thrivemortgage

Maximize Tax Benefits: Self-Employed Borrower Mortgage Qualification

Thu, 08 Feb 2024 01:52:23 GMT

Maximizing Tax Benefits for Self-Employed Borrowers

Qualifying for a mortgage as a self-employed individual can be challenging due to the way income is assessed based on tax returns. Understanding the impact of tax planning on mortgage qualification is crucial for self-employed borrowers.

Importance of Accurate Reporting

Self-employed borrowers are evaluated based on tax returns from the last two years, highlighting the significance of accurate reporting. Banks use this information to determine income for mortgage qualification, emphasizing the need for meticulous record-keeping and reporting.

Net Income vs. Gross Earnings

Banks focus on net income rather than gross earnings when assessing self-employed borrowers for a mortgage. Borrowers must understand that net income holds the most weight in the qualification process, regardless of gross earnings.

Impact of Incorporating

Incorporating can provide tax benefits for self-employed individuals, but it can also pose challenges in qualifying based on net income. It's crucial to carefully evaluate the trade-offs and consider the impact of incorporation on mortgage qualification.

Considerations for Alternative Lending

Alternative lending offers programs with less stringent income requirements, but it's important to weigh the costs and benefits. While alternative lending can provide flexibility, it may come with higher rates. Careful consideration is necessary to determine if the tax benefits outweigh the potential drawbacks.

Strategic Tax Planning

Strategic tax planning can have a significant impact on mortgage qualification for self-employed borrowers. Declaring a lower personal income can result in substantial tax savings, but it's important to assess how this decision may influence mortgage approval and long-term financial planning.

Timing of Tax Returns

The timing of tax returns is pivotal for self-employed borrowers. Engaging with an accountant early and considering filing taxes as soon as possible can help mitigate potential challenges. Understanding the timing implications of tax planning is crucial for a smooth mortgage qualification process.

Incorporation for Tax Efficiency

Incorporating a business can help reduce the tax burden on excess funds for self-employed individuals. Considering incorporation based on future plans and income growth is essential for maximizing tax benefits while also ensuring a favorable mortgage approval.

Navigating the intersection of tax planning and mortgage qualification as a self-employed borrower requires careful consideration and strategic decision-making. Incorporating the right tax strategies can lead to substantial savings and favourable mortgage terms. Engaging with professionals and staying proactive in tax planning is key to achieving financial goals.

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First-Time Home Buying in 2024: Your Comprehensive Guide to Navigating the Real Estate Market

Wed, 31 Jan 2024 02:27:49 GMT

Buying your first home is an exciting and emotional journey, and it's crucial to start with a pre-approval to understand your financial capacity. In this blog, we'll dive into the essential steps and considerations for first-time home buyers in 2024.

Importance of Mortgage Pre-Approval

Before diving into the real estate market, getting a pre-approval is a critical first step. It provides a clear understanding of what you can afford and sets the stage for a confident home-buying journey. Understanding the difference between banks and brokers, and the process of pre-approval, is crucial for first-time buyers.

Financial Planning and Credit Fixing

Financial planning is key to successful home buying. Understanding credit issues early and working on fixing them can significantly impact your mortgage approval. Seeking referrals and checking reviews for mortgage providers can guide you in making a reliable choice.

Choosing the Right Mortgage Broker

Experience and expertise are vital when choosing a mortgage broker. Instead of solely focusing on years of experience, consider the number of deals funded and the relevance of their expertise in today's market. Communication and lender access play crucial roles in a broker's effectiveness for first-time home buyers.

Researching Mortgage Brokers and Lenders

Researching online reviews and assessing a broker's history is essential to avoid potential risks. Understanding the impact of past errors on a broker's access to major lenders is crucial in making an informed decision. Stay vigilant and proactive in your research.

Market Trends, Property Upgrades, and Financial Planning

Understanding market changes and planning to stay in a starter home for at least 3 years can help in leveraging potential gains and avoiding market fluctuations. Focus on diligent savings, minimizing additional debt, and exploring options such as gifted down payments and amortization for long-term benefits.

Staying Informed and Leveraging First-Time Home Buyer Benefits

Staying connected with your broker and leveraging tools like qualification calculators are crucial for informed decision-making. Understanding tax implications, the Home Buyers Plan and CMHC premiums can provide significant advantages to first-time home buyers.

Finding the Right Team and Making Informed Decisions

Choosing knowledgeable professionals and understanding the nuances of the real estate market are pivotal for first-time home buyers. Tips for increasing down payment, reducing insurance costs, and working with a reliable team can streamline the home buying process.

Buying your first home is a milestone, and it's essential to approach it with preparedness and knowledge. Understanding the dynamics of mortgage pre-approval, broker selection, market trends, and financial planning can pave the way for a successful home-buying experience in 2024.

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Timing Your Mortgage: Insights on Variable Rates, Refinancing, and Financial Planning in 2024

Thu, 11 Jan 2024 01:55:46 GMT

2023 was a rollercoaster for the real estate and financing industry.

As we enter 2024, we take on the topic of timing the market for variable rate mortgages, refinancing, and making sound financial decisions.

Locking in a Variable Rate Mortgage

With the market on a roller coaster, the decision to lock in a variable-rate mortgage can be perplexing. The podcast delves into the decision-making process, offering insights and considerations to help you navigate this crucial financial move. Real-world examples and expert advice bring this section to life.

From Variable to Fixed: When to Make the Leap

Economic uncertainties can tip the scales in favour of converting to a fixed-rate mortgage. This section demystifies the differences between variable and fixed-rate mortgages and provides practical guidance on when it makes sense to make the switch. Real-life scenarios and relatable anecdotes add depth to the content.

Refinancing in a High-Rate Market

The current high-interest rate backdrop has reshaped the value proposition of refinancing. Gain valuable insights on navigating this landscape, understanding the evolving market dynamics, and making informed decisions. Dive into a case study that illustrates the potential benefits and caveats of refinancing amidst fluctuating rates.

Predicting Interest Rates and Lifestyle Considerations

Step into the realm of forecasting interest rates and unravel the complexities involved. Through engaging narratives and witty anecdotes, this section brings to light the unpredictability of the market and underscores the significance of aligning financial decisions with lifestyle and well-being. Real-world experiences add a relatable touch to the content.

Assessing the Benefits of Refinancing and Locking In

As the conversation steers towards assessing the benefits of refinancing and locking in, practical insights and actionable advice take center stage. Delve into a comprehensive analysis of the financial landscape, contemplating the impacts on credit, potential savings, and the interplay of lifestyle and financial well-being. Real-life scenarios and expert opinions bridge the gap between theory and practical application.

Conclusion:

As the YVR REMO Show leaves us pondering over the ebb and flow of the real estate and financing realm, the key takeaway resonates loud and clear – timing the market is an art that intertwines financial prudence, market dynamics, and individual well-being. Let the wisdom shared in this podcast serve as a compass as you navigate the intricate terrain of variable rates, refinancing, and financial planning.

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2024 Mortgage Predictions: Anticipated Rate Cuts and Property Value Growth

Thu, 28 Dec 2023 20:44:51 GMT

Looking ahead to 2024, we share our predictions and insights for the upcoming year, offering valuable guidance on understanding and navigating the evolving landscape of mortgage rates and property values!

Anticipated Rate Cuts

Renowned expert Benjamin Tal predicts that the first-rate cut may occur in the third quarter of 2024, with expectations that it will not exceed 0.25%. Additionally, variable rates are anticipated to drop by 0.5% and fixed rates by 1% by the end of 2024.

Impact on Property Values

The anticipated rate cuts in 2024 are expected to result in a 10% increase in property values, specifically in the Fraser Valley and Vancouver markets. This positive outlook is attributed to consistent positivity and heightened buyer activity in the region.

Market Considerations

While the Fraser Valley and Vancouver markets are on track for growth, other regions may not experience the same surge due to subdued performance in the preceding years. Psychological barriers revolving around mortgage rates and market timing could potentially influence the market activity and the likelihood of rate cuts by the Bank of Canada.

Strategies for Homeowners

With predictions of rate relief and property value growth, homeowners approaching mortgage renewal are advised to seek guidance from mortgage brokers to navigate potential payment adjustments. Embracing cheaper fixed rates, exploring alternative products, and evaluating opportunities for investment and upsizing are recommended strategies for leveraging the evolving mortgage landscape.

Exploring Payment Relief Options

In anticipation of increasing property values and the potential for rate relief, homeowners are encouraged to explore unique payment relief programs, including options that leverage equity to cover monthly costs for up to a year. Additionally, reverse mortgages are identified as a growing opportunity, especially for retirees or individuals with substantial home equity.

Leveraging Low Fixed Rates

Homeowners with low fixed rates obtained in 2020 or 2021 are encouraged to consider upsizing, taking advantage of favourable rate differentials across property types. Furthermore, investing in pre-sales with longer closing periods is highlighted as a strategic approach to capitalize on future value and lower rates.

Looking Ahead

As we anticipate changes and developments in the mortgage landscape, the upcoming year promises new insights and content from the YVR REMO Show, offering continuous guidance for navigating the dynamic world of mortgages and real estate investments.

Conclusion:

As the predictions for 2024 mortgage rates and property values unfold, homeowners need to remain proactive and informed. By understanding the projected trends and leveraging expert advice, individuals can navigate the evolving landscape of mortgages, unlocking opportunities for financial stability and strategic investments.

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How We Saved a Family's Dream Home!

Fri, 22 Dec 2023 01:23:02 GMT

Imagine being on a tight timeline to secure your dream home and facing challenges with mortgage approval.

That's exactly what this family experienced. But thanks to Thrive Mortgage Co., their story changed for the better.

Family's Time Crunch

This young family was eagerly looking to purchase a new construction townhouse. However, they were on a tight deadline due to various personal and financial constraints. From finding the right deal to securing financing, time was of the essence.

Unexpected Hurdles

Just when they thought all was going smoothly, an unexpected hurdle appeared. The property appraisal came in lower than expected, causing complications with their lender's financing arrangements. It seemed like their dream home was slipping away.

Thrive Mortgage Co.'s Swift Action

Promptly assessing the situation, we quickly identified another viable financing option for the family. The team expedited the entire process to ensure the family's dream could still come true.

Efficient Turnaround

In an astonishing display of efficiency, we not only identified the alternative financing but also closed the deal in just three business days. What seemed like an impossible feat was achieved seamlessly.

Negotiating Smooth Transitions

Not only did Thrive Mortgage Co. secure the financing, but we also went the extra mile to negotiate two separate rate drops before the purchase. The family experienced a smooth purchasing process with no issues or penalties from the developer.

We are dedicated to providing solutions for families in a time crunch and securing their dream homes, even when faced with unexpected hurdles.

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2023 Mortgage and Real Estate Market Recap: Challenges, Trends, and Opportunities

Thu, 14 Dec 2023 00:14:20 GMT

2023 has been a year of challenges and opportunities for the mortgage and real estate industry.

Despite facing rate hikes and market disruptions, there have been valuable insights and strategies emerging.

In this blog, we'll take a closer look at the key highlights of the mortgage and real estate market in 2023.

Challenges and Market Trends

The real estate market in 2023 faced a slow start and rate hikes in December and January. However, it gained momentum in spring with subject-free offers and high activity. This was disrupted by rate hikes in June and January, leading to a quieter market in August and September. The key takeaway is to consider short-term fixes over long-term in the current market.

Opting for Short-Term Fixes

Buyers in 2023 have shown a preference for short-term fixed interest rates to capitalize on the current market conditions. The trend towards short-term fixed rates has been evident, with little interest in variable rates. Additionally, many short-term mortgages signed in 2023-2021 will be up for renewal in 2025-2026, creating potential competitive pricing from banks.

Influence of Inflation on Rates

Inflation reports have significantly impacted interest rates and the real estate industry in the past year. Recent signs of cooling inflation have led to banks cutting rates and reaching out to clients earlier for renewals. Despite a 75% increase in rates this year, there are expectations of a pause. Changes in the economy, including job losses, have also contributed to the pause in interest rate hikes.

Positive Market Signals and Regulatory Changes

Renewals have been slow with low rates from banks, while bond yields are down, contributing to positive buyer sentiment. However, major restrictions on short-term rentals like Airbnb in BC could affect the rental market. Furthermore, regulatory changes in BC aim to increase long-term rental inventory due to the shortage of rental properties.

Expansion of Alternative and Private Lending

Regulatory limitations have led to the expansion of alternative and private lending, benefiting self-employed and non-traditional borrowers with credit challenges. The re-entry of banks such as Bank of Montreal into the broker channel and the increased activity of smaller credit unions offer more financing options and indicate the expectation of more competition and unique products for borrowers. Private lending companies have seen great returns, emphasizing the current need for private lending.

Conclusion:

In summary, the mortgage and real estate market in 2023 witnessed both challenges and positive developments. Buyers have leaned towards short-term fixes, while the influence of inflation and regulatory changes has impacted market dynamics. The expansion of alternative and private lending presents opportunities for diverse financing options. As we move forward, it's crucial to adapt and strategize in response to the evolving market conditions.

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Navigating the End of CEBA: A Crucial Deadline for Canadian Businesses

dean@thrivemortgage.ca (Dean Lawton) — Tue, 12 Dec 2023 19:51:20 GMT

The the Canada Emergency Business Account (CEBA) loan was a critical lifeline for many businesses during the Pandemic.

The program offered up to $20,000 of free funding, however time is quickly running out to pay out this Loan.

Here is a quick guide on what you should know:

Deadline Alert:

CEBA ends on January 18th.

$20,000 Credit at Stake:

If not paid by Jan 18th, you might lose a credit of up to $20,000.
Example: If you borrowed $60,000, pay only $40,000 if settled by the deadline.

Full Repayment Risks:

Miss the Jan 18th deadline, and the entire borrowed amount becomes due.

Options to pay off Loan are Limited & Costly:

Without cash, options to pay off loan are limited.
Business Loans & “unsecured debts” over $10,000 are very difficult to qualify for
Interest rate ranges are typically 7-20%
Bank/Branch approval processing times are lengthy

Home Equity as a Solution:

Consider your home equity as a potential solution. “secured” loans (eg – mortgage products) are the cheapest form of financing in Canada
It could offer relief amid challenges in securing business loans.

Act Quickly:

Time is short – just over a month left.
Act swiftly to secure the full benefits of the CEBA program.

With CEBA ending soon, make informed decisions promptly. The best solution to paying off this loan and receiving the full value of the program may be right at home.

Please get in touch with THRIVE Mortgage Co. for a complete and complementary mortgage review to see if there is a Mortgage Product available to help your business.

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Are Interest Rates at a Turning Point? Exploring the Real Estate Market

dean@thrivemortgage.ca (Dean Lawton) — Wed, 29 Nov 2023 19:20:27 GMT

Explore the current state of the Canadian real estate market, the factors influencing interest rates, and whether now is the right time to buy or wait for property values to increase.

Discover the benefits of variable and fixed-rate mortgages, strategies for mitigating risk, and gain insights from a year in review and predictions for 2024.

Is the Canadian Real Estate Market at a Turning Point?

Introduction:

With the Bank of Canada pausing interest rate hikes and negative trends in Canadian inflation, retail sales, and employment data, many are wondering if the Canadian real estate market is at a turning point. In this blog post, we explore the current state of the market, the factors influencing interest rates, and whether now is the right time to buy or wait for property values to increase.

The Pause in Interest Rates

The Bank of Canada's decision to pause interest rate hikes is a significant indication that the market may be slowing down. This pause provides an opportunity for potential buyers to take advantage of the current favourable rates without the worry of an imminent increase. However, it's essential to consider the long-term implications and potential risks of a reverse in the market.

Predicted Decrease in Interest Rates

Many economists predict a decrease in interest rates in the coming years. Negative news and economic indicators often lead to an increase in bond investments and a decrease in fixed-rate pricing. As a result, rates are becoming increasingly competitive, offering significant savings for borrowers. Mortgage brokers, equipped with a deep understanding of mortgage pricing, can negotiate better rates for their clients.

Choosing Between Variable and Fixed-Rate Mortgages

One crucial decision for homebuyers is choosing between a variable and fixed rate mortgage. Variable-rate mortgages provide immediate benefits when rates come down and can be converted to fixed rates if desired. On the other hand, fixed-rate mortgages offer consistency and peace of mind, albeit at a slightly higher cost. It's important to have detailed conversations with a mortgage professional to explore all the options and assess the potential risks and rewards.

Mitigating Risk with Multiple Financing Blocks

As the market experiences potential fluctuations, it may be wise to consider breaking up your financing into multiple blocks or combining different types of loans to mitigate risk. This strategy allows flexibility and reduces the exposure of a significant financial commitment to a single type of mortgage. Consulting with a mortgage professional can help determine the best approach based on your unique circumstances.

Year in Review and 2024 Predictions

As we approach the end of the year, the host of the YVR REMO Show is excited to wrap up with a year-in-review episode, highlighting key events and trends that shaped the Canadian real estate market. Additionally, there will be prediction episodes for 2024, providing insights and forecasts for what lies ahead in the real estate industry.

Conclusion:

While the Canadian real estate market may be at a turning point, it's crucial to carefully consider the pros and cons of buying now versus waiting for property values to increase. With interest rate fluctuations and the potential for a market reverse, it's essential to consult with a mortgage professional and strategize based on your individual goals and risk tolerance.

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Have We Finally Hit a Turning Point With Interest Rates in Canada?

Fri, 17 Nov 2023 00:30:07 GMT

Over the past two weeks, we’ve had a series of major economic data points get released that may signal a turning point for the Canadian Mortgage & Real Estate Market.

Here is a quick summary of those events:

The Bank of Canada hit Pause – Oct. 25 ^th (Eg. NO rate hike).

American Federal Reserve hit Pause – Nov. 1 ^st (Eg. NO rate hike)

The US October Inflation Report (CPI) was softer than expected.

Canadian Retail Sales Fell (Eg. Canadians are pulling back spending).

Employment data in US: Less Jobs added then expected, unemployment rose higher than expected along with a massive revision downwards from prior payrolls report (eg – economy added significantly fewer jobs than previously reported)

Retail Sales in the US are slumping.

WHY THE WEAK ECONOMIC DATA?

In short: it means the rate hiking cycle by we’ve been experiencing is now finally biting the broader economy. (Of course, we have already been feeling the effects in the Real Estate industry!)

In General, once a rate hiking cycle begins it takes up to 18 months for the effects to filter through the economy, and we are now rolling into month 20 since the BoC started hiking rates.

So, what does this all mean for the Canadian Real Estate Market?

In response to soft economic data, the market has been reacting dramatically with Bond Yields crashing. This is especially important to the RE industry as Bond yields move FIXED rate mortgage pricing!

Basically: Bond Yields Falling = Fixed Mortgage Rates Falling.

What We're Doing at THRIVE:

We're actively requesting, and successfully securing rate drops for our clients on existing approvals.

Reconnecting with clients whose rate-holds have expired to offer them these new, lower rates.

Discussing with clients the best mortgage terms for their situation, and offering how to play a potential change in interest rate direction.

Nothing but Good News for Buyers:

The recent shift in the mortgage market is welcomed news for those considering buying a home. Timing the market is nearly impossible, however, if you have been on the fence about making a move, the future looks a bit brighter today than it has over the last ~6 months. Rate drops have started across many of our lending partners, so if you are kicking tires about a purchase - get in touch to get a feel for mortgage pricing.

As they say: "Marry the home, date the rate"

NARRATIVE CHANGE?

If you’re still reading along (thank you!)

I will leave you with this: After nearly 2 years of Media reporting Interest Rates were headed to the Moon, this recent bevy of economic data has seemed to change the tune of the media. And while 2-3 weeks is not officially a trend, check out the headlines over the last few days:

(Click the headlines to view the articles) ⬇️

' Canada’s Central Bank Will Have To Cut Interest Rates Faster and Further Than Markets Expect '

“The Bank of Canada will be forced to cut 2 percentage points from its policy rate over the next 12 to 18 months.”

'The Market Is Wrong' on Rate Cut Timeline: ' (eg cuts to happen sooner)

“(The Bank of Canada) actually should be thinking about cutting rates, but it’s hubris that’s preventing them from doing that,” he added. In this economic environment, Rosenberg believes the Bank of Canada will need to act fast. “Rates are going to be coming down much more quickly and forcefully than the markets (have) priced in right now,” he warned.

Mild recession could quickly get worse without rate cuts: experts

"... if the current economic trends continue, interest rates could start to come down during the first quarter of next year.”

Macklem says Bank of Canada could cut rates before inflation reaches target

“..“We would love to be surprised and find out that we were too pessimistic and we’re able to bring rates down sooner. … We will look forward as much as Canadians to getting interest rates back to a neutral level.”

Thanks for reading along, as always: Please feel free to drop me a line, text, or email with any questions or comments!

Best regards ,

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Understanding the FHSA: A Guide for First-Time Home Buyers

dean@thrivemortgage.ca (Dean Lawton) — Wed, 15 Nov 2023 01:48:09 GMT

Are you a first-time home buyer in Canada? If so, you need to know about the First Home Savings Account (FHSA). In this comprehensive guide, we will break down what the FHSA is, how it works, and how it can benefit you. Join us as we dive into the details of this government program and explore real-world examples to help you make the most of the FHSA.

Understanding the FHSA: A Guide for First-Time Home Buyers

What is the FHSA?

The FHSA, or First Home Savings Account, is a government program designed to assist first-time home buyers in Canada. It combines the tax deduction benefits of the Tax-Free Savings Account (TFSA) and the Registered Retirement Savings Plan (RRSP). By opening an FHSA, you can contribute funds and receive a tax refund on the amount deposited.

Who is eligible for an FHSA?

Any Canadian resident can open an FHSA as long as they meet certain requirements. This includes permanent residents who are looking to purchase their first home. To be considered a first-time home buyer, you must not have owned a home for at least four years. If you meet these criteria, you are eligible to take advantage of the FHSA program.

Benefits and Costs of the FHSA

While the FHSA is a great tool for saving towards a home, it's important to be aware of the potential costs. Opening an FHSA may come with annual fees, ranging from $25 to $100, depending on the institution. Additionally, there may be management expense ratios and other investment-related fees. Despite these costs, the long-term benefits of the FHSA can far outweigh the expenses.

Using the FHSA for a Home Purchase

When you are ready to purchase a home, you can withdraw the funds from your FHSA. To qualify for a home purchase withdrawal, you need to have a written agreement to buy or build a qualified property. You can access the funds up to 30 days after the completion date. This withdrawal is tax-free and does not need to be repaid.

Maximizing the FHSA with the Home Buyers Plan

To further maximize your savings, you can also utilize the Home Buyers Plan (HBP) in conjunction with the FHSA. The HBP allows you to withdraw up to $35,000 from your RRSP tax-free for a home purchase. By combining the FHSA and the HBP, you can contribute a total of $75,000 towards your home purchase. $40,000 from your FHSA and $35,000 from your RSVP. This can result in a substantial tax refund and provide you with more funds for your dream home.

Repaying the FHSA and Planning for the Future

While the FHSA does not require you to repay the funds, it's important to consider your long-term financial goals. Repaying into the HBP can maximize tax deductions, but it's not the only option. If you choose not to repay the FHSA funds, they become taxable income. However, there may be other opportunities, such as using the funds during maternity leave. Proper planning is crucial to make the most of the FHSA and other financial planning options.

Qualifications and Designations

Understanding the qualification process is key when opening an FHSA and when withdrawing funds. Additionally, knowing the difference between a successor holder and a beneficiary designation is crucial in financial planning. A successor holder is typically a spouse, while a beneficiary can be anyone. By naming your spouse as the successor holder, they can keep their TFSA and acquire your TFSA contribution room as well.

Get in Touch

If you have any questions or need assistance, feel free to reach out to the hosts of the show. They are experts in the field and are available to provide further guidance. Don't hesitate to contact them directly for any inquiries or introductions.

Conclusion:

The FHSA is a valuable program for first-time home buyers in Canada. By understanding how it works and taking advantage of the tax benefits, you can save more effectively towards your dream home. Whether you choose to repay the funds or explore alternative options, proper planning is key. Don't miss out on the opportunity to make the most of the FHSA and reach out to the experts for personalized assistance.

