto to earn significant rental income. The median sale price for one bedroom apartment in Ottawa is $350K and the median sale price for townhouse and row units are around $550K.<\/p>\n<p>Let\u2019s compare that to Toronto \u2013 the median sale price for one bedroom apartment is $638K while the average townhouse is selling for $800K in Toronto).<\/p>\n<p>Let\u2019s look at the numbers. While the Toronto one bedroom apartment rent is 11% higher than Ottawa, the home prices in Toronto is 80% higher for one bedroom apartment and 45% higher for townhouses.<\/p>\n<p><strong>Though the Greater Toronto Area remains one of the most desirable locations for rental property; there are tons of opportunities to earn stable cash flow across Ontario.<\/strong><\/p>\n<p>As your rental income helps you to paydown the mortgage, rental properties are excellent sources to create the passive cashflow income stream that allows you to make money in your sleeps.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-89da15c elementor-widget elementor-widget-text-editor\" data-id=\"89da15c\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h4>2) Tax Write-Off<\/h4>\n<p>While rent is considered passive income, it still comes with all that good stuff of owning a business. You can deduct all sorts of expenses related to the property to reduce your taxable income. Let\u2019s look at a few examples:<\/p>\n<p><strong>** Your Mortgage Interest Is Tax Free **<\/strong><\/p>\n<p>This is probably THE biggest deduction you have against your rental income. Keep in mind that this is not your entire mortgage payment. It\u2019s only the interest part of your mortgage payment.<\/p>\n<p>Using the following mortgage statement as an example. Your monthly payment is $2,461.74, which includes both principle and interest payment. Over the course of 2021, for this mortgage, a total of $29,540 mortgage payment was made. Out of that, $12,893 is the interest cost, which is how much you can include as interest expense on your tax return.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-8ed74bc elementor-widget elementor-widget-image\" data-id=\"8ed74bc\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"800\" height=\"564\" src=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/3-payment-details.png\" class=\"attachment-large size-large wp-image-1062\" alt=\"\" srcset=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/3-payment-details.png 814w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/3-payment-details-300x212.png 300w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/3-payment-details-768x542.png 768w\" sizes=\"(max-width: 800px) 100vw, 800px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-a438cca elementor-widget elementor-widget-text-editor\" data-id=\"a438cca\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><b>Maintenance costs <\/b><\/p>\n<p>Don\u2019t underestimate how regular fixes and maintenances can add up. From smaller fixes like a leaky faucet to bigger fixes like replacing a furnace, you can write everything off as long as you keep the receipt.\u00a0<\/p>\n<p><strong>** Here\u2019s a tip for news landlords&#8230; **<\/strong><\/p>\n<p>Often times you might be tempted to pay your contractor cash to save the 13% HST. Remember, rental income is considered \u201cpassive income\u201d and it\u2019s taxed at the highest income tax rate. By saving 13% on HST, you are foregoing the opportunity to save 50% on taxes. Always get the receipt as opposed to paying cash.<\/p>\n<p><strong>And a lot more\u2026 <\/strong><\/p>\n<p>Here\u2019s a list of other spending to keep track of as a landlord<\/p>\n<ul>\n<li>Fire and Flood Insurance<\/li>\n<li>Advertising cost to rent the unit out when there\u2019s a tenant turn over (such as Kijiji and Facebook marketplace ads)<\/li>\n<li>Property tax, hydro and heat\u2026 of course<\/li>\n<li>(part) of your phone bill and transportation costs to travel to the property<\/li>\n<li>Property management \u2013 this is if you have a property manager. You cannot charge for time you spend yourself to manage the property<\/li>\n<li>Cost of new furniture if your unit is furnished<\/li>\n<li>Amortization of any major renovation and improvement<\/li>\n<\/ul>\n<p>Here\u2019s the <a href=\"https:\/\/www.canada.ca\/en\/revenue-agency\/services\/tax\/businesses\/topics\/rental-income\/completing-form-t776-statement-real-estate-rentals\/rental-expenses-you-deduct.html\" target=\"_blank\" rel=\"noopener\"><strong><em>link to the Canada Revenue Agency<\/em><\/strong><\/a> website for a full list of rental expenses you can deduct.