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Is This The Right Time to Buy an Investment Property??
Many of you have asked me that question recently. Now is a good time for me to share with you some unprecedented realities on this subject. The real estate market conditions are very good right now for Buyers and Investors to take that step forward.

1. The Market has cooled down from previous years which means instead of a Seller's Market (More Buyers than Sellers), we are seeing more of a Buyer’s Market (More Sellers than Buyers) now. There are many good opportunities out there now from a pricing standpoint.

2. Mortgage rates have NEVER been as LOW as they are right now. Prime Rate is 3% and “best” 5 year rates are sitting at 4.34%.. Historically when we have seen an adjustment in the Real Estate Market, the interest rates have actually risen. That is not the case now.

3. The Rental Market is currently very robust. Toronto is not only a very diverse city which attracts many corporations and industry, there are very healthy rental market conditions.

4.When looking at building your Portfolio which includes multiple property ownership, we need to focus on monthly carrying costs more than purchase price. Reason being that the key to success here are the carrying costs.

Sample Investment Costing Breakdown

Investment Property Price: $300,000
Downpayment: $30,000
Mortgage Amount: $270,000
CMHC Fees: @2.4% $6,840
Total Financing: $276,840

Principle & Interest @ 4.34% 5yr Term, 35yr amortization .........................15,315.00 /yr... 1,276.30 /month
Property Tax............................ 3,000.00 /yr... 250.00 /month
Total Payment..................... 18,315.00 /yr... 1,526.30 /month

Refinancing of Existing Property

Downpayment for Investment Property........... 30,000.00
Land Transfer Tax ......................................5,700.00
Legal Fees for refinance .................................200.00
Legal fees for Investment property Closing........ 1,300.00
Total.................................................... 37,200.00

Additional Principle & Interest Payment @4.34% 5yr Term 35yr Amortization....................... 2,058.00 /yr... 171.50 /month
TOTAL MONTHLY CARRYING COSTS.............1,697.80/month

This looks like a substantial monthly commitment, Right?

Let’s now look at Potential Income.

Typical 2/3 Bdrm Upper Unit Income..13,200.00/yr...$1,100.00 month
Typical 1 Bdrm Lower Level Income.....10,200.00/yr..$ 850.00 month
TOTAL MONTHLY INCOME.............................. $1,950.00 month

In this Sample “Investment Cost breakdown” you will see that there is a surplus of $252.20 monthly. This amount could be used to Offset your Existing Mortgage on your Principle Residence or Potential Maintenance or simply treating yourself to an Evening Out.

This Sample Investment Cost Breakdown is just an example using average Dollar amounts, ie property price, property tax, etc. Every situation is different so looking for the right property/scenario is important. Feel free to give me a call and I would be happy to help you further your property portfolio.

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