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Exploring Mortgage Renewal Options: A Guide for Today's Market!

Wed, 11 Oct 2023 01:59:02 GMT

With mortgage renewals becoming a concern for nearly 70% of homeowners, it's crucial to plan ahead and assess your options. In the next 12 months, 19% of all renewals in the country are coming up, and a significant number of people are worried about payment shock. In this blog post, we will delve into the critical differences and options available to navigate the mortgage renewal process in today's market.

Start Planning Early for Mortgage Renewal

It's essential to start planning early for your mortgage renewal to avoid higher rates.

Experts recommend reaching out to your mortgage provider as early as 12 months before your renewal date.

This will give you ample time to explore different options and adjust your income structure if needed.

Beware of Banks' Renewal Packages

Banks often send out renewal packages with rates that are higher than the market rate.

It's crucial not to assume that the automated renewal letter is the best option. Instead, take the time to consider all available mortgage terms and rates.

Don't be fooled by the first offer; explore all your options and negotiate to get the best deal.

Personalized Conversations with Brokers

Mortgage clients need personalized conversations with brokers before renewal.

While big banks may lack the resources or staff to provide this level of personalized advice, brokers have the ability to reach out, book calls, and offer tailored recommendations.

It's important to have these conversations to avoid massive penalties and make informed decisions.

Consider Reamortization to Lower Payments

If you're experiencing payment shocks or are concerned about potential payment increases, re-amortization can be a viable option.

Re-amortizing your mortgage can help lower your minimum payment and even qualify you for other properties.

This can save costs down the road and offer greater financial flexibility.

Exploring Alternative Options

In addition to re-amortization, there are other alternative options to consider, such as lines of credit and second mortgage products.

Lines of credit can act as a buffer during tough times and may be easier to qualify for.

Second mortgage products allow you to borrow for life expenses upfront and often cap the payments. However, it's crucial to assess the repayment of the second mortgage within the next two years.

Leveraging Equity for Financial Benefits

Leveraging your property's equity can provide various financial benefits. It can be cheaper than withdrawing from a corporation with high taxes and can offer tax benefits when used for investments.

There are more reasons to leverage equity than just payment relief and debt consolidation. However, it's vital to carefully assess your situation and consult with a financial advisor before proceeding.

Mitigating Qualification Concerns

High-interest rates have made it harder to qualify for mortgages and other loans. However, there are payment relief programs available to help mitigate qualification concerns.

If you don't qualify for your current mortgage, you may have the option to auto-renew into a more flexible product.

Additionally, lenders may cover certain costs, such as legal services and appraisals, to make the process smoother.

Treat Your Mortgage Renewal Like Buying a Home

When renewing your mortgage, treat it as if you are buying a home.

Aim for the longest rate hold possible and explore different lenders for better rates.

Establishing the current value of your home and making adjustments based on that value is essential.

By following these steps, you can ensure a successful mortgage renewal process.

Conclusion:

Navigating the mortgage renewal process requires careful consideration and planning. By starting early, exploring options, and seeking personalized advice from brokers, you can avoid costly mistakes.

Re-amortization and alternative options like lines of credit and second mortgages provide financial flexibility.

Leveraging equity can offer several benefits, but it's important to evaluate your individual circumstances. Mitigate qualification concerns through payment relief programs or renew into flexible products.

Treating your mortgage renewal like buying a home and seeking out the best rates from different lenders will contribute to a successful outcome.

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Bank of Canada Roundtable - Will The NO CHANGE Impact Rates?

Tue, 12 Sep 2023 18:30:08 GMT

On September 6, The Bank of Canada decided not to raise rates.

We sat down to discuss the announcement, what to expect, and how it impacts you.

�� Bank of Canada holds overnight rate at 5%

Economists predicted a 10% chance of rate going up after GDP report. There is a possibility that we see rate hikes in the future.

GDP contraction may lead to rate cuts, good news for Canadian borrowers ��

The labor market and the economy need to contract for rate cuts to happen.

The Bank of Canada report may be confusing, mentioning both decreased and increased inflation.

Is There Potential for further rate hikes ��

The Bank of Canada aims to keep inflation between 2% to 3%.

Bank of Canada's decision does not directly impact fixed rates.

Rate holds for pre-approved home buyers may expire soon, potentially leading to higher interest rates.

The current impact is on variable mortgages and lines of credit, which are unaffected.

In the past year and a half, there have been 10 rate hikes and only 3 meetings without rate increases. Rate holds that were locked in at lower rates several months ago are starting to expire, resulting in higher rates.

Home buyers need to be aware of their dates, rates, and how it will affect their qualification and overall cost.

Expectations for higher inflation and uncertain impact of interest rate hikes.

Pre-approvals that are expiring should be addressed. Experts believe a higher interest rate may not significantly impact inflation yet, but it remains uncertain.

Monitor closely for any potential changes in interest rates.

The hope is that fixed rates will drop based on the impact from the Bank of Canada.

The Bank of Canada has been consistently wrong in their outlook on rates over the past two years. It's good news, but caution is advised as things could change. Buyer sentiment and market timing are factors to consider when determining the right time to jump in.

Rates and house prices are inversely related. ⏪

As rates go up, house values come down.

As rates go down, house values go up.

�� discussion on the Bank of Canada update

The discussion was aggressive and lasted for 18 months. The feedback received will impact future actions and market monitoring.

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Bank of Canada Holds The Overnight Policy Rate Steady at 5%

dean@thrivemortgage.ca (Dean Lawton) — Mon, 11 Sep 2023 18:59:00 GMT

The Bank of Canada took another breather on September 6, as was expected.

The slowdown in Q2 growth and household credit triggered the pause.

The Governing Council cautioned that they will raise rates again if inflation pressures mount.

This article is referenced from Dr. Sherry Cooper and Dominion Lending Centres

Click here for their main article

Bank of Canada Holds Rates Steady Acknowledging Economic Slowdown

With last Friday's publication of the anemic second-quarter GDP data, it was obvious that the Bank of Canada would refrain from raising rates at today's meeting.

Economic activity declined by 0.2% in Q2; the first quarter growth estimate decreased from 3.1% to 2.6%.

Today's press release announced, "The Canadian economy has entered a period of weaker growth, which is needed to relieve price pressures."

The Q2 slowdown in output reflected a "marked weakening in consumption growth and a decline in housing activity, as well as the impact of wildfires in many regions of the country. Household credit growth slowed as the impact of higher rates restrained spending among a wider range of borrowers. Final domestic demand grew by 1% in the second quarter, supported by government spending and a boost to business investment. The tightness in the labour market has continued to ease gradually. However, wage growth has remained around 4% to 5%."

Lest we get too comfy with a more dovish stance in monetary policy, the central bank warned that the Governing Council remains resolute in its commitment to restoring price stability.

Inflationary pressures remain broad-based. CPI inflation rose to 3.3% in July after falling to 2.8% in June. Much of the rise in July was caused by the statistical base effect. Nevertheless, current harbingers of inflation remain troubling. The increase in gasoline prices in August will boost inflation soon before easing again. "Year-over-year and three-month measures of core inflation are now running at about 3.5%, indicating little recent downward momentum in underlying inflation. The longer high inflation persists, the greater the risk that elevated inflation becomes entrenched, making it more difficult to restore price stability."

The Bank also continues to normalize its balance sheet by letting maturing bonds run off. This quantitative tightening keeps upward pressure on longer-term interest rates.

Tiff Macklem and company concede that excess demand is diminishing and the labour markets are easing. The unemployment rate rose to 5.5% in July, up from a cycle low of 4.9%, and job vacancies continue to decline. Net exports have slowed, and the Chinese economy has weakened sharply. Consumers are tightening their belts as the saving rate rose and household spending slowed markedly in Q1.

Monetary policy actions have a lagged effect on the economy. As mortgage renewals rise, peaking in 2026, the economic impact of higher interest rates will grow. Homeowners renewing mortgages this year are seeing roughly a doubling in interest rates.

The Governing Council will focus on the movement in excess demand, inflation expectations, wage growth and corporate price decisions.

Bottom Line

The Bank of Canada, though independent, is coming under increasing political pressure. In an unusual move, the premiers of both BC and Ontario have publicly called for a cessation of rate hikes. Even so, the BoC is keeping its hawkish bias to avoid a bond rally that could trigger another boost in the housing market, similar to what we saw last April. The government bond yield is hovering just under 5%, having breached that level recently with the release of robust US economic data.

There are two more meetings before the end of this year, and many are expecting another rate hike in one of those meetings. The odds of this are less than even, given the downward momentum in the economy.

The central bank’s next decision is due October 25, after two releases of jobs, inflation and retail data, gross domestic product numbers for July and an August estimate.

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Who's Doing What In The Current Market and Why?

Wed, 09 Aug 2023 19:57:25 GMT

In this episode of the YVR Remo show,

we discuss the current market slow down and transactions that are happening !

Certain transactions are still happening in the current market

Variable rate mortgage holders are considering their options.
People are still buying homes despite market conditions.

Multi-generational living and downsizing are common trends in the real estate market.

Elderly individuals are selling their homes and buying new ones with their children's help.
First-time home buyers are getting assistance from their families.
Rental purchases out of town are becoming more popular.
People are moving to smaller towns with cheaper living costs.
Some individuals are relocating to other provinces for better employment opportunities and lower living costs.

First-time buyers are comparing the cost of buying a home to renting and finding it to be similar.

Many first-time buyers are unfamiliar with the home buying process.
The total cost of living from renting to buying is comparable.
Interest rates and rate holds are important factors to consider when buying a home.

Importance of rate holds and mortgage renewal options.

Rate holds can protect purchasing power when rates increase.
Explore different lending options to secure favorable rates.
Consider reamortization or refinancing for payment relief.
Seek a third-party opinion for guidance during uncertain times.

Consider extending the amortization period to lower payments.

By opting for a 30-year amortization instead of 25 years, you can secure a lower mortgage rate.
Don't be discouraged by the increase in mortgage term - think of it as a temporary solution to weather the current economic storm.
Another option is to explore second mortgages or home equity line of credit for additional funds without disrupting your existing mortgage.
Positive news: Scotiabank has reentered the mortgage market after a year of being priced out.

Scotiabank offers competitive rates and excellent programs for borrowers

Scotiabank has a high net worth program and a self-employed program.
Good news for the mortgage and real estate business.
Borrowers with Scotiabank mortgages should check for potential rate drops.
Bio financing is driven by life situations and becoming more common.
Pre-sale financing for properties with delayed completion timelines.

It is important to plan early and be aware of mortgage rates and qualifications when purchasing a pre-sale property.

Construction delays and municipality approvals can affect mortgage rates and qualifications.
Pre-qualification rates may not be valid at the time of purchase.
Early planning allows for alternatives such as adding a cosigner or increasing down payment.
There are programs available to lock in current rates for future purchases.
Lack of insurance and mortgage protection may require re-qualification in the event of death.

Reverse mortgages are becoming more popular, especially for seniors who prefer to stay in their homes and utilize the equity.

Reverse mortgages allow homeowners to access the equity in their homes while still living in them.
These mortgages are particularly beneficial for older individuals who may never pay off their mortgage balance, yet are still making monthly payments.
The black cloud surrounding reverse mortgages is diminishing as more lenders offer flexible products for various age groups.
A deep dive into reverse mortgages will be done in a future episode.

HOW TO REACH US! ��

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Standing Out In a Competitive Market!

Wed, 10 May 2023 01:58:45 GMT

Multiple offers are back on the rise!

It's important to know how to stand out in this market. We're going to cover tips and tricks that can help you out!

⬇️ WATCH THE VIDEO BELOW ⬇️

⬇️ TIPS FOR STANDING OUT IN A COMPETITIVE MARKET ⬇️

It's important to get a legitimate pre-approval to know your maximum offer amount.

DON'T DO ANYTHING HALFWAY, COMMIT TO THE PROCESS.

✅ Get a proper pre-approval for a competitive market

Provide around 10 documents for a true pre-approval.
Consider property taxes and strata fees to adjust maximum qualification.
Be cautious of going over asking price and work with a trusted realtor.

✅ Boost your down payment to qualify for more options

Consider using extra funds to increase your down payment
Qualification ratios and lender options improve at 20% down

�� Increase deposit to show seriousness of offer

Deposit is due at time of making offer firm
Average deposit in market is 5-10% of purchase price
Larger deposit makes offer more appealing and may result in smaller purchase price
Consider deposit financing options if cash is not readily available

✅ Flexibility with closing dates and financing timeline is crucial in real estate transactions

First-time homebuyers have more flexibility with closing dates.
Lenders typically require at least three weeks for completion due to human involvement in the process.

⛔️ Avoid subject to sale clause in competitive markets

Buyers without subject to sale clause have an advantage
Sellers should be aware of net sale proceeds and other costs

➡️ Due diligence is crucial before making an offer

Home inspection and appraisal are important for financing
Consider other inspections like well water or septic field testing

✍�� Writing a letter to the seller can be a successful tool in a competitive market

Include personal details about yourself and your family to create an emotional connection with the seller
A well-written letter can make you stand out and potentially win a bidding war

HOW TO REACH US! ��

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Subject Free Offers...Here We Go Again!

Wed, 03 May 2023 22:47:55 GMT

We are going to cover subject-free offers in a low inventory market, risks, benefits, and the new rescission period in BC.

Risks of subject-free offers in a competitive real estate market

Subject-free offers remove conditions on a purchase, making it more competitive.
Low inventory and high demand are fuelling bidding wars, leading to more subject-free offers.

Understanding the new home rescission period

Home rescission period is a three-day window for subject-free offers with a penalty of 0.25% of the purchase price if the buyer pulls out before the period ends.
The home rescission period applies to residential properties and excludes commercial properties. Buyers with less than 20% down payment and insured mortgages should avoid subject-free offers.

Avoid going subject-free while buying a home

Going subject-free is risky as the insurer could decline the file, leaving no other option for financing.
Understand the worst-case scenario and its impact before making a decision.

�� Knowing worst case scenario is important before going subject-free

Consider backup options like parents with HELOC or co-signers.
Stratified properties can be a big concern for lenders, extra preparation is needed.

�� Identifying property issues upfront is crucial

Property disclosure statements can reveal potential issues.
Non-conforming properties, non-permitted renovations, and previous grow-ups can cause financing issues.

Working with a professional broker is important for risk mitigation in real estate transactions.

Brokers actively work through different scenarios and have access to multiple lenders to find solutions.
Self-employed clients with income challenges should consider alternative lending options for risk mitigation.

�� Banks prefer automated pre-approvals to save costs

Underwriters are expensive and banks don't want to pay for deals that may not go through.
Mortgage brokers provide more options and risk mitigation for buyers.

�� When going subject-free, ensure you have help to mitigate risk

Consider putting an extra 50-200k down or having family co-sign.
Ensure you have a clause in the contract to access the property after the recision period for due diligence and financing.

How to Reach US! ��

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Worried About Your Mortgage Renewal?

dean@thrivemortgage.ca (Dean Lawton) — Tue, 02 May 2023 20:49:39 GMT

Learn about mortgage renewal options and how to move to another lender without penalties.

⬇️ WATCH THE VIDEO BELOW ⬇️

Mortgage Renewal: You are a free agent ��

At renewal, you can move your mortgage to another lender without penalties or costs.
Explore your options and programs available to make an informed decision.

✅ Consider all options for mortgage renewal

Check the interest rate offered by your current lender
Consult with a mortgage broker or professional to explore other options in the market

✅ Consider switching lenders for better rates and services

Options are available to negotiate with current lender
Switching lenders can provide opportunities for home equity and debt consolidation

�� Act now to explore mortgage options

Being a free agent allows for cost-free exploration
Delaying decisions may result in costly penalties

✅ Consider other lenders for home equity line of credit

Qualification may vary among lenders
Goals such as investment property or business should be considered

➡️ We help educate and direct you to the right choice for insurance options.

Working with us in the broker channel is important for all aspects of coverage.
We spend a lot of time doing a deep dive to ensure you're covered in all aspects.

Early renewal programs and rate locking options can help with mortgage renewal.

Many lenders offer early renewal programs.
Rate locking options can be used if early renewal is not available.

��Early planning is key to success

Having a good plan in place is crucial
Assistance is available to help with planning

How to Reach US! ��

Call 604.398.5575 or Email us!

More Questions or READY to get started!?

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Leveraging Your Home To Buy An Investment Property

Sat, 29 Apr 2023 21:46:33 GMT

Discover the importance of choosing the right lender and product, and explore expert tips on property selection, demographics, and financing options.

In recent years, the popularity of real estate investing has grown significantly. Using home equity to buy investment property has become an increasingly popular strategy among homeowners. This approach allows them to leverage their existing property to acquire rental properties and maximize their return on investment. In this blog post, we will explore the process of tapping into your home's equity, choosing the right lender and mortgage product, and selecting the perfect rental property.

The YVR Remo Show is here to guide you through the process of leveraging your existing property to buy rental properties and maximize your return on investment. In this episode, we discuss the strategies and processes involved in tapping into your home's equity, choosing the right lender and mortgage product, and selecting the perfect rental property. Watch the full episode or keep reading for a summary of how you can use your home's equity to invest in real estate.

Why invest in real estate?

Real estate investing can provide long-term benefits and consistent cash flow. The appreciation and leveraging of properties can lead to significant returns compared to traditional investments like GICs. Moreover, real estate can be a valuable asset for those without traditional pension plans, providing a reliable income stream during retirement.

How to Leverage Your Home Equity, what are your options?

Home equity refers to the difference between the market value of your home and the outstanding mortgage balance. To leverage your home equity, you will need to access the equity in your property, which is similar to obtaining a mortgage. Typically, you can borrow up to 80% of your home's value. One popular option to access your home's equity is through a home equity line of credit (HELOC), which provides instant access to funds.

It's essential to explore all financing options for rental properties and consider all-in-one mortgages.

These mortgages combine a regular mortgage component with a line of credit, allowing you to utilize the line of credit to buy rental property and convert the owing balance to a fixed term. Working with a mortgage broker can help you review multiple scenarios and choose the best financing option for your needs.

1. Home Equity Loan:

A home equity loan is a lump-sum loan that allows you to borrow a specific amount of money using your home's equity as collateral. The loan is paid back in fixed monthly installments, typically over a period of 5-30 years.

2. Home Equity Line of Credit (HELOC):

A HELOC is a revolving line of credit that allows you to access your home's equity as needed, up to a predetermined limit. This option provides flexibility, as you can draw funds when required and only pay interest on the borrowed amount. HELOCs typically have a variable interest rate and a draw period, followed by a repayment period.

3. Cash-Out Refinance:

A cash-out refinance involves replacing your current mortgage with a new one for a higher amount. The difference between the old and new mortgage balances is paid to you as a lump sum. This option allows you to tap into your home equity while potentially securing a lower interest rate or better mortgage terms.

4. Second Mortgage:

A second mortgage is a separate loan taken out in addition to your existing mortgage. This option allows you to borrow against your home equity while maintaining your current mortgage. However, second mortgages usually come with higher interest rates compared to first mortgages.

Choosing the Right Lender and Mortgage Product

When using home equity to buy an investment property, it's crucial to choose the right lender and mortgage product rather than solely focusing on the interest rate.

Different lenders treat rental income differently, which can impact the amount you qualify for.

Preserving your current interest rate is possible with a home equity line of credit or a second mortgage product.

Therefore, it's essential to work with a mortgage broker who is well-versed in rental mortgage products.

Selecting the Perfect Rental Property

Before buying a rental property , consider the demographics, numbers, and location.

A rental that is in close proximity to amenities like transit, stores, and parks may get higher rents than places that are further away.

To get a feel for the area, walk around at different times of the day and assess the neighborhood. Additionally, use a detailed performer to understand the average vacancy rate and be conservative with your projections.

Alternative Savings Plans

If you're facing a deficit, consider a forced savings plan instead of traditional savings methods. By understanding your personal budget, you can make informed decisions and allocate funds from traditional savings to cover shortfalls on rental properties.

Additionally, consider turning your current property into a rental property and purchasing a new one with as little as 5% down. This strategy can help you diversify your investments and strengthen future loan applications.

Do you want to use your home equity to buy a rental property?

Using home equity to buy investment property can be a powerful strategy to grow your wealth and achieve financial stability.

By leveraging your existing property, choosing the right lender and mortgage product, and selecting the ideal rental property, you can maximize your return on investment and secure long-term financial benefits. Start the conversation today, and unlock the potential of your home.

We're Hiring!

Sat, 19 Nov 2022 01:12:30 GMT

Business Development & Marketing Manager

Job description

Welcome to the career you always wanted, as a member of one of the top lending teams in the country.

Your role as Business Development & Marketing Manager is to utilize previous general marketing experience and your well-developed communication skills to design, develop and implement promotional marketing activities to our realtor and professional referral sources, internal promotion and marketing to our existing clients, and developing new partner and client relations. To create general public campaigns including social media and online programs.

You are responsible for execution of numerous development & marketing campaigns both direct to referral sources and clients, and indirect through general marketing and community activities.

New team members will receive expert guidance, focused support, and training to support and build your personal skill development, product and process efficiency, and knowledge.

We value and treasure our team members' growth both personally and professionally, we can't wait to meet you!

We Value:

Professional attitude, strong independent work ethic
Problem Solving (thinking on your toes)
Attention to detail in all execution details, strong pre-planning focus and diligent implementation and execution
New ideas & innovation promoted
Team Player!

You Have:

Are confident and skilled at developmental marketing, direct personal communication and presentation activities, extending a professional, positive, inviting attitude towards those to which you communicate.
2-3 years of Marketing Management experience directly with public and clients. Previous experience in mortgage broker related marketing activities is an asset.
Exceptional written and communication skills
Excellent organizational and time management skills and the ability to prioritize work
Desire to grow, learn and willingness to EXCEED expectations.
Ability to adapt and complete tasks with minimal supervision
Experience with CRM and computer programs is required

A good understanding of mortgage products, real estate transactions and related market activities is considered a serious asset.

Some of Your Responsibilities:

Design, creation, implement and execution of varying marketing & referral development programs including presentations to interested parties in group settings.
Design, create, implement and execute general community marketing materials, advertising and community events
Data Entry & CRM updating
Managing tasks & following up a variety of tasks until completion
Client Care - Ongoing Data Mining programs for existing clients and to design, create, implement and execute these programs to promote new mortgage lending opportunities and overall client happiness.
Team members are available for program execution support
Design, create, implement and execute various online and social media programs

Work Remotely

Some Remote - must be able to come into office

Job Types: Full-time, Permanent

Salary: $60,000.00-$80,000.00 per year

Benefits:

Dental care
Extended health care
Life insurance
Paid time off
Vision care

Schedule:

Day shift

Supplemental pay types:

Bonus pay
Commission pay

Is It A Good Time To Buy Real Estate & What Will Impact The Market? | The YVR REMO Show Episode 139 | Mortgage Expert Series with guest Robert McLister

Tue, 18 Oct 2022 21:09:05 GMT

In today's episode, we have Robert McLister as our guest. Robert has been in the industry since 2004, originally starting as a mortgage broker, but then moving over into the online space where he developed a mortgage platform. Recently, he has also been an editor and contributor with The Globe and Mail on housing and mortgages. He likes to interpret data and provide his outcomes, which is why he's now moved on to provide a publication. We're subscribers over here and are big fans of his content.

Robert came onto our show today to talk about what's happening with interest rates and what he expects for the future.

What's going to impact buyers, real estate agents, and investors in the next year?

If you're at all involved in the market, you should listen to this episode in its entirety.

Why were you interested in understanding the logic behind the mortgage world and what makes you qualified to talk about it?

My wife and I got a mortgage and I had a horrible experience with a mortgage broker in Windsor, Ontario. We used to be equity traders and we had a system that worked great. The system stopped working because the market changed. We were still making money, but not not a lot of money. We decided to look for new opportunities.

We had a bad mortgage experience, and so we thought, how do we digitize this process to help people get information to make better mortgage decisions and help them save in the process? We started a mortgage website. It was a website called www.myvirtualmortgagebroker.com. We turned it into a business for helping self-directed mortgage borrowers. We also started a site called Canadian Mortgage Trends, which covered the Canadian mortgage market. I did that because I needed to learn about mortgages. I didn't know anything about mortgages when we first started, and writing about them helped me learn about them. The next move was starting another site called Web Rates which was rate comparison website. After selling those websites, here I am today, still writing about mortgages for The Globe and Mail and our industry publication, www.mortgagelogic.news.