<\/p>\n<p><b>The key is to keep good records of the expenses. When well planned, you can write off most or all of rental income and pay very little tax on the income.<\/b><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-0b3a6c2 elementor-widget elementor-widget-text-editor\" data-id=\"0b3a6c2\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h4>3) Appreciation and Leverage<\/h4>\n<p>Appreciation is one of the most powerful ways to grow your wealth through real estate.\u00a0<\/p>\n<p>As of the end of 2021, Canadian home prices reached an average of $720,850, representing a 20% year-over-year increase.\u00a0<\/p>\n<p>2021 was an exceptional year, not an average year. As much as we all want to have a 20% year-over-year gain on our investment, this is not the normal rate of growth. To be conservative, we will use a 3% annual appreciate on average.<\/p>\n<p>3% per year doesn\u2019t seem to be a very high rate of return. However, that\u2019s before considering leverage. Leverage is the secret weapon of investing in real estate.<\/p>\n<p>For primary residence, i.e. not investment property, you can put as little as 5% down payment. It means you can leverage your money 20x (i.e. 1\/5%).<\/p>\n<p>For Investment Property, you need 20% down payment. It means you can leverage your money 5x. That alone will change the 3% Year-over-Year (YoY) return into a 15% YoY return.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-a902198 elementor-widget elementor-widget-image\" data-id=\"a902198\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"800\" height=\"548\" src=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/4-residential-price.png\" class=\"attachment-large size-large wp-image-1064\" alt=\"\" srcset=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/4-residential-price.png 807w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/4-residential-price-300x206.png 300w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/4-residential-price-768x526.png 768w\" sizes=\"(max-width: 800px) 100vw, 800px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-97fb8d2 elementor-widget elementor-widget-text-editor\" data-id=\"97fb8d2\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><strong>Let\u2019s compare it to the stock market returns.<\/strong><\/p>\n<p>In the past 25 years, the S&amp;P index returns on average 8.45% on an inflation-adjusted basis, and 10.74% without adjusting for inflation.<\/p>\n<p>If you compare the housing price index chart above and the S&amp;P index chart below, the pattern is similar.<\/p>\n<p>If you invested $50,000 in an S&amp;P Index Fund in 2005, that investment would have increased to $275,000 by the end of 2021.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-d4324cc elementor-widget elementor-widget-image\" data-id=\"d4324cc\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"800\" height=\"453\" src=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/5-sp.png\" class=\"attachment-large size-large wp-image-1065\" alt=\"\" srcset=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/5-sp.png 936w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/5-sp-300x170.png 300w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/5-sp-768x435.png 768w\" sizes=\"(max-width: 800px) 100vw, 800px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-a902e6b elementor-widget elementor-widget-text-editor\" data-id=\"a902e6b\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>Say if you bought a house in 2005, and you bought it for exactly the average price for a single detached house at the time, $250,000. To purchase that house, you would have had to put down $50,000 or 20% down payment.<\/p>\n<p>By 2021, the property would have been worth $800,000. Your mortgage would also have been paid off (assume 25-year amortization). Therefore, your initial $50,000 investment would now <strong>be $800,000. That is 3x the return<\/strong> you get from investing in the stock market.<\/p>\n<p>If you are one of the lucky ones who bought a property at the lower point of the market, such as 2018 and 2019, you would have seen almost 15% YoY gain per year in the past 3 years. This translates into almost over 100% return per year assuming a 5x leverage.<\/p>\n<p><strong>The best part is that real estate investing is one of the true passive income streams that requires very little time needed. And market appreciation will keep working hard to increase your wealth even when you are not : )<\/strong><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-4b20de3 elementor-widget elementor-widget-text-editor\" data-id=\"4b20de3\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h4>4) Build Equity<\/h4>\n<p>Not every rental property can be cash flow positive. It doesn\u2019t mean they are not great investments.