Mortgage Jargon – Part 3
If you missed the previous article – Mortgage Jargon – Part 2
Becoming a full-time Canadian real estate investor is not something one should take lightly. The amateur real estate investor will commonly go out and buy a property, make mistake after mistake and end up costing themselves lots of money and time. They will then run from real estate investing thinking that real estate investing doesn’t work.
The Role of a Personal Assistant
As a full-time Canadian real estate investor, we must be actively creating massive and passive income for ourselves on a regular basis. Our time is our most precious commodity and therefore must use it wisely. We get the most profitable use from our time by doing deals, not by doing small tasks. There are many facets of being a full-time real estate investor that are very important yet quite time-consuming. If we are able to pass of some of these duties to somebody else, it will be more likely that we can be focusing on doing more deals.
Canadian Foreclosure Process
The word “foreclosure” is a nightmare for the property owner as well as for the Lender. Although the numbers usually increase during the real estate bust cycle; it happens all the time.
If the person who borrowed money using a mortgage fail to pay back that mortgage, money-lender can use foreclosure as a legal action. Foreclosure allows the lender to take or sell that person’s house by first getting a Court’s permission to do so.
The property owner will not lose their property right away when he misses a mortgage payment or makes a late payment. Lenders don’t want to foreclose if they don’t have to because it is expensive and is a lengthy process. Not until two or three months after the borrower has stopped paying, would the lender probably start to foreclose. Usually, a lender will send out letters requiring payment. Then, if they don’t receive a reply, the lender will usually start to foreclose and to sue at the same time. The foreclosure process differs from province to province in Canada.
Mortgage Jargon – Part 2
If you missed the previous article – Mortgage Jargon – Part 1
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.
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.
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.
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 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
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.
We have been training Canadian Real Estate Investors since 1993
Your success is our business!
Creating an Entourage of Experts Part 1
As a full-time Canadian real estate investor, we must be able to create multiple streams of income for ourselves. In past articles I have gone through many strategies of creating a network and database in order to create an flow of deals coming to us on a regular basis. But that is not enough… it is never enough!
Flipping before closing
Wholesaling is when you wholesale a fixer upper property to a rehabber. Purchase a property no more than 30-60% of its value. LIVE training will teach you to buy deep discounted Canadian real estate properties. Traditional wholesale deal will allow you to find a cash buyer to assign. Properties that need major repairs are great for builders and renovators.
Wholesale real estate
When you wholesale a property subject-to due diligence for 30 banking days it is called a pretty house. Subject-to subject gives professional real estate investors the chance specialize in purchasing properties. Investors cash will never be used as well as your credit. However, in order to purchase a property, you should get at least 40 % discount for the back end profit. The real estate investment is a numbers game.
Expert advise is always sought after by Canadian Real Estate Investors Training and apprenticeship is needed to succeed in Canadian Real Estate investing.
Here are the top 10 Warren Buffett quotes
for Canadian real estate investors. We have broken it down so that everyone can understand how to invest in Canadian Real Estate Investing.You are guaranteed to succeed in Canadian real Estate investing with the willingness to follow directions from the experienced in the field.
Top 10 Warren Buffett Quotes For Canadian Real Estate Investors“Our favorite holding period is forever.”To build true long-term wealth, you must acquire for long term investment for passive income to build wealth.
“Risk comes from not knowing what you’re doing.”Canadian real estate investors who are speculators and gamblers will be doing risky investments.
“I always knew I was going to be rich. I don’t think I ever doubted it for a minute.”Canadian real estate investors must have mindset to stay invested in real estate for long term basis”
“Let blockheads read what blockheads wrote.”Generally, nay-sayers are considered pessimists want to be Canadian real estate investors who say “nay” to everything including training, education and coaching.
“Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it. Despite the economic fluctuations, one must think long term when it comes to Canadian Real Estate Investing.
It creates a flood of motivated panic sellers. Canadian real estate investor knows how to buy low and sell high.
“I will tell you how to become rich. Close the doors. Must know how to be opportunistic. Be greedy when others are fearful.”Greed is for speculators.Always buy it at deep discounted Canadian real estate. Don’t follow the crowd.
“Never count on making a good sale. When bargaining for investment property ensure you are getting the best deal ”If you’re concerned that you cannot sell the property for full value, then buy it at lower – at about 60% of value – and sell lower – at about 90% of its current market value.
“We will reject interesting opportunities rather than over-leverage our balance sheet.”Sometimes the best Canadian real estate deals are the ones you don’t make.
“A public-opinion poll is no substitute for thought.”Only a handful of Canadian real estate investors know the specific techniques for profiting in any market and that’s because they have invested in real estate investment training and apprenticeship.
REI Club for Canadian Investors
Being part of a Networking group (PREIG) Professional Real Estate Investors will ensure that you are on top on the information you need to succeed Real Estate investing.
“The most important quality for an investor is temperament, not intellect… You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.”Don’t worry what the masses are doing.
Utilize the proven techniques by the experts in the field to duplicate their results.“I really like my life. I’ve arranged my life so that I can do what I want.”Remember, that’s what Canadian real estate investing is all about.You eventually want to live your life the way you want it to be.
Cash Buyers for your House,please call
P.S. Success isn’t a matter of chance, it’s a matter of choice. So it’s up to you to make the right choice to become successful. If you don’t know what to do it starts with making the choice to register for this LIVE real estate investors training in your town now and making sure you make the right choice to SHOW UP!!! Learn more to earn more!
Are you a Canadian real estate Investor? Join Canada’s largest real estate investors club now.
Bandit Signs Part 2
If you missed the previous article – Bandit Signs
As a full time Canadian real estate investor, we must be continuously looking for new ways to drive business to us. We have to realize that we are our business and we must be responsible for our business. Our time is our most precious commodity so we must use it wisely. Resting on previous triumphs or letting one or two realtor be the sole sources for your deals is a quick way to go from aq full time to a part time investor.
Turning a Tenant Into a Buyer
As a full-time Canadian real estate investor, we must create various forms of deals to be able to build massive and passive income for ourselves. The way we do this is a continuous stream of income that is produced by short-term holds; creating deals without using any of our own money or incurring any liability, as well as building our portfolio with long-term holds. The latter does not always mean being a landlord. There are many other ways of creating long term holds with monthly income and a very nice backend return.