How would you describe the mortgage market?

Much weaker than last year at this time. The cycles go up and down, meaning we can't have 40% volume growth every year.

Is there any common trends that you're seeing right now leading up to what we think is going to happen with a recession?

Heading into recession, typically, we get an inverted yield curve and our yield curve is very inverted right now. It's the difference between long term rates and short term rates. Normally, long-term rates are higher than short-term rates, but when they're inverted, is typically a precursor to a recession. We're seeing that now. We're seeing credit spreads widen out. Think of it as the difference between what a bank pays for funding versus what the government pays for funding. That gap is widening and banks are paying more which is translating through to mortgage rates.

When was the last time that you saw some of these flags?

Coming into the last recession, we saw similar things. Things got hairy back in the global financial crisis. That was around 2008. When rates are shooting up, you have an inflation problem. You have the economy at risk and you have basically lenders pricing in more credit risk. You have investors who fund the lenders, charging the lenders more because there is more risk. There are similar patterns in every difficult cycle.

Deryk Williamson

When the pandemic hit, we saw lenders scale back and they took away key programs. They tried to tighten up because there were a lot of unknowns in the future.

We're seeing a lot of rate increases, which means there are a lot of risks. There's a recession looming, but we haven't seen a lot of lenders scale back. We haven't seen lenders take away programs, we've seen some lenders extending amortization. It seems like some lenders are getting a little bit more creative with this market, where it was a different mindset when COVID hit and I think that was probably because COVID was an unknown.

Robert Mclister

Every lender is different. It's hard to generalize using anecdotes. I just reported a few lenders that extended their amortizations 35 and 40 years. That's happening more often. Every lender has a playbook and so some lenders are pulling back. Some lenders are confident in their underwriting procedures and they're trying to ramp up business in a shrinking market. When you have a down cycle, home prices diving, and you're coming into a recession, then job number one is to mitigate risk. Save more for your shareholders when you're avoiding big losses versus incrementing your revenue in a shrinking market.

Do you think it's a market play by lenders looking to gain opportunity or do you think they're comfortable lending to borrowers because there's strength in our economy?

You have some lenders offering longer amortization. They're trying to drum up more business in a market with fewer opportunities. You also have stress test rates around 8% or above. To help people qualify and get deals done, you have to give people more leash but everything comes down to underwriting.

In a recession, more people lose their jobs. There's only so much you can do, but lenders are careful. Nobody wants to stick out especially regulated lenders, because regulated lenders are under a microscope. No one wants to take risks, especially when sub-markets are down over 20% real estate value-wise in seven months.

Alex McFadyen

Underwriting as a term, it's how a bank looks at your mortgage application and decides whether or not you are approved. There's a lot more to it but as a general rule of thumb, it's them looking at the guidelines and making sure that you qualify based on your job and situation. There are people called underwriters that are ensuring that is a possibility

If home values continue to dip and then stay where they are. at what point do you think this could become an issue or challenge? How should people be thinking about this?

We've been through this before. We had a pretty weak real estate market but people are more leveraged now. We also have more strict underwriting guidelines. Lenders are more careful today than they ever had been and so home prices stay lower for a while. It's got some negative economic impact. There's so much of our economy tied to real estate.

Do more people default because of it?

Long term, the trend is up, unless something dramatically changes with household formation. The Government of Canada decides that maybe letting 450,000 people in our country every year is not a good idea. I don't see that happening anytime soon. We're not building enough homes. CMHC just came out with a report talking about how we just don't have enough tradespeople to construct homes at the pace that's needed.

There are affordable housing targets in 2030. It's a significant shortage of people to build and construct homes in this country. That's on top of all the other regulatory red tape. Long term, there are a lot of great fundamentals. That's not changing. Yes, we're going to have a recession, it could be a bad one. Employment is going to spike further and people are going to lose their jobs. That's going to push up arrears like it always does in recessions. We're just going to have to ride it out.

Would you see the bigger city markets coming back quicker than Alberta, Saskatchewan, or Manitoba?

The downtown core will probably bounce back quicker in places like Toronto. There are all kinds of economic dynamics happening like high rents. There's a floor under condos now because people are not selling as many condos or are deciding to rent them out. You have investors that are going to come into bottom-pick. If you have a strong rental market, which is typically the case in downtown Vancouver or Toronto, then it creates opportunities when prices are down. A lot of it has to do with employment opportunities as well and those are big employment hubs.

How worried do we have to be about a recession? Does that correlate with rates going down?

You need a bad thing to happen for good things to happen. You're going to have to see significant rate increases and a recession before you get a rate cut.

I wouldn't be rooting for a recession.

I wouldn't be rooting for high rates.

I'd be rooting for whatever is best for the economy overall. 7% Inflation is not the best thing for the economy. 5.50% five-year fixed rates are not the best thing for the economy. I don't think that's sustainable and can't grow the economy when people are diverting their income to the mortgage.

Rates are going to get worse before they get better. At the end of the day, every down cycle creates opportunity. I expect no less this time around.

How to Reach US! ��

Call 604.398.5575 or Email us!

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All About Trigger Rates, Trigger Points & Variable Rates

Thu, 06 Oct 2022 19:22:25 GMT

You are in a VRM Mortgage and have heard about the interest changes that have happened and are happening. The Bank of Canada has been increasing interest rates, and for this reason you may be at or nearing the point at which your current mortgage payment no longer covers both principal and interest. When this occurs, your mortgage technically would go "backwards" which means the lender is taking additional interest out of your current equity. Since this is not common practice or the intention of your mortgage, most lenders will instead ask you to pick an option (listed below) to adjust your current mortgage or payments.

One thing that is important to note is that those currently in Adjustable Rate Mortgage are not directly affected by the information below, this is because your payments are adjusted automatically every time prime increases.

⬇️ WATCH THE VIDEO BELOW TO LEARN ABOUT TRIGGER RATES & TRIGGER POINTS ⬇️

Why Are Rates Changing?

There are a variety of reasons that the Bank of Canada is changing rates, much of it related to inflation, however there are other factors we cover this in more detail in our variable rate resource - CLICK HERE

Who Is Impacted?

This impacts everyone who has a variable rate mortgage, however for this explanation, we are referring to those who are in a "static payment" or VRM mortgage (this is a variable rate mortgage where when the rates change, typically more is applied to interest and less to principle).

What Is A Trigger Point?

This can vary to degree from lender to lender, however here is a general summary below:

For a Conventional Variable Interest Rate Mortgage (VRM), the Trigger Point is when the principal amount plus interest owing exceeds 80% of the fair market value of the property as determined by your lender.

For an Insured VRM, the Trigger Point is when the principal amount plus interest owing exceeds 105% of the original principal amount of the mortgage loan.

For Term Portions, if at any time the outstanding principal amount (including any deferred interest) exceeds the original principal amount, then the Term Portion has reached the Trigger Point.

What Is A Trigger Rate?

As interest rates on variable products increase and the payments don't change, there will be a point where the principal and interest payments can no longer cover the interest charged on the Mortgage or Term Portion. This happens when your rate has exceeded the Trigger Rate.

If the variable rate increases beyond the Trigger Rate, the product may have an increasing balance (check with your lender) unless the regular payment is increased enough to cover the outstanding interest.

Variable rate mortgages have trigger rates to ensure home owners are always building equity with their payments, especially as interest rates rise.

⬇️ WATCH OUR FULL PODCAST EPISODE ON TRIGGERS RATES & TRIGGER POINTS ⬇️

How Do I Calculate My Trigger Rate?

For a more accurate number, you could contact your mortgage lender. They’ll be able to calculate your current trigger rate, so you’ll know how much breathing room you have.

Another way to calculate your trigger rate is to use the following formula:
(Payment amount X # of Payments per year / Balance owing) X 100 = Trigger rate in per cent.

If you have an outstanding mortgage balance of $500,000 with bi-weekly payments (26 payments per year) of $1,100. Your formula would look like this:
($1,100 X 26 / $500,000) X 100 = 5.72 per cent

In this scenario, your trigger rate would be about 5.72%.

Remember, every lender uses a slightly different formula to calculate your trigger rate, so you’ll want to contact them if you want an exact number. However, this formula is a reliable way to estimate yours quickly.

What Are Your Options?

This could be a long one, so please follow along, as you have a few options, if you're a client of ours (or even if you're not) reach out to the team and we can set up a consultation to review your situation after reading below.

Increase your Payment

This option is quite straight forward, you increase your monthly payment based on the maximum allowance of that lender, for some it is 10%, some as high as 100% - this is easy and can be done either online or over the phone with your lender.

Lock In

This option is available with most variable rates, simply request the lock in options from your bank and they will provide you with the rates for the remainder of the term. REMEMBER you only need to lock into a term which matches the remainder of your term (ie. 3 years) and some lenders will provide 3 year options up front. In addition, often these lenders will NOT be competitive

Pay a Scheduled Lump Sums (Secret Hack)
Your lender can also provide you the option to pay a lump sums, which is subject to the policy of that lender (some may only allow this annually). So in this case this only applies to lenders which allow lump sums to be paid on any regular payment throughout the year (as an aside this is one reason we always suggest full feature non restrictive products).

Here is what you do:

1) Decide on how much you want to increase your payment (example: $100)

2) Contact the lender to schedule a monthly $100 lump sum on your payment date for X time period (12 or 24 months etc.)

Again, this provides you with more flexibility around your payment changes, it allows you to keep your minimum payment the same AND the biggest factor it keeps your payment on paper lower which is helpful for future qualifications of investment or 2nd homes.

Pay a Lump Sum

As above, however here you may choose to do a large lump sum that may be equal to the same amount as your annual contribution above as long as it is within your maximum allowance (example 15%)

Refinance

This is useful in many situations:

1) You can reduce your payment by extending your amortization

2) Include other debts, like car loans and expenses to reduce your overall cost (can save thousands monthly)

3) Apply for different terms (example 1, 2, or 3 years) if your bank is only offering longer terms

4) Search for more competitive lenders

5) Find different products or add a home equity line of credit

AND MORE

Curious About Locking In? Here Is The Process Before We Can Assist:

1. Call your current Lender and ask them to provide all possible Fixed rate options if you were to convert.

Ask for every possible term length available Ask them to provide these options in writing

2. Send us an email and include the following:

Your current Variable and Fixed rate options provided by your lender Maturity date of your current mortgage (if you have it handy)

3. One of our Mortgage Advisors will be in touch to schedule a phone call and review your options over the following few days.

REMEMBER: Try NOT to allow STRESS to creep into your decisions!

Like everything, this too shall pass and is transitory. We went through a time of very low interest rates, and we will go through a period where interest rates do decline.

Also, in most cases, the impact can be mitigated by doing an analysis of your personal cash flow (see link here) and cutting unnecessary expenses from your budget.

As always, your team at Thrive Mortgage Co is here for you.

How to Reach US! ��

Call 604.398.5575 or Email us!

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Just Ask US > Click Here to set up a call or EMAIL us

5 Biggest Mortgage Mistakes & Misconceptions!

Mon, 03 Oct 2022 19:20:13 GMT

We're going to talk about the five biggest mortgage mistakes and misconceptions.

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#1

I DON'T WANT TO PULL MY CREDIT BECAUSE I DON'T WANT IT TO IMPACT MY CREDIT.

We hear this all the and this is not the case. You can have your credit pulled, this is the only way you can use your credit. This is a very important part of being pre-approved.

If you have established credit, you are not going to see a drop in your score. The only time that someone will damage their credit by having it pulled is when multiple mortgage brokers and banks are working on their application at the same time.

If you're working with one specific group, you don't have anything to worry about.

#2

WHEN DOES MY PRE-APPROVAL EXPIRE?

A pre-approval is made up of two things.

A) A rate hold which is held for 120 days with most institutions.

B) Your qualification. Assuming that interest rates and your situation has not changed, even if you don't buy a home for a year, you are technically going to qualify for the same amount of financing. If everything is the same, it's a simple formula of income compared to liabilities, qualification, and stress test.

#3

NOT UNDERSTANDING YOUR MORTGAGE PRODUCT

People are having conversations with us not understanding that they were on a fixed rate mortgage that could have dramatically high penalties. Everyone needs to educate themselves. Work with a good adviser that can take the time to explain these products so that you can make an educated decision.

There is no mortgage broker or banker in this country that should be telling you what product to take, we should be helping you make a confident decision.

Variable and fixed-rate mortgages are two dramatically different products. They both have pros and cons. Make sure you have a good understanding of every aspect of those products before you sign that document and commit to that mortgage.

#4

DOWNPAYMENT

Down payments can be an absolute nightmare when it comes to documentation. It can also make your life very frustrating when it comes time for your final approval. Our biggest tip is to leave your money in one or two accounts and don't touch it. That's going to make your life a lot easier when it comes to documentation.

As an example, if someone has five or six different bank accounts with constant transfers throughout, we have to trace every single dollar in every transfer back 90 days. There's going to be a lot of documentation and there's going to be a lot of questions. It will be a huge relief for you if you do not have to deal with that.

#5

CHASING RATES

Rates are a very important part of this process. You cannot chase an interest rate otherwise you will likely end up with a poor product. There are multiple different products in our industry and some of them will have a lower rate but it's a very poor mortgage product with no portability, higher penalties, and is very restrictive.

Rate is a major factor but it's not the entire product. You need to make sure you're getting into a good product with a competitive interest rate.

Don't chase rates.

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How The Changing STRESS TEST Impacts The Real Estate Market | The YVR REMO Show Episode 133

Tue, 06 Sep 2022 03:40:45 GMT

Most buyers that are buying in the current market have heard of the stress test.

We find that a lot of people aren't sure what that means.

The stress test has changed a number of times in the last few years.

There are some general principles that you can understand and we'll go over that as well as a history of what the stress test is.

WHAT IS THE STRESS TEST?

The stress test is a means for the government to reduce the risk that you could qualify for a mortgage if interest rates were to increase. We've seen interest rates increase by over 2%. With the stress test, you must qualify to make the payments on your mortgage at 2% higher than the rate that you qualified for when you got approved for your loan.

The stress test becomes more important in times of rising rates because its changing people's qualifications.

HOW ARE WE EXPLAINING THE STRESS TEST?

Everyone that we work with has a good understanding because we take the time to explain it. It's important to explain that because there are a lot of people that we talked to that don't qualify for the mortgage amount that they want, expect, or feel they could afford.

When rates go back down, the qualification will get easier because the stress test is going to come down with interest rates.

Rates have increased at a rapid level quicker than anyone expected. There are a lot of people that were sitting at 1.5% and they built their life around that. The fact that we had to qualify them at the time at 5% or 5.25%, means that they are should be room to fall back. These people should be able to afford their mortgages right now. If we didn't do that and we were qualifying people at 1.5% and their rate is now 4.5%, those people would be hurting.

We think the stress test was a great play. It's worked out in a lot of borrowers' favour in regards to affordability and making sure that they can handle what we're dealing with right now.

A QUICK HISTORY OF THE STRESS TEST ⬇️

The stress test changed a few times. It originally came out in 2016 for every insured borrower who's buying a home with less than 20% down. They had to qualify at a minimum rate that was set by the Bank of Canada. Annually, they would review this rate and now or they could review it anytime they chose to. Right before 2016, you could take a five-year fixed mortgage and you could qualify for the rate you were getting. We had borrowers that were qualifying at 2.44% and all of a sudden they had to qualify at 4.44%. There was about a 20% reduction in mortgage qualification.

In 2018, we had the government step in and said everybody who's getting a mortgage now has to qualify under that stress test. Everybody was trying to lock in their rate, lock in their payment, try to qualify, refinance, or buy a second home.

We saw a dip in the industry.

We saw a run-up where everybody was trying to be competitive and purchase. That was followed by a dip for six to 12 months. We had kind of a flatter market, there was a slight incline, and then a flatter market the following year. There is no doubt putting that stress test in place did have an impact on the real estate market, not permanently but for some time until people adapted which is always what happens.

Fast forward to where we're at right now. The government has not only made adjustments to the stress test and how it operates but it's also reneged on a couple of things. Before COVID happened, there was a suggestion that they were going to change how the stress test worked. It was going to use the median rates set by the banks and 2% above. We haven't seen that come together. What they have done, however, is they just adjusted the minimum stress test rate.

IF INTEREST RATES HAVE INCREASED...

DO WE HAVE TO QUALIFY AT A HIGHER PRICE POINT?

Every situation is different. People right now are seeing higher qualification if you go variable. Some people maybe weren't into the variable product, but the variable product is getting them to the purchase price or refinance amount that they want to make it work. There's a little bit of strategy involved in that regard, we've actually had some clients that have chosen to go variable to achieve the mortgage amount that they needed to get. After the fact, you always have the ability to convert into a fixed if and when it makes sense.

The higher the interest rate that you're paying, the lower you're going to qualify for because we're adding 2% on top of your contract rate for the stress test. Right now, your typical variable for conventional mortgages is 4.30%, and your average fixed rate depending on length of term is 5.20% or 5.30%. That's going to drop qualifications somewhere in the range of probably eight to 10%. It makes a difference.

CHALLENGES IN THE CURRENT MARKET

When you're in a rising rate environment and we're qualifying based on the lowest variable interest rate, that is a variable interest rate. If the Bank of Canada changes its prime rate, even though you have a locked in discount on a variable rate, your overall interest rate adjusts.

The Bank of Canada overrules the stress test. If the Bank of Canada raises rates by 1%, then your final interest rate is 1% higher and then you have to qualify again at 2% above that. That can be one of the challenges for people looking to buy in these markets. Our biggest suggestion is to know a couple of rules of thumb and be in contact with your mortgage team.

Be proactive.

One rule of thumb would be, if interest rates were to increase by a half percent, you're looking at about a 4% to 5% reduction in how much mortgage money you can borrow. If you qualify for a million-dollar loan at half a percent in increase, the rate you're looking at qualifying for is about $40,000 or $50,000 less. If rates go up by 4%, you can double that and expect a reduction from that standpoint.

Those are some good numbers to use as rules of thumb.

THINGS TO CONSIDER WITH A RATE HOLD ��

We're doing a variable rate hold, you're just holding the discount, there's nothing you can do to stop a variable rate from changing. The flip side of that is the fixed rate. If you are doing a rate hold on a fixed product for 120 days, which is typically standard, you get that rate as long as you bought and closed within that timeframe. Your qualification doesn't change. There are a lot of people, especially in this market, who are not jumping out there and buying a house the next week. People are taking their time and getting a feel for the market. They're waiting because everyone else has a little bit of fear, which is going to continue to go down. If your rate hold is coming up and you haven't found a house, we have to do a new rate hold. If rates have increased, you are going to see a lower qualification.

That's something you have to consider when you're pre-approved.

You need to find the right property and everything needs to make sense. If you can buy within that threshold, and your rate holds coming up for renewal, you could qualify for more if rates have come down.

HAVE AN EXISTING LOAN?

HOW DOES THIS IMPACT YOU?

If you're simply renewing your existing loan, making no changes, you can just leave it as is. You don't need to re-qualify for a stress test. If you're looking to take out new money or refinance, you now have to qualify for that stress test.

If you've been paying off your mortgage for the last five years, there's no doubt that your property has increased in value. It provides you with a longer amortization period. As long as you qualify, you might be able to reset that loan to extend it back to 30 years. You could choose to still pay it off over 20 to 25 years with the right product.

That's important to note. ⬆️

READY TO INVEST IN REAL ESTATE?

We want to deconstruct the myth that real estate investing is only for "real estate professionals" and help anyone harness its power—no matter where you're at in your wealth-building journey.

Click below to take advantage of our new Real Estate Investing Fast Track course. ⬇️

CAN THE STRESS TEST BE AVOIDED?

For the most part, no.

If you are taking on an insured mortgage, there's no way to get around a stress test. If you qualify with the 1% lender out there that has a very unique program, it's not a bank. It's a credit union because of their regulator. There are are some one off programs where you can potentially avoid the stress test. These programs are not for everybody. It's not for your typical buyer or person refinancing to pay off debt. These are programs where they can bypass that because of strengthening an application, meaning assets. They want to make sure that if they're trying to help someone achieve a larger mortgage than they technically should get, there's a reason for it. There's a fallback. They're not worried about that person not being able to afford the payments, because there's reasonability to the situation. There are currently a couple of one off programs where you can bypass the stress test for a very, very strong application.

This is not a situation where you avoid the stress test but there are exceptions that we have granted, often with specific lenders. One of them specifically, is amazing for this. If you tick all the boxes, have perfect credit, you've got a stable income, and you have a good sized down payment, we have lenders that will bypass debt service ratios. Typically, the maximum debt service ratio is 44%. We can use 44% of household income to cover housing costs and any outside debts. We have conventional lenders that can go up to 50% for a strong file. That is bypassing the stress test regarding qualification.

This is where it's really important to work with a broker that understands what different lenders are doing. There are probably 90% of lenders in Canada that would never even get close to that. That's not technically bypassing the stress test. From a qualification level, it's definitely getting you close or above.

�� England had a stress test and they got rid of it. Their stress test was based on interest rates climbing by 3%. They suggest their stress test was not working as well as they thought. It's stopping people from getting in the door.

SHOULD CANADA CONSIDER ELIMINATING THE STRESS TEST OR MAKING EXCEPTIONS FOR FIRST-TIME BUYERS?

We believe there should be exceptions.

The stress test should not be a blanket stress test.

There are situations like we just talked about with credit unions and a strong file. For first-time buyers, that could make a lot of sense. Someone in an industry where their income is constantly increasing, RCMP just as one example.

There are too many what-ifs and exceptions. There's too much work behind the scenes to make it work. Exemptions should be situational because sometimes it does not make sense.

The biggest challenge at the end of the day is getting a down payment and qualifying over 25 years. A better suggestion for first-time buyers or people entering the market would be to consider a 30-year amortization. It keeps your payments flexible.

WANT MORE PODCAST LINKS? ��⬇️

Most people are nervous or afraid of the stress test. It's just a calculation, nothing more than that. If you're not sure what you qualify for, we do have some tools and calculators on our website.

You can find the Mortgage Calculator at the top of this page!

We can have a conversation with you to get a general idea as to where you're at and set you off on the right track. If you don't reach out you'll never know!

We're on Instagram!

instagram.com/thrivemortgageco

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How to Reach US! ��

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MARKET UPDATE: Why Aren't Rates Dropping?

Wed, 31 Aug 2022 21:45:41 GMT

This is a new format episode. There's so much news going on about government policy, changing economic considerations, lenders, and investment opportunities that we're going to commit to doing a once-a-month market update that's specific to what's going on. We're going to combine news and information.

Read below to get our breakdown and opinion.

The body content of your post goes here. To edit this text, click on it and delete this default text and start typing your own or paste your own from a different source.

What To Do When The Bank Says No! | The YVR REMO Show EP. 123

Thu, 30 Jun 2022 22:37:59 GMT

It can be frustrating when the banks say no or you get turned down. People need to know their options. It's not always about the bank saying no, sometimes it comes down to other lenders or knowing different qualification options.

We'll talk about circumstances where it would make sense to explore different options and what they might look like.

The bank has said no, you hear that a lot these days. It is becoming more and more consistent.

In the past, a mortgage broker was considered a second choice option. You were going to one primarily because you needed a second opinion or you couldn't get a mortgage from the bank.

That's changed dramatically.

Mortgage professionals like ourselves are at the forefront of providing better advice, better options, and a better process for clients. We're still going through banks and lenders.

The purpose of today is to dig into what you should do when the bank says no.

What are your options?

What does that mean for you?

Quick Overview

When the bank says no, don't get discouraged. You have to keep in mind that every single bank has its own set of policies and guidelines. The person you were talking to at a bank might not even know those guidelines in detail enough to properly advise you. You should get a second opinion.

Don't stop the goal that you're trying to reach.

There's conventional lending, which is your banks and credit unions. Some credit unions offer credit repair programs if that's the issue you're running into. There's also alternative lending and private lending.

