Buying Rental Property - Be Sure To Diversify Your Investment Portfolio
Over the last couple of years, fairly weak stock markets (compared to the late 90's) along with continued global economic hardship have changed the way many Canadians are investing their hard earned dollars.
A lot more Canadians are going into the rental property marketplace, some affected by the real estate appreciation that we've observed over the last few years. Others would like to add real estate to their investment mix to better diversify their stock portfolios.
Condos and Multi-Units
Additional investment is going on in multi-unit homes which include duplexes, triplexes, and fourplexes, in addition to single-family detached housing. Canadians are looking to have the rent from these investments at the very least cover their costs and, over the long term, gain a reasonable return of investment.
Look at Your Mortgage and Financing Requirements Carefully
Investors who think about adding real estate assets are typically confused about their mortgage financing options. Since the Bank Act makes it possible for only up to 75 percent of the value of a property to be in uninsured financing, a lot of investors who put fifteen percent down work with an insured mortgage for the difference.
The price of the insurance premium may be as high as 2 percent, which can translate into a $6200 cost on a $225000 mortgage. However, not all investors can meet the strict requirements that go along with an insured mortgage on rental property.
An additional alternative for those who have an excellent amount of equity within your principal residence is to take some of that equity out, typically by way of a line of credit, to get a big enough down payment that then might qualify you for a standard first mortgage.
Financing Made Simple
To simplify the procedure, you could also now consider those lenders who have mortgage products particularly designed for small investors who own or are buying a residential investment property. Canadian traders can now access up to $500000 without having expensive mortgage insurance premiums, or even leveraging the equity in their principal home.
Perhaps now more Canadians can heed the wisdom provided by many financial professionals and diversify, diversify, diversify by integrating real estate into their investment portfolios. Then when that's completed, the benefits of going public could be considered as well as capital equities.
If this applies to you, search: company go public.
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