Many people are looking to purchase rental properties in this market and take advantage of the low real estate costs. The only stipulation is that most banks require a 20% down payment for any non-owner occupied rentals. I currently have access to a 10% down payment program for rentals. The interest rates are higher so it is not for everyone, but it is worth looking over.
If you were to purchase a $200,000 rental property with 10% down ($20,000) your bi-weekly payments would be approximately $595. At the end of your 5 year term, you would have just over 22% equity in the house and you could switch to a lower interest rate lender for free upon renewal. Keep in mind; that is if real estate prices did not increase at all, so you could potentially have much more equity then that.
For this example, your outstanding balance would be approximately $155,400 at the end of the term. In order to save up the additional $24,598 of equity that you would then have in the property, you would have had to put aside $410 a month for those 5 years.
As I mentioned, the interest rates are higher but some clients see it is an opportunity to capitalize on this buyer’s market. They can invest in real estate sooner than later and gain equity in the property as well as revenue (hopefully a positive cash flow).
If you were to purchase a $200,000 rental property with 10% down ($20,000) your bi-weekly payments would be approximately $595. At the end of your 5 year term, you would have just over 22% equity in the house and you could switch to a lower interest rate lender for free upon renewal. Keep in mind; that is if real estate prices did not increase at all, so you could potentially have much more equity then that.
For this example, your outstanding balance would be approximately $155,400 at the end of the term. In order to save up the additional $24,598 of equity that you would then have in the property, you would have had to put aside $410 a month for those 5 years.
As I mentioned, the interest rates are higher but some clients see it is an opportunity to capitalize on this buyer’s market. They can invest in real estate sooner than later and gain equity in the property as well as revenue (hopefully a positive cash flow).
A great resource for landords is ROMS BC at www.suites-bc.com
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