In markets like this, we're seeing people run into qualification issues and it's because rates are getting higher. This means the stress test is higher, which means people are qualifying for less. There are ways to mitigate that with different types of lenders and programs. We're also seeing people getting declined because they've got too much debt. There are ways to mitigate and work through that.

What's Happening Right Now?

We're in an uncertain climate from a lending perspective. The cost of everything is going up, interest rates are increasing, and property values are declining. Lenders are more nervous than ever before.

We always talk about lending and money as if there's some kind of magic criteria but it's simple with most of these conventional banks and lenders. They have a series of boxes to check. If you don't check off those boxes, then you need an exception and they're not interested in making those exceptions right now. So you're getting a lot of those examples that

Banks have their concerns when rates do this. Credit unions are not financing rental properties right now and you are going to see certain markets scale back. Understanding your options is important.

Why Are Lenders Scaling Back?

There are a few reasons why lenders will scale back in markets like this.

One reason is when there's potential fear that there could be a value correction or at least a pause in appreciation. We have to keep in mind, that we're coming off one of the hottest years of real estate in history.

A lot of lenders, especially credit unions, have lent out their allotment of funds for things like revenue and rental properties. They've lent those sorts of products as much as they can for the amount of money they have. It may sound strange, but lenders do have a certain amount of money to allot for certain types of products. They could reach those capacities quickly.

What Are The Common Reasons That We're Seeing The Bank Say No?

There are a lot of people that are saying no to the bank because the product is not right for them. People are coming off some of the lowest interest rates in history. They're looking to refinance and consolidate debt banks but the banks are providing them an option that's taking them out of a very good rate. This ties back into a second mortgage product, a lot of people have maybe forgotten about that term.

What is the second mortgage?

Why would anyone get a second mortgage?

These are the times when it makes a lot of sense to get a second mortgage to preserve the rate that you already have on your current mortgage. Use a second mortgage to consolidate the debts. It's important to understand the stress test and the fact that we are qualifying at much higher rates than we have before.

There are qualifying issues because the rates are arguably 2.5% higher from a qualifying perspective than they were in the past. Look at keeping the current mortgage in place for that reason alone because we keep the payment much lower.

We're qualifying the payment that's on the first mortgage and then we're paying for the second mortgage amount. That's something we would go deep into during a planning session with our clients.

We typically see this go one of two ways.

If you have a cost-effective mortgage on your property and want to keep it, we run numbers to see if you qualify for a HELOC. If that isn't happening, because of credit issues or qualifications, you are not qualifying for conventional lending.
Take on second mortgages through private lending.

As much as private lending sounds scary, here's a prime example:

Clients had a $600,000 mortgage at a 2% fixed rate. They did not want to give that up because of a refinance. They will be taking on a whole new mortgage at either a 3.5% variable or a 5% fixed rate.

A massive jump in qualification.

What we did was structured a second mortgage at $80,000. It came out to about 8% interest. When you look at the blended rate, because they have $600,000 at 2% and only $80,000 at 8%, they ended up in the high twos. They're able to consolidate all their debt and fix their credit. When they're up for renewal in three years, we'll be looking to restructure and get them a bigger mortgage to consolidate all of that.

That was a good strategy and a prime example of where they did not qualify for conventional lending no matter what bank they went to.

Know your numbers as opposed to just looking at the one specific number.

Don't just look at the rate, look at your total cost, which includes penalties, fees, and other considerations.

Clarifying Mortgage Penalties Right Now

The penalties are confusing a lot of people right now because penalties are low. People that are coming out of a 1.5% interest rate are finding themselves quite puzzled that their penalty is so low. It's making them excited about moving forward without looking at all the numbers. The fact is you are going for a much higher rate.

The banks want to get rid of these low rates and they want you to break your mortgage so they can get you back into a higher rate. It's important to do a deep dive into the total cost and not get too excited.

Every single lender has its policies and guidelines. Working with one particular lender will substantially limit you when it comes to your qualification options, costs, and long-term strategy. They may not allow the exception to go over your debt ratios, which could reduce your qualification by $200,000. There are so many other options out there when the bank says no.

Benefits of Using A Mortgage Broker

Our goal every time we run a pre-approval or pre-qualification for a client is how can we maximize qualification?

That's our first step.

How can we get these people to the highest possible loan amount so that they can purchase the home that they want?

Once we figure that out by working through different lenders' policies, we're finding the best interest rates and making sure that they're in line for the client.

Example:

We ran numbers for someone buying a detached home with a basement suite. Compare banks and you're going to see a difference in the qualification of up to $200,000 depending on that person's situation. You need to look at that.

It comes back to the importance of working with a broker.

If you go to your bank and you have a strong application, you're probably going to get a mortgage but you are putting your blinders on. There may be something better out there for you.

What About Alternative Lenders?

There are a lot of situations where people don't fit into conventional boxes. Before the stress test came in, the overall lending world was a lot more simple.

Some alternative lenders offer very similar rates and terms as regular banks. The only difference is that they offer more competitive programs for self-employed people, those who own multiple rental properties, or those who have different sources of income.

What happens if your bank declines, in some situations, they can refer you out. They will get paid a commission or a fee to send you off to a third-party service provider who will provide you with a B lending option. The biggest problem there is that you're not dealing with the broker. In this case, they're just sending you where they feel is best at that point. In our experience, this is rarely the best option for the client because they're just trying to get you a loan. They're not trying to get you the best loan. They don't have your best interests in mind.

How are they shopping for you?

After talking to some clients who've gone through that experience, they don't even know what happened. They came back a month after not having any communication. The way the process works is the bank is just referring you to a third party that wouldn't be considered competition for that particular bank, where there are products that may fit at one bank versus the other. They're considered competitors. With alternative sources, it's not a bad option, but it's probably not the best option.

Common Situations We Are Seeing People Get A No

Self-employed mortgages are the number one situation where we see either a no or not close to what the clients looking for.
Pricing. The bank knows that you're not likely going anywhere. They're not going to be competitive until you are.
Credit is a big one. Lenders are being tighter on credit than they've been in years. They're looking for credit as a primary consideration of your qualification capability.

What Are Exceptions

When we say except, it means you're not quite qualifying and we need an exception on credit. This could be because you missed a couple of payments or your incomes sporadic. In a strong market, we were getting a ton of exceptions through certain institutions. We are starting to see that go away. The exceptions are not as common.

We had very strong clients and we could not get an exception. The lender told us that they're expecting people to start taking on more consumer debt. They worried about that. They did not want to make an income qualification exception. The inflation rates were outlined yesterday at 7.7%. You do have to expect that people are going to take on more consumer debt. The banks are at the front end of this, so they're going to continue to change policies based on what they're seeing internally.

Property Concerns

We see property concerns right now, especially around appraisals. We were getting a lot of appraisals waived. It was becoming quite common that we don't require an appraisal on a purchase. We're finding a lot of a lot of deals are requiring an appraisal now. An appraisal could be coming in under value, meaning the appraiser saying it's worth less than your accepted offer. The deal may not be getting declined, but it's definitely getting adjusted. We're going back to the negotiation table to fix that issue from a perspective of value.

We're seeing a lot of appraisals. That is something to be aware of because it increases the amount of time needed when you're buying a home and need subject to financing. We always recommend this when there's financing involved.

This Is Why To Use A Mortgage Professional

If you're trying to qualify for a loan on your own, and you get a no, you will have to walk over to another bank and go through the whole process again. We do that for you as mortgage professionals. We are here to educate you. That's a big part of what we do. One lender says no, then we're going to walk over to another lender to provide the best option for our clients.

If a lender that we're working with doesn't approve the file, we already have an appraisal completed. We can transfer that appraisal over to another lender. From the perspective of time management and saving money, that's a big one.

SUMMARY

Remember, it's not a no forever, it could just be a no for now. If you're getting a no from the bank, give us a call.

If you're a real estate agent in the industry, this is the thing that will kill steam as far as the emotion from a buyer.

If you are a buyer, don't let it kill your steam. There still could be other options.

You need to walk away with a clear plan. That's the most important thing that I would take away from this.

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How to Reach US! ��

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Buying Rental Property: A Beginner's Guide

dean@thrivemortgage.ca (Dean Lawton) — Sat, 04 Jun 2022 22:25:35 GMT

I nvesting in rental property for beginners

When it comes to a rental investment, you’re looking at a stream of income that requires work, yes—but a lot less work than flipping houses .

Initially, you may need to make improvements to the home to both increase its livability and, in turn, the monthly rent. You’ll also need to find suitable tenants (we’ll dig into this in the next chapter). That said, there are lots of ways to be relatively hands off with rental properties. Once tenants are secured and the home improvements are made, the hard work is largely complete.

Why Invest In Real Estate?

If you want to grow your net worth, real estate investment is one of the best ways to get there.

Over and over, statistics prove that those who own real estate have a higher net worth on average than those who don’t.

For example, the Federal Reserve released a staggering report demonstrating that homeowners in the United States had a median net worth of $255,000, while renters had a net worth of just $6,300—and this gap continues to widen.

Here in Canada, the real estate boom during the pandemic contributed to an increase in the net worth of households by $770 billion, but $730 billion went to those who owned their homes.

In other words, 95% of wealth created went to homeowners, while only 5% went to those who rent.

Key benefits to investing in real estate summarized:

Stable, passive Income - Investing in real estate gives you passive income that can count on when you retire.
Leverage - Investing in rental properties gives you a high level of monthly income compared to the downpayment you need to secure financing.
Appreciation in value - Real estate prices have consistently grown for decades, with no sign of slowing down.New Paragraph

A quick checklist to assess if rental investments are for you:

You want to keep your day job and like the idea of passive income each month
You’re ready to do the research required to find a suitable property
If necessary, you’re ready to make renovations to increase the property value or enhance livability

You’re comfortable with the work of a landlord, from fixing leaky faucets to dealing with tenant disputes—or you’re able to hire a property managerNew Paragraph

What kind of rental properties are there?

Three of the most popular rental properties include short-term, long-term, and senior living rentals. Let’s break down the pros & cons of each so you get a sense of which one is best for you.

1. Short term rentals:

Typically, vacation rentals or Airbnbs are considered “short term”. Short term rentals usually net a higher rental income, BUT it’s important to note that the property would need to be fully furnished and a regular cleaning service would be required.

2. Long term rentals:

The traditional tenant is generally looking for a long term rental agreement, typically with a minimum of a 1 year lease. However, any term longer than 3 months is considered a long term rental. look for a long term rental agreement. Most of the time, property does not include furniture and the tenant provides their own furnishings.

3. Senior living rentals:

This is arguably one of the most in-demand types of property and likely to increase in demand as the Baby Boomer generation enters their twilight years. Most Assisted Senior Living homes have 2-3 year waiting lists to be accepted into a unit. Catering to this demographic could be key to sourcing a fantastic tenant with potential for higher rent if the property has just one floor and was retrofitted with senior support equipment such as handles and walk-in bathtubs.

How much can I make with rental real estate?

When people ask, “How much can I make with a rental property?”, they should be asking a question with a bit more context: “How much can I take home as income after all of my expenses related to owning this property are paid?”

Remember, income = revenue - expenses.

Revenue

For example, if you generated $5,000 per month from four investment properties, you would earn $60,000 REVENUE per year, or $300,000 after 5 years.

Expenses - The cost of doing business

There are a few different types of expenses you need to consider in this equation. First up, the expenses related to purchasing your investment property . You’ll need to take into account expenses like:

the purchase price of the property
taxes (like GST and property transfer, if you’re in BC)
closing costs (with your lawyer, appraiser, etc.)
realtor fees
any repairs or improvements to the property before renting it out
and more!

Second, there are expenses related to the loan you take out with your bank or private lender (assuming you’re not paying for your rental property with straight up cash).

Last, but not least, there are the monthly expenses related to keeping your property in good condition for the tenants and your own property’s value. These could include:

Maintenance & repairs
Property management fees
Property taxes
Insurance
And others

Is your head spinning? Let’s put it back on straight! This simple rental returns calculator will do all of the hard work for you when it comes to figuring out how much you’ll make each month in net income .

Income - Evaluating your Property for Cash Flow

Income

In the context of your rental property: rental income = monthly rent paid by your tenants - monthly expenses related to the rental property.

So important to understand your cashflow AFTER subtracting costs from your revenue .

You can use our calculator to generate your own investment property analysis. Just make a copy of the template, input a few basic details about the property, and we'll calculate the rest.

In the example below, a Mortgage of $1,862 would generate $411 after deducting costs.

Mortgage: $520,000
Downpayment from HELOC: $116,700
Mortgage of $1,862 per month
Rent: $3,120 rent per month
Strata Fee: $100
Property Tax Per Month: $255
NET CASH FLOW = $411

Use cap rates to evaluate profitability of a rental property

When we’re looking solely at monthly expenses and monthly incomes, we’re looking at the capitalization rate of a rental property . In other words, how much can you capitalize on the property every month? The capitalization rate or “cap rate” of a property also helps you determine how much time you need to make back what you paid to purchase the property (and make back your investment).

Depending on where you live, a good cap rate is considered between 4% and 12% . It’s worth looking into this rate before you purchase a rental property to figure out if it’s over or under-valued. One thing’s for sure: your cap rate should always be more than the cost of financing. For example, if your mortgage rate is 3% but the property’s cap rate is below or equal to 3%, you are likely going to lose money on that property.

Exercise: Try looking at properties in your area on a site like Zoocasa or Realtor.ca and determine their cap rate with this easy cap rate calculator .

Quick deep dive into the taxes & expenses related to rental properties

One of the most common questions related to rental income is whether you need to claim it on your tax returns. Well, the answer is a definite yes. Rental income does need to be claimed during tax season.

If you don’t claim this income on your taxes, you’re putting yourself at risk of a CRA audit which can trigger fines, penalties and large tax bills. Most lending institutions also require the rental income to be claimed in order to use it towards your qualification if you’re applying for further borrowing.

An important point to understand, though, is that you only need to pay tax on the net rental income claimed . You’ll have both a gross and net rental income showing on your tax return, but you’re only paying taxes on the latter. Gross rental income can be reduced by claiming expenses related to the property, like property repairs, utilities, and insurance.

Additionally, rental income will be taxed at the individual's marginal tax rate. In other words, your personal income plus net rental income will create your total tax rate. Corporate tax rates may differ if the property is held in a corporation.

So, what are the kinds of expenses related to a rental property? We covered a few of the most common ones above, but here’s a more exhaustive look:

Mortgage interest
Property repair/maintenance
Property management
Insurance
Utilities
Depreciation
Advertising/marketing
Property taxes

Mortgage interest is tax-deductible dependent on how much of the property is being used as an investment.

For example, if the property is 100% rented, then 100% of the mortgage interest can be deducted from gross rental income. If the property is a personal residence with a rental suite, only the percentage of the property dedicated to the rental suite can be applied to the interest paid for deduction purposes.

What you need to know about the rules and regulations for landlords and tenants in BC

The Residential Tenancy Branch (or RTB) is the provincial authority over landlords and tenants. They help both landlords and tenants understand their respective rights and responsibilities, and provides both parties with dispute resolution services.

They provide information across a number of areas, including:

Ending a tenancy
Rent increases
Defaulting on rental payments
Landlord access
Discrimination
And more

To put it simply, these folks help to enforce and provide information on the tenancy law in B.C.

It’s worth reviewing this guide that the RTB released, especially when considering whether you might want to outsource property management so that someone else makes sure that you & your tenants are adhering to the tenancy law.

Understand:

How Real Estate Investment Works
Where to start
Finding and analyzing properties to invest in
How to get financing
Tips on being a landlord
And downloadable guides and calculators to save you time

How To Start Flipping Houses

dean@thrivemortgage.ca (Dean Lawton) — Sat, 04 Jun 2022 21:05:03 GMT

Beginner's Guide to House Flipping

We’re going to let you in on a secret: you don’t need a TV crew or decades of experience behind you to successfully flip a house. In fact, flipping houses is the perfect way to get started in real estate investment if you want to make larger profits in a relatively short amount of time.

As long as you have the time to do your research and the right team around you, flipping houses can be a lucrative path to financial wealth.

First, how long does it take to flip a house?

One of the most important things to know upfront about house flipping is that it takes time to do right.

Generally, it takes 4 to 6 months to flip a house successfully, which includes:

Purchasing the property itself. This can take anywhere from at least one week (if purchasing with cash) to a month (if purchasing with a loan). Related: Guide to buying an investment property .
Making the necessary improvements to boost its value. The time this step takes will vary on the amount of work you deem the property needs, and your budget.
Putting your home back on the market and selling it (ideally for a profit!). Ideally, you should be working with an experienced real estate agent who knows the market well and will support you with determining the best listing price—and showcasing the value of your property flip most effectively. Putting together marketing materials and finding a buyer can take a few weeks to a few months.
You got the buyer—now you close the deal. If you’re working with an average buyer, they’ll likely purchase your flip with a loan. This can take 1 to 2 months to secure.

What should I look for in a property?

Location, location, location!

There is no quicker way to lose out on potential profits than getting the location wrong. Location affects both the price you purchase a home at and the price you can sell the home at.

In general, you want to purchase a property in an area that buyers are beginning to flock to, so pay close attention to the liveability factors that buyers are seeking out.

For example, 8 out of 10 British Columbians in the 2020 RE/MAX Liveability Survey report wanting more access to green spaces & dog parks. B.C. residents are also beginning to turn to properties outside of the city where they can have a larger space for remote work and even patios to enjoy. This is the kind of resource you should be referring to when evaluating a property.

Think about what your target buyer needs

If you’ve ever considered launching a business, you’ll be familiar with the importance of clearly setting your target customer. Everything you do from that point on needs to serve their needs and address their challenges. The same goes for house flipping.

For example, if you’re purchasing a home in a neighbourhood flush with great schools and access to transit, you may want to look for a home that can be renovated based on the needs of a young family. Is there room to add an additional bedroom? Is there enough storage space, and could you add some more? Is there a backyard or patio that you could provide landscaping to enhance their liveability?

THRIVE TIP: Decide who your target buyer is and step into their shoes when you're looking for a property to purchase. Don't think about anyone else but your target buyer.

The extent of repairs needed

When you’re just getting started with house flipping, you may be on a tight budget. This means that you won’t necessarily be able to afford the homes that need a thorough gutting. Instead, you’ll want to look for a property that has a scope of repairs that you feel comfortable with.

How much can I make when flipping a house?

The costs associated with flipping a house successfully can pile up, but as long as you plan for them in advance, you can still make ample returns on your investment.

First, estimate the after-repair value of your home.

When looking at a property, you should be sitting down and calculating every repair you want to make based on the value it will bring to the property. For example, is the roof leaking? That’s a priority. Are the appliances outdated? That’s the next priority. (We have a great list of the top renovations/repairs you should make to a house you’re flipping below.) Tally all of these repairs up in terms of the value they’ll bring to the home. That’s your after-repair value (ARV).

Now comes the 70% rule.

Take 70% of the after-repair value and subtract the cost of repairs from it. This is the maximum amount you should pay for the property.

Let’s say you’re looking at a home and work out its ARV to be $500,000. Multiply this by .7 to get 70% of its ARV. You’re left with $350,000. Now, suppose it cost $50,000 to complete all the repairs. $350,000 with $50,000 subtracted is $300,000. That means the most you should pay for this property is $300,000.

Don’t forget taxes!

Unlike a rental property, if you purchase a home with the sole intention of selling it for a profit, the CRA considers this business income. As a result, the entire income you earn from selling your flip will be subject to taxation. When eventually selling a rental property, the sale would be considered capital gains, meaning that you’d only be taxed at the 50% rate.

THRIVE TIP: When you’re getting into the business of house flipping, it’s important to set yourself up for success by chatting with an accountant ahead of time.

What are the most cost-effective and value-increasing renovations to make?

Garage doors

According to the 2021 Remodeling Cost vs Value Report , updating the garage door is the single best improvement you can make to a home when it comes to the return on investment.New Paragraph

Siding upgrades

When you upgrade the siding of a home, the entire home is given an instant lift. While you want the siding to be clean and dent-free, make sure to take into account the colour, too. Go for what will appeal to your target buyer.

Decks

While a deck will not be cheap to build, it can add an unmistakable sense of luxury & more space for buyers. Plus, decks often pay off. Y ou can likely expect more than 80% of the cost it took to build a deck in your home’s new value.

Minor kitchen remodeling

Even if the exterior of a home looks sleek as can be, nothing will date a home more than an old kitchen—not to mention turn off potential buyers as they tally up the costs of a future renovation that they'd need to tackle on their own.New Paragraph

Window replacement

While the average home buyer doesn't immediately think about windows, home inspectors do . This can scare buyers right off when they hear about the hefty price tag associated with most window replacements & repairs. Stay ahead of this challenging scenario with energy-efficient windows, which increase a property's value and promise lower energy bills.New Paragraph

Take our Real Estate Investment course for free!

Key takeaways:

A clear understanding of why people invest in real estate
The basics of the different types of real estate investment
A well-informed opinion on which type of real estate investment is best for you
The best ways to secure your down payment
Which type of mortgage financing is right for your situation
Optimizing your equity—and learning exactly what equity is!
All of the costs you should be aware of, including a personal cash flow calculator

Why Is A Pre-Approval Important???

Thu, 07 Apr 2022 21:10:02 GMT

A common question we usually get asked about pre-approvals WHY IS A PRE-APPROVAL SO IMPORTANT?

Why Is It Important?

Especially in a fast paced market, a true pre-approval is very important. You cannot be out shopping not knowing if your financing is going to go through. You need to get your pre-approval to the farthest possible point because we're in a very competitive market. Writing offers with a partial pre-approval can create a ton of risk.

Is A Pre-Approval A Full Approval?

A pre-approval is just like it sounds, it's PRE. We're doing an in-depth review to go over income, and credit to determine what you will qualify in regards to mortgage financing. That does not take into account the specific property that you might be writing an offer on and specifics that could potentially cause issues. A pre-approval cannot be considered a full approval, but we get it as far as possible to give you as much comfort as possible before writing an offer.

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MAKE MORE MONEY! Investment Property Expenses Explained

Fri, 01 Apr 2022 22:41:57 GMT

A big part of our day-to-day conversations on the podcast has always leaned towards creating wealth in real estate. One of those factors is always real estate as an investment.

It's important to understand the different types of investments and how the costs vary. This will prevent getting caught off guard when looking to purchase an investment property.

We're going to talk about estimating potential fixed and variable expenses. In the end, we'll bring it all together when it comes to analyzing these costs associated with an investment property.

There are also your purchase closing costs which everyone needs to be aware of.

Property Taxes

Taxes are going to vary depending on the municipality. Certain cities such as Maple Ridge are quite a bit more expensive than Langley and Surrey. If it is a rental property for investment, you're not going to get the homeowner's grant. You're going to be liable for the full property tax bill. One flaw that we see people make is they don't account for this, they don't put money aside at the end of the year and they're getting a bill for $4,000. If that is your situation, and you're not proactively putting that money aside, you can typically have your institution collect that money on your behalf and remit it to the city for you.

It's important to understand the actual city that you're looking at and the type of property. Some cities will cover your water and sewage. All these aspects need to be considered to analyze the costs associated with the property.

Strata Payments

Not only is a strata payment a fixed cost, but it's a cost that actually can go up. We've seen strata payments go up quite significantly due to insurance reasons. It's something to be prepared for. Budget for at least a 20% higher strata payment just to be safe.

A depreciation report is something that you would look at as far as the ongoing costs. This is a dive into the strata documents and figuring out what is coming up.

Does the roof need to be done? These are things that the strata will start to account for and start to budget for. They'll increase your strata payment to essentially cover those costs in X amount of time the repairs needed. We saw insurance skyrocket for strata in the last couple of years and people weren't prepared for that. Where we're at from a perspective of strategy, it seems to be stable.

Depreciation reports are readily available with most strata properties. If you see a building that's 20 years old, and they haven't done a depreciation report in recent years, that's a cause for concern.

What About Insurance?

Insurance is something that you're always going to pay whether it's a strata property or detached. It covers everything you can imagine needing to be covered in a strata property. The strata has its insurance policy which covers the building itself. You would have homeowners insurance or renters insurance for everything inside including the tenants in case something were to go wrong.

