Real Estate Investment Financing Tips

March 18, 2011 § Leave a comment

The spring season is coming up and the housing market still appears to be hot! There’s still lots of potential in the growing Toronto market and I thought that the topic of investment property financing should be addressed.

In order to build a strong, well rounded investment portfolio you need to be well equipped. Hopefully you’ve done your research on the area in which the property is located, and you’ve got some capital. But there are some key players involved, too – the solicitor, realtor, and the mortgage broker. Having and building a relationship with your team is so important because they will understand your long-term goals, and understanding is the first step towards success!

Tip # 1 – Make A Plan

A winning portfolio requires a winning strategy; have clear-cut goals for your budget, expectations and long/short term profits. Prior planning and ongoing revision of your plan will keep you focused, save you money and increase your chance of success.

Tip # 2 – Get A Pre-Approval

This seems so basic, but knowing your price range, credit score and rate-hold prior to entering into a purchase agreement can only improve your position. Knowing your situation makes for a more efficient house-hunting experience!

Tip # 3 – Having a Top Notch Broker

Your mortgage broker is your best weapon – if they’re good. There is a difference between a well qualified, seasoned broker that does high-volume and others that are just entering the field. Creating a relationship with a knowledgeable broker that specializes in real estate investment is crucial because they have a better understanding of your game plan. They will have a large pool of private money, financing options and lending products – unlike your bank, which can only offer you a few products.

Tip # 4 – Only Considering The Interest Rate

Anyone in the mortgage business can tell you that a lower interest rate alone doesn’t always make for the best loan. Some things you need to keep in mind is the purpose (short-term or long-term). If long-term cash flow is your aim, then a variable-rate 30-year amortization mortgage might be what you’re after. However, if a short-sale is more likely then an open mortgage that has a higher rate would be ideal as it will save you thousands in penalties.

If you’re an investor in need of sound investment property financing advice, we hope you’ll come to us!

Call John Panagakos at 416-406-1659 ext. 1


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