\u00a0<\/p>\n<p>You might ask, why would someone buy a rental property when they need to pay out of pocket to service the property? Appreciation is one of the reasons. The other reason is to build equity.<\/p>\n<p>For your primary residence, you need to pay for your mortgage use your AFTER TAX income dollars. And the mortgage interest CANNOT be deducted against your personal income.<\/p>\n<p>When you have an investment property, your renters are paying for your mortgage with their AFTER TAX income, and the Mortgage Interest CAN BE deducted against the rental income. The math cannot be clearer.<\/p>\n<p>Even without appreciation, after 25 years, the house will be paid off and you have accumulated the equity without using your hard earned after tax dollars to service the mortgage.\u00a0<\/p>\n<p>For example, for a $500,000 mortgage, over 25 years, your renter would have paid approximately $216,812 in interest and the entire $500,000 mortgage principle, which is the amount of the equity you accumulated simply through principle paydown.<\/p>\n<p><b>There are a ton of other reasons why you should start investing on real estate, today.\u00a0<\/b><\/p>\n<p><b>Real estate investing is not a get rich fast scheme, but it is the most simple and sure way to create wealth and financial security.\u00a0<\/b><\/p>\n<p>Now let\u2019s take a look at an important aspect of real estate investing&#8230;<\/p>\n<p>How to find the right rental property&#8230;<\/p>\n<p>\u00a0<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-e60c46b elementor-position-left elementor-vertical-align-top elementor-widget elementor-widget-image-box\" data-id=\"e60c46b\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image-box.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-image-box-wrapper\"><figure class=\"elementor-image-box-img\"><a href=\"https:\/\/calendly.com\/mortgage-advisors\/quick-chat-clone?back=1&#038;month=2022-01\" target=\"_blank\" tabindex=\"-1\" rel=\"noopener\"><img decoding=\"async\" width=\"150\" height=\"150\" src=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2021\/10\/Women-150x150.png\" class=\"attachment-thumbnail size-thumbnail wp-image-837\" alt=\"\" \/><\/a><\/figure><div class=\"elementor-image-box-content\"><h3 class=\"elementor-image-box-title\"><a href=\"https:\/\/calendly.com\/mortgage-advisors\/quick-chat-clone?back=1&#038;month=2022-01\" target=\"_blank\" rel=\"noopener\">Do You Have Any Questions?<\/a><\/h3><p class=\"elementor-image-box-description\">Book a 15-Min Chat to ask any questions you have on qualifying and getting a mortgage for your rental property.<\/p><\/div><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-ad47138 elementor-widget elementor-widget-heading\" data-id=\"ad47138\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Pick The Right Rental Property<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-d3857c0 elementor-widget elementor-widget-text-editor\" data-id=\"d3857c0\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h5>FIRST! Determine how much effort you would like to put in&#8230;<\/h5>\n<p>Are you ready to put in some work to fix up a property? Or would you rather purchase a turnkey property and rent it out right away?\u00a0<\/p>\n<p>How many hours would you like to put in managing this property?\u00a0<\/p>\n<p>These are the questions you need to ask yourself to determine the type of rental property that is right for you.\u00a0<\/p>\n<p>Let\u2019s look at the level of effort required based on the type of property:\u00a0<\/p>\n<h4>Teardown<\/h4>\n<p>Typically, these properties are in rough shape. These properties typically have structural issue and need a full demolition before you can rebuild on it. When you purchase a teardown property, you are pretty much buying it for land value.\u00a0<\/p>\n<p>You are looking at minimum of 12-18 months to rebuild it depending on where the house is located and the local building permit processes.\u00a0<\/p>\n<p>Teardowns can be really profitable for experienced builders who are able to efficiently navigate the permitting process and control the costs.\u00a0<\/p>\n<p>It is not for the faint of heart! <b>If you are a first time real estate investor, this type of property is not for you.<\/b> To finance for a teardown project, you may require a construction loan.<\/p>\n<h4>Major Renovation<\/h4>\n<p>When you see the \u201cas is\u201d description in a <a href=\"https:\/\/www.realtor.ca\/\" target=\"_blank\" rel=\"noopener\">realtor.ca<\/a> listing, it typically means the property requires major renovation.