You are required to have house insurance. A bank will not fund a mortgage without insurance. If you're purchasing, we recommend that all of our clients get their insurance sorted out before they remove subjects so that there are no surprises. We've seen this far too many times, where people are reminded by their lawyer two days before completion that they need insurance. Make sure you tackle that and understand the cost.

A lot of people go into this thinking that the insurance costs are going to be similar to their primary residence. When you're insuring a home for rent, it's is going to be a higher cost. Get your insurance agent on this well in advance of closing. Try to do this at subject removal so you know the full numbers.

If you talk to an experienced investor, they know right away that insurance is one of those considerations that they're looking at.

It has to be a major consideration in your overall performance when you're buying a property.

Do You Need Help Managing That Property?

You have two options when you're buying an investment property, you can manage it yourself or you can hire somebody to manage it. This is dependent on the location and what type of investment.

A property manager would charge a percentage of your income. If you earn $2,000 per month in rent, they would charge a percentage of that in terms of an expense. They can also charge a placement fee if they're finding a tenant for you. Typically, that would be half of a month, sometimes more. Depending on if it's short-term or long-term, they will charge a certain expense for managing the unit.

For a short-term rental, we've seen expenses as high as 20% to 30% of the monthly income. For medium-term, which would be a furnished rental, I would see somewhere between 10% to 20%. 6% to 10% is a standard that we've seen for long-term investments.

Find out what those property management fees would be and what would they cover.

Would they include any of the other expenses in their calculations?

We've seen property managers cover minor repairs. That's why their percentage could be higher. Ultimately, it's important to understand what these are when you're looking at moving forward with any property.

Do You Have The Time To Manage A Property?

If it's a short-term rental and you have people coming and going every three or four days, constant requests are going to be time-consuming. Before you take on managing any type of property, chat with some people who own rental properties to get an understanding of what it's going to entail.

It doesn't always make sense to do it yourself.

Mortgage Payments

If you have a mortgage, that's a cost. With a variable mortgage, you need to understand if rates are going up or down because your payment could fluctuate. There are variable mortgage products that have a static payment, meaning that even when rates change your payment does not have to change. If you're curious about that, let us know. The actual cost of the mortgage is typically going to be your biggest expense in owning an investment property.

Home Equity Line of Credit

If you leverage a property and you are using a HELOC or a refinance, you need to account for that. You need to account for the fact that you could be taking on an extra payment to extract your down payment.

Vacancy Expenses

Although vacancy might not be an expense, it is something that you have to plan towards. Your property may not be occupied 100% of the time. Be aware of it and prepare for some form of vacancy. An example of this would be short-term Airbnb. Our vacancy rates in the Lower Mainland and Fraser Valley are extraordinarily low. If you have a desirable property, you could plan for a vacancy rate as low as 2.5% to 5% of a year.

Utility Costs

This depends on how your lease is structured with your tenant. Some tenants are required to pay the cost of utilities such as hydro and gas. Some people will pay a lower rent cost knowing that they're taking on those hard costs for you. If it's on you, that is another cost that you have to factor in.

If you're operating a short-term rental, you're going to be covering utility costs. You're going to cover items like internet or cable. Tenants are going to expect those types of services when you rent an Airbnb. Things like a Netflix account people can access is important. Those are things you should factor in as fixed costs.

If you're looking to buy an investment property, you want to analyze this in something similar to a pro forma. Basically what it does is it allows you to punch in a variety of numbers. It can be as simple as punching in the mortgage amount, the expenses, and adding those up. Then you would add in your cash flow or income, providing you with the output. A more useful pro forma could also provide you with the actual return on investment.

If we're looking at a property, we are looking for cash flow. How much cash am I returning after these expenses including variables both from a conservative and aggressive standpoint?

What would be the mortgage pay down?

When you're buying an investment property, although you have expenses, you're having someone pay off your mortgage.

What would be property appreciation?

You want to combine the paydown, principal appreciation, and cash flow to give your total equity gain or total return on this property. You can't get accurate numbers without factoring in the property taxes, insurance, vacancy, and everything else we've talked about.

How Can Thrive Help You?

We go to an extra level here where we'll factor in the cost o a home equity line of credit if we use that for any sort of financing for the downpayment. It is common for clients to access equity from a home and buy another home. We specifically account for that.

Maintenance

Another variable expense to consider is maintenance. You have to expect that if a tenant is living in your house and the fridge goes, that is on you. You are paying for a new fridge or getting it serviced. You need to have your gutters cleaned and pressure wash the house every year. You can't go into this thinking that you're going to be bringing in rent and cash effortlessly. We tell people that they should have a fund of about six months worth of rent set aside. That accounts for vacancies and maintenance that can occur. Strata typically take care of exterior maintenance and landscaping. If it's a detached home, you have to consider these things. If you're buying in Alberta, as an example, you will be looking at snow removal. This is something you have to factor into your lease that the tenant.

Preventative Maintenance

If a tenant slips on the driveway, they can come after you and sue you for that. You want to make sure those driveways are clear. One thing we always touch on is preventative maintenance. Number one issues in a condo building or any strata building are leaks, water issues, and tenants who don't care about the home as much as the owner would. We see this a lot where these issues are massive but there are some preventative things you can do.

Plan for the worst-case scenario when you're analyzing any investment and hope for the best. It's always better to over overestimate everything.

RECAP

You have to go through this process and make sure that it's a property that makes sense financially. If you're putting out $200 a month after rent and everything's been paid, that's not necessarily a bad thing when you look at future values and you look at principle pay down. If we were to run the numbers, people are making hundreds of thousands of dollars over two to five years.

Where else you can put $200 a month that's going to turn into something like that?

It's not a negative thing if you're out of pocket, you just need to make sure it's affordable for you.

Analyze your numbers and check everything. Go into it with eyes wide open and don't be afraid of investment where there are tons of great opportunities.

If you're liking the show, leave us a five-star review. You can leave us a review on both Apple Podcasts and Spotify.

If you want to see more of this kind of stuff, make sure to let us know! We value feedback from all of our listeners.

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FIRST TIME HOMEBUYER MYTHS | The YVR REMO Show Episode 108

Wed, 23 Mar 2022 20:23:25 GMT

We're talking today about myths and confusion related to being a first-time buyer. There are a lot of people who are not first-time buyers that will see a lot of value in this episode.

We talk a lot about investors in this market but one thing we don't talk a lot about in our podcast is people getting into the market for the first time. We get a lot of interest from people trying to figure out how to buy their first property. There are many different reasons that people are doing it and with all of the confusion and miscommunication around first-time buyer programs and what you can do, we want to set the record straight in this episode. We will highlight the most common myths and confusing points that people hear when it comes to buying your first piece of real estate. Whether you are buying your first piece of real estate or maybe your second or third, there's going to be value in this conversation if you're listening in today. A lot of these myths are things that second and third-time buyers bring to our attention as well.

You need to make sure you're working with a good team that can explain everything to you in detail and if you're making the right choices. Call your broker a year before investing so they can help you plan and have an understanding of the available programs and downpayment requirements.

We've seen real estate take off in the last couple of years. We've seen trends that people either want to get into the market as quickly as they can or they're backing out and saying I'm going to hold off. We'll talk a little bit about what that could look like and market trends. That's a valuable conversation to have when it comes to myths around real estate and where that goes.

DOWNPAYMENT MYTHS

Everybody thinks that only first-time buyers can buy with 5% down. And that is not the case. As long as you're going to occupy it, you can buy with as little as 5% down if it's under 500,000. When you get over $500,000 you have to put 10% down on the portion above.

A lot of first-time buyers think that they cannot buy an investment property. We live in a market where some people have been priced out locally and they can't qualify or afford to buy something in the Greater Vancouver Fraser Valley area. That doesn't mean you shouldn't buy real estate. We've had a ton of clients that we've helped buy investment properties out of a town.

Common confusion on downpayment amounts above $500,000 that we hear is that you need to put down 10% flat. It's not 10% flat, it's just 10% on the difference.

Example:

$600,000 purchase price

First $500,000 at 5% = $25,000

$100,000 at 10% = $10,000

Anything above a million is required to put 20% down. That's a big shocker because single-family homes are hard to find for under a million dollars these days. A $999,000 purchase price is going to have $75,000 down and then as soon as you go above a million you're looking at $200,000.

A lot of people think that the 20% rule might not apply to them because they're first-time buyers. 20% is minimum on properties with a price tag of more than one million.

BUYING MULTIPLE PROPERTIES AT 5% DOWN

Can you only buy one property at 5% down? You can buy a second home with less than 20% down, you just have to qualify under the insurance guidelines. It could be for a family member or for you to move into.

A lot of our clients take advantage of something we'd like to call house hacking. There are a variety of different ways to do it with the easiest being moving into the property, living in it for a year, and then converting it into a rental. After that process, you buy another home with the minimum downpayment.

CAN YOU BUY AN INVESTMENT PROPERTY AS YOUR FIRST HOME

Real-Life Scenario

We pre-approved a client about a year ago. He was qualified for about $400,000. He came to terms with the fact that whatever he could get locally didn't make sense for him and his family. It just wouldn't work for him to be in a one-bedroom condo. He didn't have the extra income and he didn't have someone who could co-sign. Rather than him throwing in the towel and not buying anything at all, we ran some numbers and he made a goal of saving up 20%. He started working with out-of-town real estate agents, specifically in Vernon, and he watched that market. He saved and he continued to rent locally. As soon as he had his 20% down in closing costs, he pulled the trigger and bought a detached home. He paid about $450,000 for a place and it's bringing in good rent. That property has gone up in value by about $150,000 in the last eight months. He's done some renovations and he's got a good tenant in there. A lot of people might not have those conversations with their brokers. This guy could be sitting here today with the same amount of money in the bank and no real estate to help get ahead. If you find yourself in a position where buying locally doesn't make sense or doesn't work for you, remember this situation.

A lot of people come with a minimum downpayment and it's tough to make that work even at the $450,000 mark. We've also had a client buy a second home in Powell River and rents in Langley, BC. He qualified to carry his rent and the new home that he purchased as a vacation home. That individual has put the property as an Airbnb while he's not there. That's another way to get your foot into a rental space. It's not a long-term rental, but it's a way to get into the market with minimum down.

IF YOU HAVE A COSIGNER, DO YOU STILL QUALIFY FOR FIRST-TIME HOMEBUYER PROGRAMS?

Yes, you can cosign with someone on your first home and not move into it. I've got a brother-sister duo, and the sister is looking to move in with her partner. The brother is going to come on from an income standpoint. He's going to support the qualification and help move in. They're both technically first-time buyers but he doesn't need to live on the property. She can live on the property because she's on the application. They can have a co-ownership agreement. They can also design the agreement so that he's a 50% owner in the property whether or not he's living there. Technically, it still isn't an investment for him but at the end of the day, you still qualify under the guidelines of CMHC because one of the owners is occupying the property.

What if you're a first-time buyer and your parents have bought and owned multiple pieces of real estate? If they co-sign on the property, can you qualify under any of the first-time buyer programs such as the RRSP exemption or the property transfer tax exemption? The answer to that question is yes, you can still qualify to use a percentage of that program for yourself. In the case of the homebuyers plan, like the RRSP program, you can use the entire thing under your situation.

THINGS TO KNOW

Requirements if you're a first-time homebuyer buying an investment property:

1. You can't buy an investment property with 5% down. If you're buying an investment property, you have to have 20% down but you can still do that as a first-time buyer.

2. The property transfer tax exemption, you can't use these programs if you're not going to occupy the property.

3. If you're buying a $400,000 home as an investment property, you typically wouldn't have to pay any property transfer tax. If you're going to live there, you are going to get hit with that bill.

Keep in mind these first-time homebuyer programs and exemptions are not going to work for you if you're buying for investment. That minimum downpayment is 20% for a first-time buyer or not.

FIRST-TIME HOMEBUYER PROGRAMS

First-time homebuyer programs are often misunderstood. Let's break them down.

Federal Government Homebuyer's Plan

This one is in relation to the RRSP program. Everyone thinks that you can only be a first-time homebuyer to use this program. The program allows you to dip into your RRSPs. If you take money out of your RRSPs, you have to pay tax on it unless you're a certain age. You could be 20 years old and you could have money in your RRSP. In that situation, you could take money out tax-free. You don't get taxed on that up to $35,000. You are required to pay it back over 15 years. It's a long time to pay that back, which is a nice incentive. A lot of companies paint a picture that you have to be a first-time buyer already to do that. That's not true. You could have not owned a home for over four calendar years, you could also be recently divorced or separated, a person with a disability, or supporting a person with a disability. You could use this program more than once depending on your circumstance. If you are a first-time buyer, it's just important to note that this is one of the great ways to get money out of your savings. You could be buying with another person, and still access this program for a downpayment.

With the thresholds that you can access, up to $35,000, two buyers can combine that so you're grabbing up to $70,000. You can't exceed that amount and you can't put three people together.

BC Property Tax Exemption

This one is for first-time buyers buying a home that they're occupying. In British Columbia, there are some rules and restrictions around that.

The first one is the threshold. If you're buying a property, you have to be occupying it and it needs to be under $500,000 to get the full exemption which is up to an $8,000 property transfer tax exemption. Once you go above $500,000 there is something called a sliding scale, which means for every percentage above this scale, they reduce the rebate. For $525,000 you have to now pay the entire amount at $500,000. There's a full exemption, so there's a percentage that you still have to pay. You have to occupy the property, you have to file taxes the previous year in British Columbia, or lived there for 12 months. Double-check with your lawyer on your qualifications and whether or not you're qualified. We've seen before where people tried to qualify for exemption and didn't live in British Columbia for that period. They need to then be Canadian for the most part or permanent residents to qualify for this. It's got to be owner-occupied. You can't be a foreign resident and take advantage of this program.

If you're on the fringe of buying something that $550,000 and can find something a little bit cheaper to save, it's beneficial. We've also had a lot of clients see it make sense to spend the extra money on transfer tax because you get a two-bedroom. That two-bedroom is going to appreciate more than one bedroom and it's going to be a longer plan for you.

Don't build your desired home around saving money.

With brand new pre-sales, you're buying directly from the developer and no one's lived there before. If it's owner-occupied and under $750,000 you do not pay transfer tax above that $750,000. You do not need to be a first-time buyer for that. As long as it's owner-occupied under $750,000 you do not pay a transfer tax.

Municipalities will have their own taxes in some cases. The City of Toronto has doubled the amount of property transfer tax versus the rest of the province. In Alberta, there is no transfer tax. Check your government site to see what would be charged to you.

MYTHS SURROUNDING BUYING & CLOSING COSTS

There are a lot of myths around the closing cost.

What are closing costs?

What would you have to pay?

Can you roll that into the mortgage?

If you are purchasing a property and putting 5% down, technically you don't roll the additional costs into the mortgage. These can be legal fees and expenses. Some lenders can qualify you for cash back programs. They lump an extra amount of money back to you at the lawyer's office to cover some of the closing costs. There are some rules, restrictions, and costs around that. If you break that early in the next five years, not only will you pay a relatively large penalty, but you'll also have to pay back the entire cash back amount as well.

You can roll closing the costs with some lenders if you qualify but it is more of a cash-back program. What if you have a $60,000 truck and you want to add that to your mortgage? Technically speaking you can't because most of these cash back programs don't qualify for that kind of money. We're talking about 1% to 3% of the balance of the loan. If you're borrowing $500,000 that is $15,000. It's meant more of like a small amount to help someone get across the line or consolidate. There's some creativity that can be had there.

Closing costs that you can expect to pay to go into this if you're a first-time buyer are transfer tax and municipality-dependent property transfer tax. If you're over the threshold, there are also legal fees. We tell people it's around $1,600. A lawyer provides an exact quote. Outside of that, if you're buying with 20% down there could be an appraisal. If you choose to do an inspection on a home, they're usually about $750,000 depending on the size and scope. Sometimes there's a requirement to pay off a debt to allow you to qualify for that mortgage.

What isn't a closing cost? If we tell you that you have to pay your credit card to zero before completion, that's not necessarily a closing cost.

Those are the items that you want to prepare for going into a purchase and transfer tax in BC. Budgeting will help because it can be very dramatic, especially with current house prices.

How Can Thrive Help You?

We have a very helpful budgeting tool as part of our software when we pre-approve our clients. It summarizes all these numbers for you, which can be very helpful. Click our mortgage calculator below!

HOME INSPECTIONS

One thing that's talked about a lot is the home inspection. It is not a requirement of the lender and the bank will not make you do a home inspection. It is your choice, but it's highly recommended. There are experienced individuals that can assist you with this

If you have experience as a home builder, you should be okay. You should know what you're looking for but we've seen that work against people as well. We've seen a situation where an uncle has renovated a couples home and it ended up costing them $50,000 within two months. This happened because they didn't catch some of the potential issues.

MYTHS AROUND CREDIT SCORES

People don't reach out to start the process early enough. They don't reach out to start the conversation. We're finding that people don't have enough credit quite frequently. It's not just the credit score, but creditworthiness. What we mean by that is it's one thing to have a cell phone in your name and to pay everything by cash, which a lot of people tend to do. It's another thing to prove that you can pay back your credit via multiple accounts such as a credit card or a line of credit. We're not recommending someone go out and take on a bunch of debt.

We're noticing people have low credit for two reasons:

They don't take care of their credit and they're not paying it off on time.
They don't have enough credit and it's limiting their qualification. The easy way around that is to make sure you have two credit lines and just use them monthly on gas, groceries, or other low-cost necessities.

It's not just a credit score, it's a very detailed report. The banks are looking through that report and reading it. The score is one small item on a report that could be four pages long. There is a lot of very detailed information that we're going to be looking at, not just miss payment and score.

How much of a limit does your credit card have? A $500 credit card limit is not going to be enough if that's your only product. We've seen many people have a $500 credit card that they got when they were 19 and you fast forward that's all that they have. You can call the bank and ask to increase that limit. It's typically done over the phone, or in most cases, they're already pre-approved you for that and it's just a click of a button on their online banking. Those little adjustments could help you.

You need to use your credit to get credit to get good credit. We have seen applications get declined with a good credit score. The bank comes back and says it's too thin. That's the word that they use, the credit is too thin and there's not enough here to justify good credit.

There are a lot of things that are going to vary on credit reports that a broker or bank pulls versus your credit report. The score is one of them. Those scores will differentiate, so don't be alarmed when your score is different. There are a lot of times we'll notice accounts that yo u thought you closed and are still showing as an active account on the report. Some of these issues that come up on credit reports literally can take up to six months to rectify. This again, is why preparation and starting the process early is always a great idea.

GETTING A MORTGAGE AS A FIRST-TIME BUYER LEAVING YOUR EDUCATION TO BEGIN A CAREER

What if you're getting out of university and starting a new job, what does that look like? We have seen a variety of age groups that don't have a strong working history with full-time hours. If you went to school and you're working in your trade of choice at full-time and guaranteed hours, lenders will consider your income.

We hear this quite frequently where people don't buy because they walked into their bank and are told they can't get a mortgage because they need to have a year under their new position. We've got tons of lenders who will consider your qualification, it just has to be a good story.

It's all about the story.

The other thing to note is that a lot of people, the first thing they do is a Google Search on mortgage rates. They apply with an online lender and they get declined and then they don't do anything for a year. If you're going straight to a lot of the branches, you're dealing with people who are maybe not qualified and they're just basically looking at guidelines. If you're going online, it's the same thing. That's why they offer certain products and rates at a lower cost. It's because they're piling in the easy stuff quickly. If you're a first-time buyer and you think you have a unique scenario, you should talk to a professional.

WHAT HAPPENS IF I FINANCE A NEW VEHICLE BEFORE I QUALIFY FOR A MORTGAGE?

Don't take on a car loan before you buy your house. Do whatever you need to do before you get the car loan. We get people buying car loans with payments of around $1,000 to $1,200 and they can't qualify for a house. For every $400, you're losing $100,00 in mortgage qualification. Even if your car loan is only $3,000 you're probably better to pay that off.

As a first-time buyer, lenders are looking for guaranteed income if you've started in the last 12 months and you're putting down 5%. In most cases, you need a 24-month average or two-year history.

Lending programs and guidelines change monthly and weekly.

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SHOULD YOU LOCK IN? | THE YVR REMO Show Podcast Episode 107

Tue, 08 Mar 2022 20:00:49 GMT

The Bank of Canada decided to take the plunge later than expected. It was originally anticipated that in January of 2022 we were going to see the first of what's considered to be multiple rate increases to the overnight lending rate. We're talking about what impacts consumers in the real estate space as variable-rate mortgages and lines of credit

The Bank of Canada meets multiple times throughout the year and has control of what they call the overnight lending rate. The overnight lending rate changed on March 2, which is why we're having this conversation. We'll go back and explain what you need to know about what happened, who it affects, what are the numbers, what you need to do, should we be concerned, and more.

What Changed?

The overnight lending rate was initially at 0.25% and it's now sitting at 0.50%. That is the overnight lending rate from the government to the banks. That's not the prime rate but that is exactly what will impact the prime rate.

We just saw the first banks decide to match that increase to their prime. It's important to understand the difference between the overnight lending rate versus the prime rate. Prime is now going to be 2.7%

How Does This Impact You As A Borrower?

When the interest rate went up by a quarter percent, the bank's prime rate is going to go up to match the policy rate.

The banks don't have to follow the policy rate, nor do they always do. A perfect example would be that TD is at 2.60%. Every other charter bank, along with most mortgage lenders, is at 2.40-2.50%. A few years ago, when we saw interest rates go down, the banks opted not to go down the full quarter percent. They only went down by 0.10-0.15%. They're going the whole way back up.

It's not the scary rate hike that the news was talking about. we'll talk a little bit more about what the bigger version or the bigger picture could look like over the next year or two or three years as we get through this.

Variable-rate mortgages and home equity lines of credit fluctuate with prime.

If you are at a prime minus one (1% is your discount off of prime), that's how a variable product works. You're either at a discount or a premium on top of prime. Now that prime has gone from 2.45% to 2.70%, your rate would go from 1.45% to 1.70%. Rates across the board are increasing.

Does This Impact Your Payment?

There are a handful of lenders that offer a static payment. You can think of it as a fixed-rate payment in a variable product. This means that even though rates have gone up, your payments stayed the same inside of that payment. You're paying a bit of extra interest and a little bit less principal.

Make sure that you understand the mortgage you're in if you're in a variable. You might not see any change in your mortgage payment or you may see a change to prepare for.

Who Does This Affect?

This affects anyone in a private lending mortgage. A lot of private lenders will market their rates as prime plus. You're paying your prime interest rate plus a surplus. Anyone that's carrying a construction loan is typically in a prime plus type of situation as well. A lot of unsecured lines of credit are also prime plus. If you have an unsecured line of credit, you're also going to be looking at an impact there.

These changes equal about $12 per $100,000 borrowed. Let's take a loan example of $500,000. That's a $60 difference on the monthly payment.

We talked about who does this effect and we cannot forget all of those folks underneath that window who have variable rates and have investment properties who are calculating their numbers. Does this mean you should not invest? No. This means you should continue pushing forward but you should look at your numbers just to recalculate them accordingly.

Will This Affect My Qualification?

If you're pre-qualified, meaning you're pre-approved for a purchase, this does not impact you whatsoever. This has nothing to do with the qualifying rate, this is just the final rate that you'll pay.

In Canada, we have something called a stress test. The stress test currently sits at 5.25% or 2% above the rate that you have. Most Canadian consumers have the option to take a variable rate right now. Let's say the discount is one off of prime, they'd have a rate of 1.7%. We qualified you already using this 5.25% payment. If we saw interest rates go up a couple of percent and fixed rates continue to rise, the Bank of Canada does have the ability to adjust the stress to stress-test rate. At this time, there are no indications that they will still do so while fixed rates still hover in the high twos and low threes and variable rates are in the ones and twos.

Fixed rates have already been rising for the last 12 months. We have lenders offering five-year fixed-rate mortgages at 3.39%.

This current change is only impacting variable and home equity line of credit borrowers. If a variable that was at 1.50% is now at 1.75%, compare that to the fix that's being offered today at 3.39%. We are still dramatically below the fixed rate.

Should I Lock In My Rate?

There are situations where it could make sense to lock-in. You need to know your situation. Given where rates are at and given the spread between the two, we could see another 1.50% of increase and break even with the fixed rates being offered today. Fixed rates are so much higher right now, it's very tough to commit and jump into something like that.

