Tag Archives: Canadian Real estate Investor tips

Becoming a Successful Full Time Real Estate Investor

Becoming a Successful Full Time Real Estate Investor

 

This is a continuation of  Becoming a Successful  Full Time Real Estate Investor – Setting goals

In order to be successful, both the rookie real estate investor as well as the veteran needs to continue to implement strategies to improve their business. There is always a way to sharpen your skills to create more success.  One of those necessary implementations is goal setting.

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The Suicide Clause

The Suicide Clause

As a full-time Canadian real estate investor, we must be very aware of the types of mortgages that we take. During our time as an investor, we will  do deals where we do not take the mortgage ourselves. In other words, we may joint venture with someone who does the qualifying. We will, however, be doing deals where we do have to get a mortgage.

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Mortgage Jargon – Part 4

Mortgage Jargon – Part 4

If you missed the previous article – Mortgage Jargon – Part 3

We will continue in our series of Mortgage jargon. As full time Canadian real estate investors, we need to utilize the following definitions as part of our everyday language.

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Mortgage Jargon – Part 2

Mortgage Jargon – Part 2

If you missed the previous article – Mortgage Jargon – Part 1

We will continue in our series on mortgage jargon. Many of these references should or will soon become apart of your language in real estate investing.

Total debt/service ratio

This ratio is calculated by your mortgage broker. This is a standard by most lenders which states that no more than 40% of your gross income can be utilized to service your property. Your total debts are principle interest, property taxes, heating, 1/2 condo fees, plus all other monthly obligations, such as credit cards, leases, loans, lines of credit, etc.

Switch

This term applies to changing lenders at the end of a term. When a mortgage is at the end of it's term, or coming to the end of it's term, another lender may pay the costs of switching over to their company. This means that if there is a mortgage penalty, the other lender may pay that penalty for you to break your mortgage and move the mortgage to them. They may also offer you a reduced rate to come to them from a competitor.

Cap rate

A cap rate is a calculation that is used mostly in the commercial side of real estate. The the fair market value is divided into net operating income (rent minus expenses, not including mortgage). Capitalization rate is essentially a percentage calculation that is better when higher. The higher the result, the better rate of return.

Closed Mortgage

A closed mortgage is closed for the term, usually 5 years, but it can be anywhere from 1-5 years. It cannot be paid out unless there is a penalty involved which can be discharged at a cost of either three months interest, or an interest rate differential.

Interest Rate Differential

The IDR is a penalty for an early pre-payment of all or part of the mortgage outside the normal payment terms, or even pre-payment terms. This is calculated as the difference between the existing rate and the rate for the term remaining, multiplied by the principle outstanding and the balance of the term. For example, if the mortgage balance is $100,000 at 9% with 24 months remaining and the current 2-year rate is 6.5%, the different between 6.5% and 9% is 2.5%. The interest rate differential is $100,000 outstanding mortgage, times 2-years times 2.5% will equal $5,000 dollars.

High Ratio Mortgage

A mortgage that is greater than 80% loan to value(LTV). What is loan to value?  It is the ratio of loan compared to the value of the property. For instance: if the mortgage was a 70% loan to value on a $100,000 property, the value of the loan would be $70,000.

Equity

Equity is the difference between the value of what you can sell your property for (or fair market value), compared to what is owed against it. So the more equity in a property for a real estate investor, the better.

We will continue in our mortgage jargon series in a following article.

World Wealth Builders offers many unique, practical, "out of the box" real estate investor trainings which offers the student hands on, in the trenches style instruction to facilitate both a different mindset as well as a successful and lucrative real estate investment business. To find out more, please go to www.worldwealthbuilders.com

To read the next article – Mortgage Jargon – Part 3

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Becoming a Full-Time Real Estate Investor

Becoming a Full-Time Real Estate Investor

Becoming a full-time Canadian real estate investor is a desire a lot of people have. They get an idea in their head that where they are today financially is not where they would like to be and real estate investing will solve all of their problems.  Real estate is a great business, yes but it can be very challenging  and if not done properly, is rarely achieved.

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Three Most Common Landlord Mistakes

Three Most Common Landlord Mistakes

As a Canadian real estate investor and landlord, one must pay attention to the amount of time that you spend managing your properties. You have to be cognizant of the fact that you want to be spending your time creating more deals, rather than spending your time dealing with tenants. You need to spend time on your business not in your business.

That said, we must do our best to create an excellent  business relationship with your tenants.

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Closing the Deal – Part 2- Unforeseen Costs

As a full time Canadian real estate investor, we must be creating massive and passive income by facilitating many types of deals. We have to fully understand the scope of every deal, have the capability to analyze it fully and make informed decisions as to the proper exit strategy.

Whether we are purchasing a property for ourselves, for a joint venture project or have the property under contract to assign, we must be able to outline all potential expenses pertaining to the acquisition. Closing costs are a necessary part of the expenses.

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Closing the Deal – Part 1-Legal Fees and Title Insurance

As a full time real estate investor in Canada, we will ultimately be involved in many types of deals.  There will be those that we will negotiate, tie up contractually,  and have a number of potential exit strategies we can select from to enable us to make a massive income by not ever closing on the property. This process will utilize O of our own capital and consequently, we will have O liability.  There will be, of course, those properties  that we will close on and purchase ourselves.

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Building an Entourage of Experts – Part 8- Choosing a Property Inspector

Building an Entourage of Experts – Part 8- Choosing a Property Inspector

If you missed the previous article – Creating your Entourage of Experts – Part 7 – Choosing a General Contractor

As a full-time Canadian real estate investor, we will be involved in many deals with no intention to close. We are able to make a lot of money on these deals.  There will ultimately be deals that we will purchase ourselves for the sake of flipping, and other deals that we utilize as long-term holds.

Continue reading Building an Entourage of Experts – Part 8- Choosing a Property Inspector

Building our Entourage of Experts – Part 7- Choosing a General Contractor

Building our Entourage of Experts – Part 7- Choosing a General Contractor

 

If you missed the previous article – Creating your Entourage of Experts – Part 6 – Choosing an Insurance Agent

As a full-time Canadian real estate investor, we may find ourselves involved in deals for the purpose of  both portfolio building, as well as short-term holds for quick money.  We should  involve ourselves in as many "non-conventional" deals as possible, using zero of our own money, and having zero liability in any property.

Continue reading Building our Entourage of Experts – Part 7- Choosing a General Contractor