\u00a0<\/p>\n<p>These are types of properties with \u201cgood bones\u201d, but in need of some \u201cimmediate care\u201d before they can be rented out. Examples include replacement of roof, wiring, clean-up of water damage, or simply redoing the entire interiors of the house. Some refer these types of renovations as \u201cgut job\u201d.\u00a0<\/p>\n<p>These types of properties are great opportunities to \u201ccreate value\u201d for your rental properties. However, it does require rigorous budgeting on what needs to be fixed and how much it costs to complete the renovation. You may also need a building permit for major renovations depending on local zoning rules.<\/p>\n<p><u>Photo description:<\/u> Gut job vs. teardown \u2013 unlike a teardown, when you are doing a major renovation, the foundation and exterior walls of the property are usually untouched.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-50e813c elementor-widget elementor-widget-image\" data-id=\"50e813c\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"600\" height=\"409\" src=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/1-reno.png\" class=\"attachment-large size-large wp-image-1058\" alt=\"\" srcset=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/1-reno.png 600w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/1-reno-300x205.png 300w\" sizes=\"(max-width: 600px) 100vw, 600px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-3024c13 elementor-widget elementor-widget-image\" data-id=\"3024c13\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"604\" height=\"572\" src=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/2-reno.png\" class=\"attachment-large size-large wp-image-1061\" alt=\"\" srcset=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/2-reno.png 604w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/2-reno-300x284.png 300w\" sizes=\"(max-width: 604px) 100vw, 604px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-6d2c480 elementor-widget elementor-widget-text-editor\" data-id=\"6d2c480\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h4>Minor Renovation<\/h4>\n<p>These are the types of properties that simply have \u201cdated\u201d interiors, such as properties with a new shade of paint, new cabinets, refreshed sinks, etc.\u00a0<\/p>\n<p>These properties are excellent choices for real estate investors. Due to lack of staging or \u201cpolish\u201d, these properties are often overlooked by homebuyers who are searching for their \u201cdream home\u201d.\u00a0<\/p>\n<p>That means there will likely be less bidders on offering night, which creates a great opportunity for real estate investors to snatch it at a value below the market price.<\/p>\n<p>Take one of our return customer, Jackie as an example, she and her family had been looking for an investment property for months, but kept being out-bid by other buyers. The found a property located in the highly sought after Leslieville neighbourhood in the east end of downtown.\u00a0<\/p>\n<p>It was a traditional Victorian house with 3 units and was listed for $990,000. The problem was that the MLS listing photos looked awful. Clothes were all over the floor, the paint on walls were peeling, and the rooms looked dark and small.\u00a0<\/p>\n<p>However, when they went and viewed the property, it turned out to be a nice, south-facing triplex with 11 ft ceiling and large rooms. Due to the poor staging and the facts that tenants remained in the property during that time, the property was significantly under-represented.\u00a0<\/p>\n<p>When similar properties were getting 10+ offers, Jackie was able to purchase this one by only competing with one other registered offer, which was unheard of in that neighborhood.<\/p>\n<p>Jackie spent $5,000 to re-paint the entire house with fresh white paint. She was able to rent the three units out for $7,000 per month in total!<\/p>\n<p><strong>Photo description<\/strong>: Nothing can\u2019t be fixed with a fresh coat of paint. Look beyond the staging to find value in rental properties.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-3ef198b elementor-widget elementor-widget-image\" data-id=\"3ef198b\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"604\" height=\"426\" src=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/3-reno.png\" class=\"attachment-large size-large wp-image-1063\" alt=\"\" srcset=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/3-reno.png 604w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2022\/01\/3-reno-300x212.png 300w\" sizes=\"(max-width: 604px) 100vw, 604px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-282dbe9 elementor-widget elementor-widget-text-editor\" data-id=\"282dbe9\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h4>Turnkey<\/h4>\n<p>Turnkey properties are the ones that are ready for tenants to move in right after closing. There is typically no immediate renovation needed.