Will Your Payments Rise?

Yes, but your payments going to jump much more dramatically if you go to a fixed rate. You're committing to that and you're putting yourself in a product that can be very restrictive with big penalties.

When you look back at the last three years, the fixed rates are at the peak in the three-year mark. They're above where they were pre-pandemic levels. Even if the variable rate was the same as a fixed rate, we would take the variable rate just for the flexibility of avoiding penalty issues and having the freedom to refinance. There are different situations where you would be recommended a fixed-rate mortgage such as budget downsizing, seniors, first-time homebuyers squeaking in the market, or having to know your numbers because of a strict budget. It's important to know what your why is.

There's such thing as a two-year or three-year fixed term. We had five or six consultation calls and every single one of those people was breaking their mortgage term. The penalty ranged from three months' worth of interest to $47,000 on a $600,000 loan. It does have a dramatic impact. You have to look at your situation and budget. Frozen payments can come in handy. At the end of the day, if you hate it, can't sleep at night, then go for it, pay the higher amount and go fixed rate.

Do You Need To Break Your Mortgage Early?

The stat is that the average Canadian breaks their mortgage every three years. If this is the case, why do people take a five-year fixed rate? It's not all about selling your house, it's refinancing as well. You may want to pull some money out to pay off debt or renovate. There are so many situations that come up where you're breaking a mortgage.

Certain lenders have calculations that are going to create a larger penalty than others. Typically the big banks have fixed rate products that are typically going to have a higher penalty than some of the other mortgage lending companies. That's a big part of the planning and strategy that we dig into. If you're going to go fixed, let's pick the right term. The reality is you're never going to pick the right term because you don't know how long you're going to live in a house. All we can do is guess, assume, and hope for the best. Try not to overestimate. Try to place yourself with the right lender, that's the best thing you can do for yourself if you're going to go fixed.

We want to be clear in saying that in our world, we advise independently to each person. We believe that the variable rate makes a lot of sense. There's more upside than downside at this moment.

What Can You Expect Going Forward?

There's a lot of uncertainty right now. The one thing that is certain in Canada is that Omicron, although it had an impact there in December and January, it's certainly bounced back way faster than the government expected. All of the provinces except for BC have eliminated their passports and mandates. What that means is people are back to business as usual. People are spending more money in their provinces and enjoying life again. That's another reason why we're seeing the bank increase the overnight rate because the country can operate normally. People can absorb this slack and have saved more money than ever. For most people to stress or worry about this increase is probably null and void. For the bank to do this, they are suggesting that people can afford it.

How Has Inflation Affected The Market?

Many things at the grocery store are at least 20% to 40% more expensive. Inflation plays a big piece in this and that isn't going to stop. When the war in Europe starts, that provides a lot of uncertainty. As of this podcast, everyone's looking at the fuel pumps right now and it's through the roof. There are so many things here that could play in.

This has been the craziest past two years of our all of our lives. Our government has been very transparent when it came to the rates. They were very transparent that the rates were going to drop, and they continue to drop. In the past, it's been a lot of surprises.

We have a lot of people reach out and they're adamant that they need to lock in because it provides some stability. Your payment is going to go up to do that because you're likely locking into a higher rate. You need to prepare for a higher payment. We always want to analyze what other payments you have going on in your life. What we found is that a lot of times people are carrying more high-interest debt than just the mortgage.

We see average car loans are hovering at 4.99% to as high as 7%. Somebody on our team saw a hot tub loan for 15 years at 8%. Our clients are carrying about another $1000 to $2,000 in payments across a line of credit, credit cards, car loans, hot tub loans, or boat loans.

What Can You Do With The Equity In Your Home?

A lot of us have a lot of equity from the recent boom in our market. Instead of locking in at a higher payment, why not look at the whole payment and bring some of those loans into the mortgage, if not all of your debt. You can bring down your overall monthly liabilities in a big way. On average, I would say with $2,000 of unsecured debt payments plus the mortgage payment, we're seeing an overall payment reduction of at least 35%.

If you refinance that term when fixed, you are going to pay a large penalty. You got to be prepared to not be able to access that equity. That's the number one reason people are breaking besides selling. If you're thinking you want equity at some point, consider this as a time to restructure, refinance, or re-amortize the loan to make the payments manageable. The banks will not offer you favourable terms nor will they analyze your file. You should understand what your payment structure is, what kind of money you can get out right now, and the impact of the prepayment penalty penalties. Banks don't look at bi-weekly payments, so the average car loan is about $600 to $700. From a mortgage payment standpoint, if you wanted to buy a second home that's $200,000 gone. It's a massive bump to your cash flow. You know, like if you looked at actually putting a $50,000 loan into your mortgage, that's a $200 payment. It makes a big difference. Think about the other things that you might want to do just before you lock-in. Get a second opinion.

From a budgeting perspective, we're talking seven $800 payments for a vehicle, let's not worry about our mortgage going up by $100. Your mortgage is actually an asset, it's a phenomenal investment. If you're looking at the budget and cash flow, get rid of those, whether that means selling some of those items or consolidating them. You can even bump up your mortgage payment so you're paying your principal down quicker because you don't want to amortize your vehicle debt over 30 years. Take advantage of that, the rates are lower and it's going to get your payment down and it does wonders for qualification.

The problem in Canada is not mortgage rates. The problem is cars, vehicles, boats, and other things that require a monthly payment. When we're worried about a 0.25% or 1% rate hike on our mortgage, we're talking about someone spending $1,000 bucks on a car loan. Not to make our clients feel bad because nothing is wrong with that, it's just that these are the different types of terms that you need to be looking at. Look at appreciating assets and buy more real estate!

You don't need to rush this process. Fix rates are at an all-time high for the last three years, right now they're not going up. If your goal is to lock in, you don't need to rush and locked in this week. Take your time, have a conversation with a professional mortgage broker like us, look at these options, and just take the urgency out of this. The only urgency I put behind this is to get out of those high-interest debts and get into this mortgage as quickly as possible to start saving interest. From a perspective of trying to do this because you're afraid the fixed rates are going to keep going up, slow down and do this right. You only have one opportunity to do this right.

We update our variable rate web page every single time that there is a bank announcement. Click below to learn about the recent change and more!

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The Bank of Canada Changed Their Rate!

Wed, 02 Mar 2022 20:28:24 GMT

On March 2nd , the BOC increased the overnight rate from .25% to .50% which is only a .25% change

Should I lock in now?

Variable rates have lower penalties, fewer restrictions, and typically cost LESS over the long term (if you're wondering, all 3 partners at Thrive are variable and staying this way for the entire term).

How do I lock in if I want to?

Contact your bank, get a quote in writing, if you'd like a 2nd opinion send it to us for review and we will reply.

Why should I NOT lock in?

Fixed rates are already 3%-3.5% with most lenders. You're likely paying more with a fixed rate vs. if your current variable were to go up 4-5 more times. Additionally, you will have to pay 4.5-5.5% of the balance if you break that fixed-term early.

Think about this before locking in.

- Let's use an example of a $500,000 Mortgage. If you were to go from a variable to fixed today @ a 1.5% increase, it would change your payment by $390.

- If you stay variable it may take months or even years for rates to increase this much.

- You would save more by staying variable with this increase and manually adjusting your payments.

Should I renew early if my mortgage is up in the next 1-2 years?

Variable rates are at record discounts and interest rates (as predicted will go up likely over the year). It's not a bad time to get re-evaluated and tap into that equity.

RECOMMENDATIONS:

We still are RECOMMENDING if you have a variable rate to consider staying the course. Remember WHY you took your variable. You may already have WON with rates having been so low for 1.5 years.

The SPREAD between the current variable rates and fixed are nearly 1%-1.25% or greater, so even if the bank were to raise rates 5 times you are protected.

If you have a variable rate at 2.05% or higher you should be talking to us RIGHT now about REDUCING your rate.

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3 Ways To Make Money In Real Estate

Fri, 18 Feb 2022 01:41:47 GMT

Let's talk about the three most common ways to make money with real estate as an investment!

#1. CASH FLOW

Cash flow is what a lot of people think about when they think about real estate has an investment.

What Is Cash Flow?

The amount of money that you're getting for rental income minus your expenses equals your total cash flow.

How Does It Work?

Example:

Rental Income: $2,000

Mortgage Payment: $1,000

Taxes: $100

Strata Fees $100

Utilities: $100

Your total expenses are now $1,300.

To sort out the calculation see below:

$2,000 of rental income - $1,300 of expenses = $700 of cash flow.

#2. APPRECIATION

What Is Appreciation?

Appreciation is the increase of your property value based on external factors such as market conditions and when you purchased.

You want to be clear about the neighbourhood you're buying in, the type of property you're looking at. Look at the history and statistics of the property to understand what percentage of appreciation you could be looking at. We always recommend being conservative, but it is a tried and true way that over the long term, you can gain more money in real estate.

#3. PRINCIPAL PAYDOWN

What Is Principal Pay Down?

Principal pay down is having someone else in your rental property, paying off your mortgage by paying rent. Even if you're breaking even, you're making money because that person is paying off your mortgage. This opens up the amount of equity, increasing your net worth on that property.

BONUS #4. SWEAT EQUITY

What Is Sweat Equity?

Sweat equity is the ability to walk into a property to do some improvements and increase the value. It could be an overhaul, it could be or interior design. That sweat equity is something that should not be overlooked and should be considered when looking at analyzing real estate properties as an investment.

Good luck on your investing journey!

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SUBJECT-FREE and HOW NOT To Lose Your Home! | Episode 103 The YVR REMO Show Podcast

Fri, 11 Feb 2022 04:35:29 GMT

We're going to talk about going subject-free on properties and how to protect yourself. We talked to hundreds of people every week and a vast majority of buyers right now are in a position where they can't put financing conditions in their offer. We're in an environment where we don't have the opportunity to do that because things are so active. Today, we've got a list of the most common issues that have been presented when people have gone subject-free. These are things you need to think about before making an offer.

It's a challenging market for everybody involved. We have some clients that have written 10 offers and they still haven't secured a property. We've seen a condo value go from $400,000 to $550,000. It's a very common conversation to go subject-free to even have a chance of getting a property. We have countless clients that are going subject-free and we've gone through the motions multiple times to help them understand the risks of doing so. There's a lot of work behind getting into a position where you as a buyer are comfortable going subject-free and understanding the risks. We're hoping this episode is helpful for every single buyer in this market whether you're an investor or a first-time buyer.

We're starting to realize there are a lot of questions that people aren't asking. People are making offers on properties and they're not qualifying because they didn't do something. Go back to our previous episode on subject-free offers to get a better understanding of how they work.

Today, we're going to talk about the things that could negatively affect your deal.

LOOKING AT YOUR INCOME

We need to look at every single income document to make sure nothing has been missed.

Why do you need to provide T-4s, two pay stubs, and a job letter?

If there's one number in any of those documents that we haven't accounted for, it's going to come up and it could hurt your approval. Looking at income, make sure that you have submitted every single one of the documents required. If you're self-employed, we need to see documents to make sure your business is still active. If someone's not asking you for these things, they are not doing this properly and you shouldn't be going subject-free.

Income, credit, and liabilities are the big three items that we need to find comfort in. We have a very thorough process to make sure that we uncover issues and income. We document what shows up on the credit bureau and we go through it with every single client. If we didn't have that conversation, that could come up two days before completion and your mortgage is gone. Going through a true pre-approval is what's going to allow you to find some comfort in going subject-free. If you're selling a house and your money is coming from the sale, that's very easy to track because we know where it's coming from. We need to know the source of your downpayment. Some people don't want to ask clients for bank statements, because it's a lot of work. We do that upfront. Banks are not going to accept certain forms of down payment.

PROPERLY UNDERWRITING A FILE

People don't realize that your bank and most people don't properly underwrite your file.

What does that mean?

Underwriting of the file means that we've reviewed credit, income, down payment, assets, and so forth. Most people going into subject-free offers don't know if their file has been underwritten because they walk into the bank to give them the documents and put them on file and they say you're pre-approved for this amount of money. Your bank typically does not review any documents that you send in any high-level detail until after you've got a live transaction. We've had someone who's made a subject-free offer and can't get qualified on the terms or the rates they thought they were prequalified because the bank did not fully underwrite it. It comes down to someone that you trust to go over as much as they can in advance. That's the number one mistake most people make, not knowing what's been reviewed or not reviewed in their file.

SUBJECT-FREE OFFERS AND DATES

It's hard to make dates line up in a normal market. What we mean by this is when you're moving out and when the seller is moving out. Being prepared by that, and being flexible, will help you put yourself ahead. If you can accommodate somebody else's dates, you set yourself apart with that extra edge. How you can protect yourself from a date situation is by being prepared for bridge financing and being prepared to carry two homes for a short period.

Knowing those costs is very helpful because that could be the difference of paying an extra $10,000 on a property to win that offer. Having the flexibility of dates and knowing how to prepare yourself for that would be key.

In this market, a lot of people are trying to buy their house first before they sell. The good part about selling now is you know how much money you have to play with, which can help you decide how much you can spend on your next house. A lot of people aren't going that route because they don't want to be left renting or not be able to get back into the market when it's moving at this pace.

If you write a subject-free offer on a house to purchase and haven't listed your house for sale and you're doing a three-week closing, what if your house doesn't sell? The market can change over a week and we don't know what's coming.

If you get stuck in that spot, do you have enough equity?

Can you carry two mortgages?

Can you get private financing?

These are all conversations that we have upfront.

We don't like to see quick completion dates on subject-free offers, even if there isn't a property to sell because something may come up. If you have two or three weeks closing and you've gotten subject-free, if an issue pops up a week later when the banks finally looking at your file, we only have two weeks left to try to fix that issue. Going to a different lender and bringing on a cosigner are timely tasks. We like to see a bare minimum of one month, but generally, more time is better. You're sometimes at the mercy of the sellers. It's just another risk that you take on.

If you're purchasing your first home or you've already sold your property and you're prepared to do so, this will change the lenders that you can work with or who can take you on. Sometimes we see certain banks will be too busy and they won't take on a file and they'll reject it. If you're working with a mortgage broker, we can use different lenders but at the end of the day, it will change your options in many circumstances. We might have to pay for rush costs and things like that, so just keep those things in mind. Make sure you let your broker know and be aware this could change your options.

APPRAISALS AND SUBJECT-FREE OFFERS

Let's talk a little bit about appraisals, what's going in the market as far as appraisers, and what we're seeing right now.

How that could impact you if you go subject-free?

It's a conversation that comes up every single day and every single subject free offer that we make right now. We're talking people who are putting 20% down. They need to be aware that when you do a purchase for a property, there are two types of appraisals.

There's an automated appraisal, which is what we hope for. This is the computer saying yes, the value is good.

Then there's a physical appraisal now with the value going up week over week. Often lenders are asking for physical appraisals when somebody is asked to go there, take a couple of pictures, write a report, and look at comparables. Sometimes there are no comparables. If you're buying a detached home, and the last most recent sold showing up in the system is $1.5 million and you just paid $1.85 million, There's a good chance that your appraiser could say the valuation in the market is $1.7 million. Now you're short by $150,000, you've gone subject-free, and you've got three weeks to close. What are you going to do? That's a big consideration that you'd be thinking about.

We've seen this firsthand where that same scenario occurred but we had three months for closing. That's not going to happen in this market, but you should be able to get a decent amount of time with 45 to 60 days being common. That amount of time saved this individual because we were able to reappraise the home a month later and there were comparables to support that new value. Now we have that new value and we're moving forward with no issues. That's how a date can protect you on an appraisal issue like this.

Another thing we see quite commonly is homes that are old and have never been renovated. Vintage homes with not a single upgrade done. One big piece of the appraisal report is the life of the home. The economic life of the home is looked at very closely by lenders. Typically, a home should have about 35 to 40 years of life or more. That's the minimum of what most lenders are looking at, 30 years is the minimum. That's why it's so important because your amortization is tied to that economic life. A lender typically wants to see five years more on the life of the home over your amortization. If you have a 25-year amortization, that's how we're qualifying you. For those that don't know, amortization is how you qualify, it's how much your payment is going to be for your term. An amortization is typically tied to the life of that mortgage. That economic life should be five years more than the amortization. If it's not, we have to decrease the amortization, which is ultimately going to hurt your qualification. If we now approved you over a 25-year payment plan, we're now looking at a 20-year payment plan if that economic life came in a little bit less. Now you do not qualify for that home and if you're in a subject freeze situation, we're looking for a cosigner or more money down and that's a big deal to consider.

A lot of banks will just walk away if they see a really short economic remaining life.

With an insured mortgage, most of the time, there is no appraisal required unless it's a unique property. That doesn't mean that the insurer is going to look at a file and not order an appraisal. Keep in mind, it's typically never the bank but it's the insurer. It's rare, but if it does happen, we deal with that. We hope that the appraisal comes in where it needs to with somebody with 20% down. That takes a lot of the risk away in a subject-free offer because we're no longer dealing with the insurer and we have potential B-lender options. If those buyers have 20% down with no fallback and no family that could support them if something went wrong, those are the people that are probably at the most risk of an appraisal coming low. If an appraisal comes in low and they just have 20% down, they have to find extra money unless we can get the value up. For somebody that has no fallback, if an appraisal comes in low you have to find more money unless we can get the value increased. Somebody with 35% down, there's not a lot of risks there in regards to value because you have an extra 15% down. Keep in mind that this might be a little bit confusing but in a conventional mortgage, the maximum that a bank will finance is 80% of the property value in most situations. If you're doing 35% down, you've already built in a big extra buffer of equity and down payment. Even if your appraisal does come in low, it's often not going to impact the size of your mortgage most of the time unless it's dramatically low.

We want to be clear, we're not suggesting in this conversation that you can't get any financing for all of these circumstances. We are suggesting that this will change your financing options and could impact you.

MULTIPLE BUILDINGS ON ONE PROPERTY

A lot of people lately have been looking at selling properties and moving out to rural areas, smaller towns, the island up north, and the interior. One thing that's come up a lot lately is a piece of land that has multiple buildings on it. You might choose to pay $1.5 million because there are two properties or a beautiful shop but your lender typically only looks at one unit or one house on the property. As a rule of thumb, if there are two homes on a single piece of land with a single title, the lenders look at the primary residence. They're valuing that property plus the land, they're not putting value in that second home. That's a pretty common thing.

We've seen properties that are 40 acres in size and the lenders only look at the first five acres of value. You have the one building and they think they're prepared because it's just the one building. They realize it's 40 acres and we're only looking at five acres of value. That can be a big issue, especially in the rural communities that we seem to deal with quite a bit. A lot of lenders are looking for more down and it's considered a sliding scale. When you get above 1.5 million, I would be prepared to put 25% down at a minimum. Some lenders will still allow you to do 20% down but understand that not every lender looks at the purchase price the same way. 20% down is correct if it's over a million dollars but once you get into those higher purchase prices, you need to be talking about the purchase price and how much you're putting down from a percentage point of view.

Clients of ours bought acreage in Langley for a $3.7 million purchase price. This is five acres with a house, separate mobile, two massive shops that are worth a lot of money. Their appraisal came in at $3.19 million. It worked because they had a very big down payment. For someone that was thinking they're doing 20-25% down, it's not happening. Sometimes we do limit ourselves to one lender because maybe that one lender has a program where they will go to $2.5 million and they'll do 20% down. We also have to keep in mind that if we have limited ourselves to one specific lender, there's way more risk there. If that lender won't do it for whatever reason, we don't have a bunch of other options. When you're in a scenario and you're buying and you qualify everywhere, there's a lot less risk there. We could get a decline from four lenders, but we're probably going to find one that will do it. Just keep that in mind, depending on your specific situation.

As brokers, we work with different institutions. Knowing that your qualification works specifically with one institution is key going into this because then you can gauge your level of risk. In a lot of circumstances, we're talking about conventional financing, we're not keying in on alternative financing. You could go back to the alternative financing options. It's probably going to be something that you want to think about. Make sure to have that conversation when you're going into it and how you can get in.

A key point on buying farms comes from buying a property that has cows, pigs, or chickens. Lenders don't typically love farms, or you're going to fit under a farm program. You got to make sure you do your due diligence there. I've seen people show up with a contract and there's a horse and the chicken on it. They're putting down around 10%. If you're doing the farm route, it will change your options, just make sure to have that conversation upfront because it's much easier to get the chickens and the cows after the fact than beforehand.

The main reason for that is the foreclosure process. Foreclosures are very rare in Canada but banks don't want to have to deal with someone not making their payments. Banks have to take the necessary steps to work with organizations that are going to deal with humanely getting rid of the animals. The last thing a bank wants is to be on the news because these animals died because of the foreclosure process. There's just a lot more there when it comes to foreclosure if a property or mortgage ever got into that state.

It's very difficult for a bank to take away somebody's livelihood as part of a foreclosure. It's almost impossible to foreclose on a property that somebody is earning the majority of their income on. It can be tied up in court for years. We've seen it with blueberry farms up to four or five years in foreclosure court. Banks want nothing to do with that.

Continuing on property types, lenders can look back on MLS reports and see that previous MLS listings from the previous owner listed it as a grow-op. A good realtor will look back on old listed data and see if there was a previous grow-op as well. I've had this a lot lately where it is in one of the original listings, and it kills your deal. It's very important to do some deep dives there and a good realtor should be able to help you through that.

VACATION PROPERTIES AND COMMERCIAL BUILDINGS

We've seen people trying to buy properties in Kelowna and Cultus lake, for example, and there's a whole bunch of different designations. Some of them are designated as mobile home parks and they're converted into detached homes. Some are designated as just vacation rentals. Keep in mind that does impact the lender's ability or desire to finance you. So again, if you're qualified with one lender and they're not going to lend on that, that'll impact you. So keep that in mind.

Short-term rentals can be a phenomenal investment and you can make a lot of money. A lot of these properties and condos are marketed as Airbnb properties. 99% of conventional lenders see that and they want to step aside, they don't like the idea of having short-term rental Airbnb being active and in a property that they have a mortgage because there's a lot more risk there. It's hard for them to justify income because they don't know if it's going to be rented 200 days a year or 20 days a year. It's hard for them to justify income. That's a big one, understanding zoning the short-term pieces, some lenders will do it but it's a unique structure. It's harder to qualify. If that's something that you're going after, just make sure you've done your research and you know what your lender options are upfront.

SOURCE OF MONEY

Where's your money coming from?

Is your money coming from overseas? Typically, it has to be in Canada for 30 days.

Is it being gifted?

Who's providing the source?

When is it coming in?

That would be something I would keep in mind. If you're someone who's getting a gift or you're transferring money from somewhere, are you a foreign individual or someone who's not yet a permanent resident of Canada? Also a key consideration, there's going to be foreign buyers' taxes. It surprises people that it impacts your financing and your options. If you're an agent, know your client's situation and what their current circumstance is because that will also change your options.

IS YOUR APPLICATION UP TO DATE?

Is your application up to date? This correlates with your pre-approval. When was that completed? We do full pre-approvals but if it's six months ago, you need to understand that it needs to be up to date. Four months is typically a rule of thumb. When you get into a live offer situation, updated documents are going to be required and a pre-approval is not a firm approval by any means. If you went and bought a big ford f-350 truck over the holidays and you think that's not going to impact you because you got a pre-approval, it is a big issue. You can't make changes to your situation.

2021 income is very important. A lot of people think that if they qualified on a two-year average for commissioned income over 2019-2020 that they're set. They don't realize that they earned a lot less in 2021. The bank wants your 2021 year and a bank statement or pay stub to see how much you earned. Now your two-year average is a lot less. These are things that you have to stay up to date on and that's what we're here for.

STRATA PROPERTIES

If you're buying something that's on strata, there are many considerations you have to think about first and foremost. Do you have an upcoming repair or assessment on the property? Is the building 20 years old and they're replacing the roof? Did you just have a replacement occur? Maybe you didn't see it or they haven't had the engineering report? There are a lot of lawsuits and litigations. There are so many considerations you have to keep in mind that you've got to do a deep dive. Lenders aren't going to look at that before you're placing the offer. Make sure that you're doing a deep dive into it.

