If you missed the previous article – Database Building – Part 2
As a full-time Canadian real estate investor, we need to make the most from our time and learn not to waste time. We need to be doing important work such as creating more deals to increase our massive and passive income. In our training apprenticeships, one of the areas of focus is proper building of database.
Database Building and training
Qualifying your client
In previous articles, I spoke about how to create competition amongst your database candidates. Let’s speak about the specific details and questions to ask this caller to financially qualify them to understand how much property they can afford.
In this situation, you can either have a specific property under contract or this could just be a caller responding to a general ad you have placed. Regardless of either situation, you must ask them the following financial questions:
- Do they currently own or rent?
- If they rent, how much is the payment?
- Have they been pre-qualified?
- If they own, what is their mortgage payment(s)?
- Are property taxes included in this payment?
- Do they have any other major obligations?
- What is their credit like? (you can ask them to pull their own credit, which does not affect their score, and fax it to you.) (more on credit scores and reading a credit bureau in another article)
- Do they owe any income taxes?
- How much down-payment do they have?
Now you don’t have to get into the realm of being a mortgage broker, but you have to understand if your potential client can qualify for a mortgage and how quickly they can “get in” to a property you may offer them.
What other qualifications should I look for?
A full-time Canadian real estate investor need to be aware of many factors when choosing their potential network. Other than a good credit score, a candidate needs to be able to qualify based on the amount of annual income they make. This calculation is based on a 32% debt ratio called a gross debt service ratio.
What this means is the percentage of income needed to service the debt on the property, being principle, interest, property taxes and heat, needs to be 32% or less of a family’s annual income.
A second calculation is also needed, and this is called the total debt service ratio. This calculation is based on principal, interest, property taxes and heat, plus all debt that would be reported on your credit bureau. This includes the annual payments of credit cards, lines of credit, loans, lease payments and the like. With all this factored in and calculated against the annual gross family income, the client’s total debt service ratio needs to come in under 40%.
Once you understand this you can, in a round about way, realize what they can afford monthly and work your way backwards to figure out the price of a house they can afford, remembering to factor in their down-payment at the same time (we will get into this in a future article).
World Wealth Builders offers many hands-on Apprenticeships to properly educate and encourage the Canadian real estate investor to new heights of independent wealth.
P.S. Take Action now to attend the eye-opening seminar and walk away with confidence, knowledge, and specific “action ideas” that can help you achieve your dreams and leave the rat race behind.
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