<\/p>\n<p>The downside of turnkey properties is that there is very little room to add value and build equity right away.<\/p>\n<p>However, it is a worry-free option to purchase your first investment property.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-2ab57b4 elementor-widget elementor-widget-heading\" data-id=\"2ab57b4\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Find Under-Valued Property<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-f73c3bc elementor-widget elementor-widget-text-editor\" data-id=\"f73c3bc\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>The key in finding \u201cunder-valued property\u201d is to understand the \u201ctrue value\u201d of the property. This might be a little difficult with Turnkey properties \u2013 if a property is nicely renovated, staged and marketed, it\u2019s more likely than not you will be paying the market value on them.<\/p>\n<p>If you are looking for a property that you can add value right away, there are the steps:<\/p>\n<ul>\n<li>Decide which city\/neighborhood you would like to purchase the rental property in. We recommend to select the city based on proximity, appreciation potential, and vacancy rate. If you are not yet sure, ,we have some recommendations : )<\/li>\n<li>Determine how much is the maximum purchase price you can afford. You can do so by getting a pre-qualification from one of our experienced mortgage advisors. To illustrate how this works, let\u2019s say your budget is $600,000.<\/li>\n<li>Decide the type property you are purchasing. Is your budget enough for a condo, townhouse, semi-detached, detached, or multiplex?<\/li>\n<li>Now reduce your budget by 15% to get to the upper limit of the listing prices for your \u201csearch\u201d. In this case, if we reduce the $600,000 by 15%, we get to $510,000. This is to leave you room in case of a bidding war.<\/li>\n<li>Talk to your Realtor or go to Realtor.ca and filter by city, type of properties, and maximum listing price (in this case, use $510,000)<\/li>\n<li>Now you need to put in the work and scroll through the listings. Pay special attention to the ones that are less polished and less staged \u2013 these are the opportunities!<\/li>\n<li>Once you narrow down on a property, estimate how much would it cost to \u201cfix it up\u201d. Let\u2019s say the property you found is exact $510,000 needs about $20,000 for a new paint job and some renovation in the bathroom. The total cost for you is now $530,000 to get this property ready to live in.<\/li>\n<li>Last but not least, work with your Realtor to compare the Total Cost of $530,000 with similar properties with updated interiors in the same neighborhood to determine if you are getting it at a \u201cgood price\u201d. For example, if similar properties are selling for $580,000 with similar finishes after you do the paint job and the bathroom reno, you have instantly created $50,000 value through the purchase and renovation.<\/li>\n<li>Repeat this process until you find the right opportunity. It gets easier to spot a good deal the more you spend time looking and buying.<\/li>\n<\/ul><br>\n<p>We do send out list of investment properties that are deemed \u201cunder valued\u201d with great returns. Email us at <a href=\"mailto:info@effortlessmortgage.ca\">info@effortlessmortgage.ca<\/a> to be added to our mailing list.\u00a0<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-70a1f1e elementor-position-left elementor-vertical-align-top elementor-widget elementor-widget-image-box\" data-id=\"70a1f1e\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image-box.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<div class=\"elementor-image-box-wrapper\"><figure class=\"elementor-image-box-img\"><a href=\"https:\/\/calendly.com\/mortgage-advisors\/quick-chat-clone?back=1&#038;month=2022-01\" target=\"_blank\" tabindex=\"-1\" rel=\"noopener\"><img decoding=\"async\" width=\"150\" height=\"150\" src=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2021\/10\/Women-150x150.png\" class=\"attachment-thumbnail size-thumbnail wp-image-837\" alt=\"\" \/><\/a><\/figure><div class=\"elementor-image-box-content\"><h3 class=\"elementor-image-box-title\"><a href=\"https:\/\/calendly.com\/mortgage-advisors\/quick-chat-clone?back=1&#038;month=2022-01\" target=\"_blank\" rel=\"noopener\">Do You Have Any Questions?