We recently saw an active construction. This is a big project, roof, and exterior of a building. It was about 95% complete but because it was active, it had been declined from multiple lenders. They did not want to get involved because the concern is are they going to finish it? Is it paid for? Are they going to run into issues with the contractors? Is it going to turn into a lawsuit? They want work completed.

Age of buildings is key too. If you're trying to learn how to mitigate this, we've seen age-restricted buildings as well. We just had a few files declined because it's age-restricted. You can't live in there unless you're at least 45 years old or older. Be aware of that if you're buying a rental property and then find out that we've qualified you on rental income.

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Investing In Arizona & Short-Term Rental Success with guest EDDIE LACK | The YVR REMO Show EP. 100

Tue, 18 Jan 2022 20:56:23 GMT

Today's guest comes back for the second time and all you hockey fans out there you're going to recognize the name.

We met Eddie two years ago through social media started having good conversations and asked him to talk a little bit about real estate and what it was like getting started. He's had a lot of experience and he's grown his business massively. He's become an expert when it comes to Airbnb short-term rentals and investing in Arizona. He's here to talk a little bit about his experience, what he's seeing now, and where some of the opportunities are.

THE CURRENT CLIMATE OF REAL ESTATE IN SCOTTSDALE AND ARIZONA

Alex McFadyen

How has your last year been for real estate?

Eddie Lack

The last year, it's been amazing and I made so many meaningful connections. We're just going up from here.

Alex McFadyen

The big reason that we wanted to have you come on today is to talk talking a little bit about what's happened in the market.

Why is Scottsdale big for investment? From your perspective, what are you seeing from the US climate concerning real estate? I feel like you guys are six to 12 months ahead of us.

Where is the market right now as a whole?

Eddie Lack

We haven't seen any signs of slowing down whatsoever. There are talks about the interest rates going up a little bit. That might scare a few buyers off. With Scottsdale right now and Phoenix in general, we have so many people moving here. I just saw a stat that we are among the top for people moving from other states. We had over 90,000 people moving here from other states last year alone.

Dean Lawton

Have you seen a huge increase in appreciation amongst all this busy activity?

Eddie Lack

We bought our Airbnb two years ago here. We bought in the $400,000 range and now the same properties go for around $800,000. We're seeing the projected numbers and everything still says that the market is going to go up. Double digits in appreciation the next year here.

Alex McFadyen

I was just talking to an agent earlier today and asked him to send us numbers from where we live just outside of Vancouver. Across the board, it was up 35%. Condos were up 30%, houses were up 40%, and townhomes were up 40%.

Have there been any big changes in rates in the last year? If so, has it changed what people are doing?

Eddie Lack

Not so much in the last year, but we have seen in the last few weeks that it's starting to creep up a little bit. Things are starting to change. From what I'm hearing from my lenders is that by April or May, there is going to be a big hike down here in interest rates.

Alex McFadyen

We're hearing a lot of talk about that in Canada, rates potentially going up. It's unique here because you have to qualify for a rate that's way higher than you have. It's unlikely that would make a difference in what people can qualify for.

WHY ARE PEOPLE MOVING TO SCOTTSDALE?

You mentioned 90,000 people moving to Scottsdale. Why are they moving there? What type of people is moving there?

Eddie Lack

There are always people that like to spend a lengthy amount of time here. They always say I didn't expect it to be this nice and I didn't expect so many things to do. A lot of people are getting tired of the weather and politics in the other states. Last month, we had a surge of Canadian because we don't have as many restrictions. They're buying a rental property down here with thoughts of relocating eventually. I have three, three clients right now that we're working on relocating down here.

Alex McFadyen

What what are people doing when they're getting there? Not everybody can buy a house when they move to Scottsdale but there's probably a lot of people who are interested in doing so. You mentioned a lot of Canadians coming down to buy investment properties or rental properties. When we first spoke and we did our first podcast, you mentioned that you had done a few Airbnbs yourself.

Click the video below to watch Eddie Lack's first appearance on The YVR REMO Show!

Why are people investing in buying rentals in that area, aside from the lifestyle and the appreciation?

Eddie Lack

Strictly from an investor standpoint, it's the ROI. It made a ton more sense when I bought mine two years ago. It is starting to become a little bit oversaturated here and we're kind of at a tipping point. I feel like Airbnb still makes sense at this price but if these $800,000 properties go up another $150,000 then from an investment standpoint, you're hoping that the appreciation is going to come.

INVESTING IN AN AIRBNB IN ARIZONA AS A CANADIAN

Dean Lawton

I'm experienced with Airbnb here in Vancouver. I like it because it's close by. The fear from a Canadian like myself is if it's out of town, it's out of sight, out of mind. Who's managing it? There's a lot of activity, and if I didn't have the professionals to support me, it wouldn't be happening because I don't have the capacity with my business to do that.

When you set up a Canadian that's eager to get into this market, are you putting the whole package of professionals together?

Eddie Lack

I describe us as a one-stop-shop with full-on management and real estate, we have everything. We help you buy it. We have the management company, if you need need to do remodels. We have a ton of clients that we're doing remodels for now with my contractor here. We have someone that helps us furnish the places. Anything you can think of, we can provide the connection.

Dean Lawton

To have that support, even just from furnishing, seems easy to do but it's not.

HOW IS THE CURRENT RENTAL MARKET PERFORMING IN SCOTTSDALE?

Alex McFadyen

There have been so many cities locally, where people buy short-term rentals. Six months later, there are restrictions and rules, and you can't do this and you can't do that.

LONG-TERM RENTALS

Is there anybody buying investment properties in Scottsdale for long-term rentals?

Eddie Lack

Airbnb is like a race car and the long-term rental is like a Volvo. It doesn't bring as much income, but it's a nice and steady cash flow. Rents have gone up so much in the last year here as well. Long-term rentals make total sense.

STEPS TO WORKING WITH EDDIE AND HIS TEAM

Alex McFadyen

If somebody reaches out to you or they get referred down to you, what are your next steps? What should somebody be prepared to do?

Eddie Lack

The first step that I always want before I started working with people is pre-qualification or proof of funds. That's your ticket to starting the search and start looking at properties. Depending on if the person is local or Canadian, then we start looking at what you want and what price range you're pre-qualified for. What kind of investment property did you want to have or do you want to live here? It all depends on the situation. From there, we zoom in on different areas and I just started sending properties to see what type of style of house you want. It's just like finding the right property for the right person.

Alex McFadyen

I love the first thing you said, get your money sorted out and proof of funds. So many horror stories we hear. We get a phone call last minute from somebody saying, I thought I was qualified by my bank, but I wasn't and now I can't close. Glad that you're on top of that. Get your ducks in a row and talk to us first. Then we'll hook you up with Mr. Lack and we'll find a way to get you buying your Scottsdale dream property.

Reach Eddie and his team by visiting his website below!

https://www.lackandlong.com/

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The #1 Missed Opportunity: RENEWALS! | The YVR REMO Show

Wed, 12 Jan 2022 19:38:24 GMT

What we're going to talk about here today is applicable no matter when you listen to this. This is an important consideration for you if you have a mortgage or if you're planning to get one. We like to think of this as the biggest missed opportunity when it comes to mortgage financing for most mortgage holders.

It's your mortgage renewal or maturity.

What happens when you hit renewal?

What are your opportunities?

This is the number one missed opportunity that people have when it comes to taking care of their financing.

UNDERSTANDING RENEWALS

We talked to borrowers that have existing mortgages and it's mind-blowing how many people don't know when they're up for renewal. They don't know what it looks like, what they need to do, if they can switch to a different lender, or if there's a penalty. There's no education around the renewal process because everything's focused on getting that new mortgage or getting your house when you're first purchasing. It's also mind-blowing how many people don't research at the time of renewal. So if you're with a bank, that bank is going to try to keep your mortgage with them. Three months before your renewal date, they're going to reach out and make you an offer. Most Canadians just sign it and they move forward. They lock into another five-year fixed term without looking into what other options are out there.

Is there a better rate?

Is there a better product?

Should you flip from a fixed to a variable?

There's a lot that goes into that renewal. It needs to be well thought out and planned. That is not happening for most people when they're renewing. If you're not working with a detailed broker, like our firm, unfortunately, the education just isn't there.

People are focused on getting the rates and terms when they get their first mortgage. When it comes to renewal, it's not even a consideration for a lot of people. They don't think about the fact that their bank doesn't have their best interest. This is why it's such a huge opportunity and this is why banks have started to bring on and hire strong retention teams. This is where they make a ton of money, the first term of the mortgage. The second term is where the banks are purely profiting.

WHAT IS A RENEWAL?

A lot of clients may not have experienced a renewal because they've broken their mortgage early to refinance or drop their rate. It could be a first-time homebuyer that's just waiting to get to that maturity date.

What is a maturity date?

Maturity date refers to the date on which a borrower's final loan payment is due.

The Canadian average client that we work with takes a five-year term. The very last day of that term is going to be your maturity date and that is the end of your existing term. You have to have a decision made by that date. You're going to start to hear from your bank and or whoever is managing your mortgage quite a bit before this maturity date. We're typically reaching out six months in advance. There are opportunities to do what's called an early renewal. You could look at your options and renew into a new term before the maturity date. In some cases, you may not have an early renewal option. The penalties to break early, we're talking six months or less, are very minimal. The ability to get a good offer that's available could be worth breaking that mortgage early.

OPTIONS AVAILABLE TO YOU

When you're at renewal time, one of the biggest things is you can do is change what option you're in at that time. You can stay with your existing lender and sometimes it makes sense to do that. That's a conversation you need to have with independent professionals like us, as opposed to working with that bank, because their primary objective is to keep you on board.

At renewal, you can leave that lending institution at any time or make structuring changes. You can go to a one-year term, two-year term, three-year term, five-year term, variable-rate, fixed-rate, open mortgage, or a closed mortgage. It might make sense to go into an open term if you're moving, so you don't have to pay a large penalty. You can take your mortgage anywhere you want. That's important to recognize because people think that they're just locked into that bank. It's not a difficult process and it is something that we do all the time for people, but that option is open to you. The only cost is the discharge fee, which is mandated depending on the province you're in. In BC, it's around $75 right now.

PENALTIES WHEN RENEWING

The reason that someone might wait for maturity or that renewal is that they're in a fixed rate with a big penalty. You have a $30,000 penalty that you don't want to pay. You don't always have to wait for your renewal. If you're going to break your mortgage early, there will be a penalty. Variable-rate penalties are three months of interest, very minimal. That's where we typically see people refinancing a lot during the term if it makes sense financially because the penalties are low. There's no big hefty penalty holding someone back. Even with fixed-rate penalties, we've seen people pay $15,000 penalties and it's still made sense financially. They're still going to recoup that cost by getting into a different product. You do not have to wait until the end of your term to change your mortgage, sell your house, or refinance. You can do it within, you just have to understand what that penalty-breaking cost is. If it's feasible and achievable to recoup, or if you're just comfortable with the cost, you can do that at any point within your term.

TIMELINES

Being aware of timelines is important. We get this quite a bit where somebody will come to us and say, my maturity date is next week, what are my options? If your best options are to leave your current lender, it's very unlikely that your mortgage is going to come together. You're going to be in a position to leave on time. In this case, you're now going past your maturity date. That's not necessarily a bad thing but you do need to be aware of what that looks like. It's very important to communicate with your lender, don't ignore your lender just because you're leaving them. If you don't talk to them and you reach the maturity date, 90% of the lenders will just automatically roll you into a six-month closed term. That would be at a similar interest rate to what you're at. Now you're locked into another product for six months and if and to break that, you're going to be looking at a penalty. Call your lender and say, I'm looking at my options that are better than what you're offering me. Tell them you need to roll into an open term. They're going to talk you out of doing it because the rate could be as high as 7%. You got to keep in mind, this is only going to be for a couple of days, or maybe a week. The cost of having a higher rate for a short period is interest-only during that time. It's very much worth it to evaluate your options.

It might take a week to get your full application piled up and then take three to four weeks to close. You're going to have to open or pay costs that maybe wouldn't have otherwise. Does that mean you can't do a renewal? You definitely can but it's super important to be aware and be communicative with your lender.

You may have that conversation and in good faith, ask for that open turn, but it doesn't happen. Get confirmation in writing or in an email that they did put you in the open term.

DOES IT ALWAYS BENEFIT TO LEAVE YOUR LENDER?

There are two kinds of ways to look at this because we'll see lenders that will come out and they'll have a very competitive renewal offer. If that is the case, we still need to have a conversation. We can give you full confidence in that. We can talk about the terms and what are your plans. Do you think you're going to sell in a couple of years? Oftentimes, banks won't offer you their best rate, and that's because they know that 65% of Canadians sign it and send it back, then renew. Right now the bank is more profitable because they've given you a higher rate than they could have. 35% of the time, when we're working with a client on our renewal, we might just help them stay with their current bank. If the rates aren't too far off, we'll help you negotiate with your bank to get the slightly lower rate and get the best possible outcome from your institution. Having that conversation with us is so important.

There is work involved to more move your mortgage. Understanding what that means is you are re-qualifying. You are you're putting your documents together again and you do need to make sure you're still employed, you still have great credit, you haven't taken on big debts, because you might not qualify for the mortgage you currently have. It doesn't mean don't talk to us and figure out what your options are. Understand that when you move your mortgage to save a rate, there is a bit of work involved. That work is always worth it.

A renewal process with your existing lender is quite easy. You don't need to panic if you're out of work or you've taken on big debts. We can always make this work, the key thing is to just start the conversation.

EARLY RENEWALS

There were a lot of banks that were reaching out to people and saying, do you want to renew early? In many circumstances, we don't recommend entertaining early renewals. You're locking into a whole new term, which is a concern concerning penalties and that extra five years that it takes to do that. Another couple of considerations around early renewals are that you're paying a higher interest rate to lock-in.

OPPORTUNITIES WITH RENEWALS

You're free at renewal, you can increase your mortgage, you can pay a bunch, you can pay half your mortgage off with no penalty, you can pay the whole thing off with no penalty. There's a handful of different strategies that you could look into at renewal if it makes sense for your situation.

Extending Amortization

You could be 10 years into your mortgage, and maybe your parent's payments are fairly high because you're on a 20-year amortization. You will have the ability to extend that amortization out to 30 years if you wanted to. Not saying that's the best thing to do financially, but this is going to help your cash flow dramatically. Maybe your spouse lost their job, your income has decreased, or you had to take on some household debt. This is something that can be short-term, but it can help your cash flow inside of your house. You always can speed up your mortgage payments. If you need a more comfortable, lower payment, extending your amortization is huge. You don't change the mortgage amount if you don't want to, but it can drop your payments.

Re-amortization is something that gives you the ability to reduce your debt to qualify for more, lowering your debt to income ratio. Anytime you're restructuring the amortization period, you are doing a refinance. Being at renewal time, your costs are dramatically lower because there are no penalties or fees to do it that way. That's the time to have these conversations.

Canadians as a whole typically make their mortgage payments. If someone's going to miss a payment, it's typically a credit card or maybe a car loan at most. If you do have missed mortgage payments for any reason, and you're up for renewal, that bank has you red-flagged and that could be a potential issue for default. They might say, we're willing to renew you, but you have to re-qualify and we need all your documents. We need to pull credit. Just another reason to make sure that you maintain mortgage payments and don't let them slip up. Some of the clients that we've worked with have missed mortgage payments, it's not because they don't have the money, but because they didn't have the money in the right account. It's little things like that. Just make sure when you're buying your house to document if it was a bank error or a minor error on your side. Keep documentation of everything. If that does come up at renewal it can be a saving grace.

Taking Advantage of Interest Rates

This is where it comes in handy to work with a good mortgage team because we watch rates and we call our clients if there's a potential opportunity to make a change. We run the numbers to see if it's cost-effective to pay your penalty. There is a good chance that if you took a mortgage three years ago that if you're renewing and two years from now, you could be looking at lower interest rates. that might mean going from a fixed to a variable rate. On the flip side, you could also be renewing at higher rates. We had a lot of clients that got into these amazing 1.8% fixed rates that we saw for a six-month sprint. We can almost guarantee that in three to five years when out for renewal, those are not going to be offered. Those people are going to be looking at a bit of a payment shock unless they're looking at a variable still that cheap.

Interest Rates Are Not The Only Factor To Look At.

A lot of people at renewal are shopping rates. The rate isn't everything. It's trying to figure out if you're in the right product. Your current mortgage that you have right now might not allow the flexibility to be able to access your equity in your home when you want to do that. It might not be structured in the way that it could be best optimized for saving you money. It ends up coming down to the specific products, institutions, and flexibility around that.

The Ability To Change Products

Having answers to all these questions we're asking helps us provide advice on if it makes sense to change products, especially if you're in a fixed rate. Your bank will offer you a renewal letter, as we talked about, for a rate that's typically higher than what you would get in the market. It will always be the same product that you were originally in. Sometimes the lender will give you the fixed-rate variable. The ability to upsize is something that you need to look at. Looking at the flexibility of a variable or just the flexibility of another lender's product is so important for these future goals. These are the reasons why we ask these questions.

If none of the above apply to you and you don't think you need any of these opportunities at renewal, we recommend everybody get a HELOC right through five years. If you live in the Lower Mainland, your property has probably gone up dramatically in value. If you qualify for it, there's absolutely no reason not to. You're at renewal, there are no penalties, it's easy to do and you never know when you're going to need it.

SUMMARY OF TIPS WHEN RENEWING

At the end of your term, you may leave and go anywhere as long as you qualify.
Don't ignore your renewal. Get the paperwork sent over to us. Let's have a look and see what we can do.
Always get independent advice. Make sure that it makes sense for your circumstance.
If you're thinking about selling, don't lock in around that time. Get advice around what your options are in terms of not locking in or locking in.
Get that home equity line of credit. If your lender doesn't offer that, that's why we're talking to you. Let's see what options we can do. It will save you a lot of money in the long run when you go to buy that car, boat, or next property.
Be aware of timelines and plan.

The percentage of people that are renewing and staying with the same bank, versus refinancing and restructuring year over year, has been up and down. A few years ago when they put in the first stress test, we saw renewals go up in numbers. In the last couple of years, we've seen that drop-off and we're seeing a lot more refinancing. People are starting to make a change midterm more than ever before, very few people we talked to are renewing.

WHY AREN'T AS MANY PEOPLE RENEWING?

People aren't getting independent advice. They're doing it right through their bank and they're not getting that option presented to them.

If you know you're getting towards the end of the term, reach out, we'll give some free advice and let you know what you can do.

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Make Money In Real Estate in 2022 | The YVR REMO Show Podcast

Fri, 07 Jan 2022 20:01:52 GMT

Where do we see opportunities in 2022?

We look at a few key ways, based on trends that we saw in 2021, where we see things continuing to grow.

IS THERE VALUE IN YOUR HOME?

If you have been in the real estate market for the last 12 to 24 months, you have made money on your home. Unless you are in a very poor transaction, your house is going up in value.

How do you take advantage of that?

Money in your home is not working for you, it's just sitting there. We can tap into that equity at very low interest rates right now. We have seen clients taking advantage of this to grow their net worth.

On average, detached home prices in the Fraser Valley have increased by up to $300,000 in the last 12 to 24 months. We've seen townhouses increase by $200,000 and sometimes more. We've seen condos jump from $50,000 to $200,000. That is a dramatic amount of equity that has built up, even for someone that put 5% down. You now have access to well over 20% of the money that can be drawn out.

When it comes to looking at equity in their home, clients don't realize it exists, especially those clients that put 5% down two years ago. We've never seen this so early into a five-year term. As a first-time homebuyer, it's been pretty rare to see the opportunity to access equity in the first five years.

Realizing there is equity in your h ome, we take it for granted. A lot of people are putting their heads down, working hard, enjoying life, and not looking at the value of homes. One big takeaway here is you have equity in your home, there's no question.

WHERE DOES THE OPPORTUNITY LIE WITH THE EQUITY IN YOUR HOME?

From an opportunity perspective, values will continue to increase with properties going up in value. Refinancing and capturing that equity for something good is going to help you make money. We know that 2021 was the year of inflation rising. When you continue to pay for a mortgage at 2% and you could take $100,000 out at a $350 payment, invest that. Equity is your number one opportunity for growth.

WHY TAP INTO YOUR EQUITY?

You have equity sitting there and there's a way to utilize it. It could be establishing a home equity line of credit that you don't need, but don't pay for. You might as well have it there and have access to it if you do need it, because when you do need it, and it's not there, it's a lot tougher to get debt. It's very easy to get it when you don't need it.

WHY WOULD YOU WANT TO ADD ANOTHER FIVE YEARS TO YOUR AMORTIZATION?

That's not necessarily what's going to happen, but creating a minimum payment threshold if you get into tough times can be useful. You may need to access equity because you lost your job or are temporarily out of work, these are possibilities. To create safety funds or strategies are highly recommended.

REAL-LIFE SCENARIO

We just had a client that was looking to buy and she didn't want to refinance her home. and she qualified for about a $400,000 purchase. She's at a higher rate and a high payment. We're restructuring and getting her into a lower range, not pulling a dime out of the property, stretching it out to 30 years. She's going to qualify for a $550,000 property just because we've got that payment down. That's another great tool if you're looking to buy an investment property. The component of pulling money out but also getting that payment to the lowest possible point can make a huge difference for cash flow as well.

WHAT IS HOUSE HACKING?

One of the strategies we talked to people all the time about is buying a home with 5% down and living in that home for a year. Start to build up some equity and then rent that out. Put a renter in that property to help pay off the rent to get some cash flow going. Move into the next property with another 5% down.

What's interesting is we're working with a client who has a property that went from $450,000 years ago to almost $600,000. We can refinance to take enough equity out to increase future downpayment and reset the amortization. Now his property is going to cash flow and he's going to move to the other property. The same strategy as he was going to do before, but just a better way to do it. That's just with the equity growth.

OPPORTUNITIES WITH RENOVATIONS

I just want to touch on renovations and the opportunities with renovations. This can skyrocket the value of your home. A lot of people don't realize that a suite is far more advantageous than a garage. If you're thinking why would you eliminate your garage, that now opens you to a new demographic of buyers. There's now rental income there. Adding a suite is a no-brainer. It's something I would highly recommend because it can add value to your home.

INVESTING IN A VACATION HOME

How do you buy a vacation home? In a lot of circumstances, if this property has power and electricity, you can buy this property as a typical vacation home. For a lot of people, it's a rental, so buy a vacation home and put a renter in there for a year to get them to start paying it off for you. This allows you to enjoy it for the rest of your life or rent it out.

Airbnb placing can be incredible in the right area and right community.

DOES PRE-SALE MAKE SENSE FOR YOU?

Pre-sales are great if you know what you're doing. There's a lot of people in the industry that aren't educating their clients about the pros and cons. Pre-sales are going to be big and they're going to continue to be big. Make sure you're doing your due diligence in your search.

ARE THERE NEGATIVES FOR PRE-SALE PROPERTIES?

If you look at what these pre-sales are selling for per square foot, you are buying at a premium. You need to understand that you're buying at a higher market value than resale properties. That's important to know because you're taking a gamble. Don't buy that pre-sale without the ability to close. You need to be able to close on that property because a lot of people are buying these pre-sales with the mindset of i'll sell it before I have to close. That's not the right way to go in it, you have to go in on that project with the ability to close.

If you're buying a property for rental, and the presale isn't done for three to four years, you have lost out on three to four years of rental income and principal paid out. You're may still gain appreciation. If you buy a resale property today, and you get a renter in there tomorrow, that renter is paying down your mortgage and you could be cash flow. You're still going to gain appreciation because you're in the market. You can gain a ton of net worth and wealth in those years that you're waiting to close on a new property.

WHAT ARE SOME REASONS PEOPLE CHOOSE PRE-SALES?

We see people buy pre-sales because they don't qualify for that size of a mortgage today. Someone may have quite a few raises, their wage is going to increase over time. In two years when the property is ready, they will be able to afford and qualify for the mortgage.

Somebody might only have their 5%-10% down. That may be all the development requires, but they need 20% to qualify for the mortgage. This place is ready in three years, it gives them three years to plan, save up, and get themselves into that property.