<\/a><\/h3><p class=\"elementor-image-box-description\">Book a 15-Min Chat to ask any questions you have on qualifying and getting a mortgage for your rental property.<\/p><\/div><\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-830048b elementor-widget elementor-widget-heading\" data-id=\"830048b\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Grow Your Rental Portfolio<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-b7f16a3 elementor-widget elementor-widget-text-editor\" data-id=\"b7f16a3\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><strong>Follow the \u201cBRR\u201d model \u2013 Buy, Renovate, Refinance<\/strong><\/p>\n<p>This model is simple:<\/p>\n<p><b>Buy <\/b>a rental property with 20% down payment (for less than 20% down payment options, talk to us). Using the previous example, you need to put down $102,000 as down payment, and take out a $408,000 mortgage.<\/p>\n<p><b>Renovate<\/b> the property and increase rent. Pick and choose \u201chigh value\u201d renovations that create the most equity for your home, such as kitchen and bathroom. Use the example from the last section, after purchasing the rental property at $510,000 and spending $20,000 renovating the property, the property value increased to $580,000.<\/p>\n<p><b>Refinance<\/b> the property to take out more money. You can refinance up to 80% of the property value. We generally recommend you wait for at least 12 months before refinancing. Refinancing too soon may be raising questions for lenders. Let\u2019s look at the numbers:<\/p>\n<ul>\n<li>Say after the renovation and 2 years have passed, your property increased 5% each year, and is now worth $650,000.<\/li>\n<li>By refinancing up to 80% of the market value (i.e. 80% x $650,000 = $520,000), you can increase your mortgage balance to $520,000<\/li>\n<li>During the 2 years time, your tenants helped you paid down about $20,000 mortgage principle. This reduces your mortgage balance from $408,000 to $388,000.<\/li>\n<li>Therefore, you can take out approximately $132,000 equity (i.e. $520,000 new mortgage &#8211; $388,000 existing mortgage balance). Now you have the down payment to start this cycle all over again!<\/li>\n<\/ul>\n<p><b>Build a team around you so you can keep buying.<\/b><\/p>\n<p>Whether you are planning to purchase your first rental property or you are looking for ways to keep expanding your rental portfolio, it is imperative to spend the time and effort to find the right partners to help you purchase, renovate, and refinance your properties.<\/p>\n<p><b>With 30 years of experience in the industry and a team of dedicated Mortgage Advisors specializing in investment properties, Effortless Mortgage can be \u201cyour team\u201d when it comes to an investment property mortgage.\u00a0<\/b><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-a8469c3 elementor-widget elementor-widget-spacer\" data-id=\"a8469c3\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"spacer.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-spacer\">\n\t\t\t<div class=\"elementor-spacer-inner\"><\/div>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-1a006f9 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"1a006f9\" data-element_type=\"section\" data-e-type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-8e464b2\" data-id=\"8e464b2\" data-element_type=\"column\" data-e-type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-1371f33 elementor-widget elementor-widget-heading\" data-id=\"1371f33\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">To Sum It Up<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-7c8d523 elementor-widget elementor-widget-text-editor\" data-id=\"7c8d523\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>The recent and long term trend is the renter households growing at a faster rate than owner households offering landlords a big advantage in the rental market.<\/p>\n<p>Investing in real estate is a true passive income stream that with less effort than other investment streams builds your wealth, significantly<span style=\"color: var( --e-global-color-text ); font-family: var( --e-global-typography-text-font-family ), Sans-serif; font-weight: var( --e-global-typography-text-font-weight );\">.<\/span><\/p>\n<p><span style=\"color: var( --e-global-color-text ); font-family: var( --e-global-typography-text-font-family ), Sans-serif; font-weight: var( --e-global-typography-text-font-weight );\">The key to success as a beginner rental property investor is learning how to assess the value of properties, choosing the right rental property and the right location, understanding market conditions, and <\/span><span style=\"color: var( --e-global-color-text ); font-family: var( --e-global-typography-text-font-family ), Sans-serif;\"><b>MOST IMPORTANTLY,<\/b><\/span> <span style=\"color: var( --e-global-color-text ); font-family: var( --e-global-typography-text-font-family ), Sans-serif;\"><b><a href=\"https:\/\/www.effortlessmortgage.ca\/purchase\/apply.php\">GETTING QUALIFIED<\/a> FOR THE MORTGAGE<\/b><\/span><span style=\"color: var( --e-global-color-text ); font-family: var( --e-global-typography-text-font-family ), Sans-serif; font-weight: var( --e-global-typography-text-font-weight );\"> you need to purchase the rental property. If you meet these criteria, you can be better prepared to reap the benefits of owning rental property.<\/span><\/p>\n<p>We hope that &#8220;The Ultimate Mortgage Guide to Buy Rental Property&#8221; in Canada offers you actionable advice to ease and support your real estate investment journey!<span style=\"color: var( --e-global-color-text ); font-family: var( --e-global-typography-text-font-family ), Sans-serif; font-weight: var( --e-global-typography-text-font-weight );\"><br \/><\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-9e267ae elementor-widget-divider--view-line elementor-widget elementor-widget-divider\" data-id=\"9e267ae\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"divider.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-divider\">\n\t\t\t<span class=\"elementor-divider-separator\">\n\t\t\t\t\t\t<\/span>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-80272e2 elementor-widget elementor-widget-heading\" data-id=\"80272e2\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Let's Chat<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-9dbe432 elementor-widget elementor-widget-text-editor\" data-id=\"9dbe432\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>Our experienced Effortless Mortgage Advisors are always here to help 7 days a week.\u00a0<\/p>\n<p>Book a 15-minute chat with us to learn more how we can help you support and\/or grow your client base.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-cb013aa elementor-widget elementor-widget-image\" data-id=\"cb013aa\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a href=\"https:\/\/calendly.com\/mortgage-advisors\/quick-chat-clone?month=2022-01\" target=\"_blank\" rel=\"noopener\">\n\t\t\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"364\" height=\"113\" src=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2021\/07\/Book-a-15-Min-Call.png\" class=\"attachment-large size-large wp-image-806\" alt=\"Book-a-15-Min-Call\" srcset=\"https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2021\/07\/Book-a-15-Min-Call.png 364w, https:\/\/effortlessmortgage.ca\/blogs\/wp-content\/uploads\/2021\/07\/Book-a-15-Min-Call-300x93.png 300w\" sizes=\"(max-width: 364px) 100vw, 364px\" \/>\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>&ldquo;If you are considering buying your first or next rental investment property &ndash; then, Congratulations!&rdquo; Buying income properties has long been one of the most rewarding and secure investments for Canadians. Use our mortgage guide to buy rental property to help you in your journey! In According to the Globe and Mail, one in three [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1000,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9,46,48,1,43,8],"tags":[],"table_tags":[],"class_list":["post-996","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mortgage-basics","category-home-purchase","category-investment-mortgage","category-news","category-mortgage-options","category-home-refinancing"],"_links":{"self":[{"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/posts\/996","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/comments?post=996"}],"version-history":[{"count":124,"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/posts\/996\/revisions"}],"predecessor-version":[{"id":1134,"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/posts\/996\/revisions\/1134"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/media\/1000"}],"wp:attachment":[{"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/media?parent=996"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/categories?post=996"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/tags?post=996"},{"taxonomy":"table_tags","embeddable":true,"href":"https:\/\/effortlessmortgage.ca\/blogs\/wp-json\/wp\/v2\/table_tags?post=996"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}