A pre-sale is a great option if you are striking out currently based on your situation. If you have a detailed plan with your mortgage broker as to how you're going to get there in the future, that's a phenomenal plan. I don't think you'd go wrong.

If you're striking out because you're not in a position to go subject-free, you should not be going subject-free. There's risk there unless you have a backup plan with your family. Pre-sales give you an automatic, standard, by law seven-day rescission period. You have time to go and try to achieve financing approval to see if it's going to work. That's the other big value that we see people go this route.

BUYING A HOME AND GETTING INTO THE MARKET

People that we've talked to this year, who have maybe lost a job or had something occur, had a large amount of debt and their home equity was able to help them get out of the hole. Those are people we were able to teach not only how to leverage and pay off the debt, but also how to take that money to purchase an investment and turn that into something real.

There are creative ways to get into the market with co-ownership agreements, joint venture agreements, or parents helping.

If you can take some of these strategies we've talked about throughout the year about getting into the market and finding creative ways to get a down payment, your yield will pay dividends. It will bring your lower your monthly costs down in a considerable way. That's super important. I don't want to sugarcoat how easy it is to get in the market. It's not easy, but there are ways to do it.

START PLANNING TODAY FOR SUCCESS TOMORROW

You got to start planning because you can run the numbers and in the best-case scenario, it works right now and you can pull the trigger and buy something. On the flip side, it doesn't work right now but we can start explaining and planning with you, figuring out what you need to do to get there. Whether it's borrowing from family, getting a co-signer, or buying with a friend, there's always a ton of different scenarios that we can look into. If you're one of these people that is waiting for a crash in our market, you need to stop waiting for a crash, because it's likely not going to come. Try to get in and make sure it's affordable.

Because of what's happened in our market and how high prices have increased, if you think you've been priced out, have a conversation with us. There are other options you can look at. If you are priced out, try to buy something somewhere else, even Alberta. You can buy a detached home that brings in a large amount of rental income in Alberta for $500,000. You're not gonna see the same appreciation, but it's good to get into the real estate market at some level. I wouldn't walk away and shut the door on real estate if you know you've had a poor experience so far, it's worth the conversation.

INVESTING OPPORTUNITIES

The opportunity to be able to give back or even just another foot in the door to invest in further real estate, look for these opportunities. Look for these great people, whether it's your son, or your daughter looking to get into the market, these are great opportunities for you to support that individual. Get your foot in the door with another property as a co-ownership agreement. We're all at the point where it's very difficult to buy another property, it's very tough to qualify for more than one or two properties and getting into three or four. People rarely own more than three or four properties because it's so hard to qualify. These are great ways to get your foot in the door as a silent partner.

We did an episode not long ago, talking about the four key strategies to getting started. Watch the episode below because that's going to give you everything you need to know about what you should be doing first.

Put your budget on paper, you know, write it down exactly what you're trying to do and make it happen. Start the conversation. For 2022, create a more positive mindset of what you're going to do, then action it and make it happen.

DEALING WITH CREDIT

A credit bureau that's pulled for a mortgage can be very different than quickly checking a website like Credit Karma. From a planning perspective, you may not be ready for 12 months, but having a thorough review of your file and where you may be at today can just set you up for success. The biggest thing is avoiding big headaches when you are ready and to be able to rectify issues with creditors that you thought you dealt with. We pick these things up earlier because we're planning, it's priceless.

Your pre-approval is going one of two ways. You either qualify and it all works or it doesn't work, and we need to build a plan. We have personally worked with clients for five years, helping them fix credit, save downpayment, and get into a better job before they purchase their house. It usually doesn't take that long, but it can take a year.

PREDICTIONS & OPPORTUNITIES FOR 2022

We predict the trends continue into 2022. In 2021, we saw people being more comfortable with purchasing properties remotely such as moving to different provinces. We also saw a lot of clients in the past who said they would never buy an investment property elsewhere because they couldn't manage and see it. They started shifting their mind and we're talking to more clients about buying a property out of province. It comes back to equity and a lot of people have enough to buy properties elsewhere.

Another opportunity that I would look at is the two-bedroom, two-bathroom condos in the Lower Mainland and Fraser Valley. Those have gone up in value in 2021. They're primed for a boost in 2022 because that's what we saw in the townhouse market during 2021. The number of clients that we see dual-income, they're qualifying for condos. That's what's affordable.

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Hiring An Associate Mortgage Advisor

Tue, 14 Dec 2021 18:46:34 GMT

We Are Hiring An Associate Mortgage Advisor

Thrive Mortgage Co.

Langley, BC

Remote

$58,000 - $71,000 a year - Full-time, Permanent

Welcome to the lending career you always wanted, as a member of one of the top lending teams in the country, your role as an associate advisor is to utilize your professional and broker skills to understand the client, their client’s needs, lending characteristics, and qualifications to develop a trusted and amicable relationship with our clients and partners.

Your role is vital to our team, as you represent us to the client’s service, our lenders, and our referral partners that trusted us with their referral of business, all ultimately affect our reputation.

You are responsible to ensure the accuracy and completeness of the client intake and application and Pre-Review Summary processes and the fulfillment of the CL lender Conditions and other file closing activities to achieve a broker complete and funded solution by providing exceptional and professional client service.

New team members will receive expert guidance, focused support, and training to support and build your personal skill development, product and process efficiency, and knowledge. As well, you may receive support from your co-workers, in handling new or challenging situations as they arise.

We value and treasure our team members' growth both personally and professionally, we can't wait to meet you!

NO Vaccine Mandate or requirements - your choice is your choice.

We Value:

Client first approach
Problem Solving (thinking on your toes)
Attention to detail
Positive work ethic
New ideas & innovation promoted
Team Player!

You Have:

Experience in processing the following types of Documentation: Income (CRA), Financials, Bank Statements, Contracts, and Property Documents.
Focus on supporting reviewing mortgage lending and clearly explaining information to clients.
Proven experience as an administrative assistant or executive assistant
Empathy and a HIGH focus on going above and beyond to exceed client expectations.
Knowledge of office management systems and procedures
Strong phone and communication skills
Excellent time management and the ability to prioritize work
Excellent written and verbal communication
Strong organization skills
Desire to grow, learn and willingness to EXCEED client expectations.
Ability to adapt and complete tasks with minimal supervision
Technical aptitude, including experience with CRM’s, Office, and ability to learn other web applications.
Experience with FILOGIX is an asset
Ideally has experience reviewing lending documentation.
A Mortgage Broker License in BC will be a requirement of this position. If you do not currently have a license we will work with the right candidate to find one.

Some of Your Responsibilities:

Client Communication of files & status
Document Collection & Review
Data Entry & CRM updating
Managing tasks & following up throughout files
Compliance Procedures
Client Correspondence (Email / Phone / Mail)
Client Care - Support & Happiness

Job Types: Full-time, Permanent

Salary: $58,000.00-$71,000.00 per year

Additional pay:

Bonus pay
Commission pay

Benefits:

Dental care
Extended health care
Life insurance
Paid time off
Vision care

Schedule:

Day shift

Work remotely:

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Pre-Approvals...Why You Need One

Wed, 17 Nov 2021 22:51:59 GMT

Pre-approvals are talked about every single day by n the real estate industry. Most people don't understand what it is how it works, what's the reason for it, and what happens behind the scenes. If you're a homebuyer, you can have more success if you understand what a pre-approval is, but more importantly, what it isn't.

Why Is A Pre-Approval Important?

A pre-approval is one of the most important parts of the finance process. If you don't have a proper pre-approval in place, your realtor likely isn't going to show you homes because they don't know if you qualify. The worst thing that can happen in the home buying process is you find the place that you love and get an accepted offer, just to find out that your financing doesn't work out.

True pre-approvals help buyers know their maximum numbers, worst-case scenarios, backup plans and give an idea of timelines. And it's just it's so important in the different markets.

WHAT IS A PRE-APPROVAL?

A true pre-approval is determined by a thorough review of your financial situation covering your income in-depth. We look at the last couple of years of income, current pay stubs, letters of employment, tax returns, & credit.

We're looking to see if your credit is up to par for the type of lender that we're hoping to work with. Going more in-depth, we look at debts, loans, payments, credit card balances, and compare income to debts. This is all done to figure out what you can qualify for. Down payment and work experience will also be factored in.

There's a lot of different ways that a pre-approval can go right. When dealing with insured mortgages with less than 20% and conventional mortgages, some exceptions can be made.

This is a thorough review, it's not a guarantee. There's no such thing as a 100% ironclad guarantee of financing. The number one consideration for a lender is the property and not the applicant. An applicant is extremely important to find out what the income qualification would look like. If you're buying a home, the bank is not looking at just you, but they're looking at the ability to resell that home if you don't make your payments. That's one of the biggest factors of getting a mortgage qualification.

If it's strata property, lenders are going to look through a lot of strata documentation. We suggest a subject of finance. We've been in markets over the last year and a half where subject to finance potentially won't get you into that property. We have to make sure that everyone understands their risks. You'll never get a guarantee from any bank or credit union in Canada, so going subject-free is knowing what the risks are. You need to know what your worst-case scenario is. If something was to go wrong, what is the plan that we're going to put in place if something did come up?

WHAT A PRE-APPROVAL ISN'T

One of the biggest mistakes for most people is they get pre-qualified and they don't get their file reviewed. A pre-qualification is something that's done quickly. It's a 15-minute phone call where we can punch in some numbers with a calculator. We have an online app to make getting started easy!

Use our mortgage calculator to find out how much you can afford in 30 seconds!

As long as the data is good, it spits out a general number, but it's just a calculation. A lot of people confuse the online bank apps and our online app as a true pre-approval. It's not and it's not worth shopping with.

The bank may have a quick conversation where they look at a pay stub, don't pull credit, haven't reviewed all the documentation, and they say here's what you qualify for. Sometimes they give a pre-qualification letter, but it's bolded on there that this is not a pre-approval. The downside to that is that they haven't pulled credit and maybe you forgot to tell them about a loan or how much the payment was. You may be part-time at work but forget to mention it. Banks don't want to put a ton of time into a full true pre-approval because it's not immediate dollars for them.

Real-Life Scenario

"I talked to a client yesterday who is working with a bank.

The bank said, "Here's your qualification, come back when you have an accepted offer and we'll do our best to get it done."

That client now has to go with their realtor on evenings and weekends looking for properties battling this market, not knowing if it's going to work out. The unfortunate part is that client is going to take the bank's word.

Would you not trust the banker that does mortgages for a living?"

Deryk Williamson

Partner, Thrive Mortgage Co .

A pre-approval is not an approval from an institution. An institution is not going to take the time to review every single document, credit, downpayment, documents, and issue a commitment letter. They will only do that once you have an accepted offer on a property. It's important to get that proper pre-approval in place because the banks won't put the time into it until you found the property.

Banks see thousands of people submitting applications for approval. Most of those people are never going to buy a home or will choose not to refinance. From a banking perspective, to hire enough people to do the underwriting on every single pre-approval, it's a lot of time and a lot of money. It can take a while to underwrite every single file, making it a massive commitment. Their objective is to make money, but they can

make money on other things like credit cards, mutual funds, and RRSPs.

Another huge aspect of this is the relationship side of things. Let's say one of the big banks mess up on 50% of their qualifications. People will still pile into that bank because they're a bank. They have a relationship and they have millions of clients. They could mess up hundreds of applications every single year and their doors don't stop. To keep our business, as mortgage brokers, we have to make sure we do the best job possible for all of our clients and our partners.

Why Do Banks Like Working With Mortgage Brokers?

We do the proper pre-approval, we help clients get the accepted offer, and we submit a full package. The bank has to do minimal work on that application to find a mortgage. It's an extremely efficient line of business for these institutions that choose to work with brokers.

WHY DO YOU NEED A PRE-APPROVAL?

Confidence

Are you confident in making an offer on a property if that seller wants $10,000 more than you offered? If you had your file reviewed and you know your maximum qualification, you can feel confident knowing that you have a very good idea of where you are.

Speed & Organization

You may be able to get an accepted offer but the seller can only give you three days for your financing subject, that's not a lot of time. If you've done a proper pre-approval and you've submitted all of your documentation, we are typically submitting that offer to the lender within a few hours. If it's a full package, we can often get a pre-approval within one to two days. If you don't have a full pre-approval in place, and you send us an accepted offer, we're starting from scratch trying to build an application. It's very unlikely you're going to be able to remove your subjects and buy that property. Scrambling to get documentation is stressful for every person involved.

When you get fully pre-approved, you're in a position where you're going to get an offer accepted more likely than someone else who doesn't. Homeowners don't want to have multiple people bidding on their home and then have one person fall out and then have to take a backup plan. In many cases, the highest price wins, but there are many circumstances where there is the same offer and our clients come out on top because they have been pre-approved. It's all about understanding your financial situation.

UNDERSTANDING YOUR FINANCIAL SITUATION

There's a lot of times when we run an application and there's something unique in that application where we can't issue a pre-approval. Now that you've started that process and we've done a thorough review, we can give you feedback and suggestions on what you need to do to fix your credit. You may need to wait until you get a few months of 40 hour work weeks. There's a lot of times where we have to tell clients that it doesn't work but explain what needs to be done.

REASONS WHY PEOPLE DON'T GET A PRE-APPROVAL

Credit Check

Do you need to do a credit check? Different lenders have different guidelines around credit. The benefit of working with a mortgage broker is that we don't work with just one bank. We only pull your credit once then shop it around.

Will A Credit Check Hurt My Credit Score?

No, it's not going to negatively affect your credit. Some examples of things that will hurt your credit are applying for multiple credit cards, not paying off a credit card balance, or leasing a new vehicle.

If you have good credit, it's not going to impact your credit. If it does, it's not going to impact your score enough to hinder your credit. If you've had your credit checked 15 times in the last two months, it will hinder that.

THE APPLICATION PROCESS

We start with a discovery phone call which is 15-25 minutes. It's a very short process to complete. The last step, in which there's a bit of work involved, is documentation. We get this question all the time, do you need my T-4? The answer is yes, not because we want to collect them, but we know that the bank is going to ask for them. Documents required include paystubs from two years of employment and T-4s. There are other considerations that we do look at including proof of down payment history. We give you a list based on your circumstance.

PRE-APPROVAL TIMELINES AND RATE HOLDS

With a rate hold, you are putting a flag in the ground and holding an interest rate for some time. A rate hold is typically 120 days with some lenders doing 90-130 days. A rate hold isn't a pre-approval and it doesn't mean it's been underwritten or that we've reviewed your file. The only thing we have to do to get a rate hold in place is a credit check, a consent form, and an application from you. Some lenders do require more information to provide a rate hold, but some don't.

A pre-approval is essentially your qualification and it's what you qualify for based on income, credit, and downpayment. Your qualification won't change unless there are adjustments to the national mortgage regulation or a stress test change. If there are no regulation changes, we could have a conversation in 12 months and you could still have the same qualification. What expires is credit checks and documentation. A lot of lenders want to see income documents, meaning pay stubs and a job letter within 30 days. You have to give us a new pay stub and a new job letter showing that your income is the same or has improved. Credit checks follow the same guideline and we would have to pull a new credit bureau. If your situation stays the same, documentation has to be updated.

Can I Have A Rate Hold On A Promotional Rate?

You'll see promotional rates that are offered by lenders that are better than the going rates. Typically those promotional rates can't be held because it's a short-term promotional offer.

Understanding Rate Holds

Lenders don't offer you the best terms for a rate hold. When they pre-approve you for a $500,000 loan at a certain interest rate, they're holding that money with a guarantee, assuming you qualify. Upon finding a home, if interest rates on their end were to rise, you still get that rate but they would technically lose out on that additional profit. There's no incentive for them to hold it for much longer than that. That's why in most situations we could see the spread as far as 0.25%-0.5% when compared to a pre-approval rate. The other important factor is that if you get a rate hold for 120 days, you have to close within 120 days. That means if you go shopping 60 days from now, you have to close within that 60 days. If you don't, you're going to pay for whatever the rate at that time is even if it's gone up.

Rate Holds and Closing Dates

Closing means you're taking ownership for that property. A lot of people think that you just need to find your home, write an offer, and get an accepted offer when that is not the case. If we pre-approve somebody today, they might find a house in two to six weeks. From there completion is usually one to four months after. You do have to keep that in mind with rate holds.

Don't Feed Into The Urge To Panic Over Rates When You Have A Rate Hold

Finding the right home for yourself and your family or your investment is way more important than trying to save $50 bucks a month on an interest rate. Take that out of the equation. Rates are competitive, and they'll be competitive when you're purchasing so just focus more on the property.

HOW SOON SHOULD YOU GET PRE-APPROVED BEFORE SHOPPING FOR A HOME?

If you're thinking about purchasing a home or investment property and you're not sure about timelines, you should always reach out and have a conversation with us. A 15-minute phone call can go a long way. The timeline is subjective depending on your situation. Get prepared early.

We could have that conversation in six months when you think you're ready to write an offer and we may find out that you had to pay off a credit card as well. The sooner that we can dig into your situation, the sooner that we can give you some advice and feedback.

For anyone shopping in a hot market right now I want to definitely remind you go back to our episode on subject-free offers

If you want to find out about getting pre-approved with us then send contact us below!

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Construction Loan Guide: Getting A Builders Mortgage In Canada

Tue, 02 Nov 2021 15:49:13 GMT

Making sense of construction financing

Are you thinking about building your dream home? Then it’s time to learn all about construction loans. And trust us—getting a builders mortgage isn’t as complicated as you think!

A construction loan is your key to accessing the funds you need to build a home that ticks every one of your boxes. In this guide, we’ll take you through everything you need to know about the exciting process ahead—from submitting your initial application to walking into your new home on move-in day. Let’s dive in.

What is a construction mortgage?

“A lot of people look at construction loans as some kind of mystical unicorn in lending and, in reality, it's not that complicated,” shares Alex McFayden, Founding Partner of Thrive Mortgage Co. “There is a specific series of steps to it. If followed correctly, you will have a great experience.”

A construction loan is a short-term way to access funds to build a home from the ground up. Importantly (and the name itself may lend a clue), a construction mortgage is a type of loan that solely finances the construction of the home. Throughout the building process, the funds are typically disbursed based on reaching certain construction milestones.

How does a construction mortgage differ from a regular mortgage?

Construction mortgages will carry higher rates than regular mortgages due to the greater risk incurred on the part of the lender. After all, building a home is a complex & long process, and is no stranger to running into delays or unforeseen road blocks. In turn, construction mortgages are often harder to obtain than regular mortgages as well.

Reviewing your financing options

When it comes to choosing a lender for your construction mortgage, private lenders offer significantly more flexibility. However, they also generally carry higher interest rates than traditional lenders. Below, we break down the two options for financing your construction mortgage.

How do private lenders differ from traditional lenders?

Traditional lenders, or an “A lender”, are generally banks or credit unions that offer the lowest rates. Because they’re federally regulated, this means that the restrictions applied to who they grant loans to are extremely strict. Borrowers must have solid credit scores, stable employment income, and a minimum of a 5% down payment.

Private lenders, or alternative lenders, are individuals or small companies that provide mortgages on a short-term basis and do not need to follow the strict requirements imposed by the government on who they can qualify for a mortgage.

When should I use a private lender?

”There are a lot of reasons to proceed with a private lender—especially when it comes to construction mortgages,” explains Dean Lawton, Founding Partner of Thrive Mortgage Co. “What we’ve found, and many industry experts and builders agree, is that construction projects typically get stalled because of financing. In this case, alternative lenders are much more flexible to deal with. That’s why we often proceed with the construction portion of a mortgage with alternative lenders over a bank. ”

Generally, once a construction is complete and a home is move-in ready, you’ll transition to your traditional mortgage. However, when you’re in the thick of building, conventional institutions’ construction programs don’t offer the same kind of flexibility or deep understanding as qualified private lenders. When you run into a construction delay—which is nearly inevitable with building a home—a bank will slow down the entire process due to rigid protocols, costing you more money along the way.

As a result, despite the higher rates that private lenders provide, they actually provide you with the immediate access to funds that you may need during construction. Plus, they typically grant you a higher qualification than you would ever typically receive with a bank, which means that you’ll have a greater pool of funds to tap into throughout the process.

In turn, private lenders can actually save you money in the long run.

What is a construction draw mortgage?

A draw schedule is the detailed payment plan associated with funding the construction of your home. Generally, funds are released once certain milestones have been reached throughout the build—in other words, you “draw” money from the total loan amount on an incremental basis. As work is completed, you are then able to pay the builder or contractor you’re working with.

Construction draws with private vs traditional lenders

When working with a traditional lender like a bank, you’re working with a very rigid schedule with one to five draws. If you haven’t reached a certain milestone completely, then no money will be released for the next stage under any circumstances.

For example, let’s say you’re expecting $150,000 to be released at the final stage (or the lock-up stage) and you submit a draw request to the bank. They will then take the time to review every document, order and approve inspections, and ensure that all of the work that was associated with the lock-up stage has been completed. If there is one document out of order or box left unchecked, you won’t receive a penny from them.

A rigid draw schedule may be reasonable for an individual with a lot of cash on hand and can push the project along as-needed on their own. However, private lenders offer the average homeowner the flexibility they need to fund the construction of their home throughout any unforeseen obstacles.

With private lenders, there can be an unlimited number of draws. For example, you could receive one draw with just 1-2% of the project complete. In turn, you’ll never experience delays—saving you a ton of money in the process.

The steps to a successful building experience

Construction mortgages follow a specific series of steps that set you up for success if followed correctly.

1. Submitting your application and determining your qualification

Your application enables your mortgage broker to assess the size of loan that you can qualify for. This is where you’ll have a detailed conversation with the team that’s supporting you throughout this journey on all of the lender options available to you and building out a financial strategy. After all, before engaging a builder, you need to know exactly what you can spend and what the costs associated will be.

Another benefit of a private lender becomes clear at this stage: you are much more likely to be able to stay in your existing home and access the equity you need to build your new home. Once the home is fully constructed, that’s when you can sell your existing home. This is an extremely common scenario at Thrive Mortgage Co.

2. Finding your dream property & team

After securing your loan, that’s when you can go out and hunt for the property that you’ll build your future home on and find a qualified builder whose resume features at least a few successful projects. You’ll work through an in-depth builders contract that outlines all the terms to make sure you’re on the same page with timelines, costs, and everything else associated with the construction of your home. Your builder also helps you develop the budget and floor plans for your home—all of which is, of course, dependent on your financing.

Your designer will also come in at this stage. It’s extremely important to ensure that your designer and builder are introduced early and communication is flowing. “One of the biggest pitfalls we see here is clients will go out and design a home without consulting the builder,” shares Dean. “Your builder and designer must work together every step of the way.”

3. Securing an appraisal

The next part of the process is an appraisal report. An appraisal report is required for most transactions, like move-in ready homes. With construction financing, an appraisal is a slightly different.

There are two reports attached to an appraisal during the construction process. The first report assigns the value of the lot that you’re purchasing and the second will assign the value of the home once it’s complete—taking into account the floor plans and overall design that you developed with your team.

Taking both reports into account is extremely important. The lender wants to ensure that what you're building and how much money you're spending on it will both be marketable and profitable.

4. Reviewing your financing offers

While private lenders are ideal candidates for many construction mortgages, they’re not necessarily who you’ll end up with for your regular mortgage once your home is complete. In most circumstances, once you’ve moved into your home, you’ll be transitioned to a typical lender which will offer you lower interest rates than private lenders in the long-term.

You're not alone

The experts at Thrive Mortgage can help guide you through the process. Start the application process now to speak with an expert.

We will not do a credit check without your permission.

CLICK THROUGH THE SLIDES BELOW TO VIEW THE ENTIRE PROCESS

WATCH OUR PODCAST EPISODE ABOUT THE ENTIRE PROCESS!

Preparing To Invest In Real Estate: The 4 Key Areas To Consider

Fri, 22 Oct 2021 00:29:11 GMT

In this article, we help you to prepare to invest and give you the four key factors to consider and key information that comes from them.

If you want to learn more about working with us here at Thrive Mortgage Co. hit the contact button on the top of this page or read our other blogs to learn more. What we do best is help families create wealth in real estate. This is our domain.

This is what we love. That's why we talk about it for hours on end.

Due to popular demand, we've had a lot of episodes recently talking about some of the principles and basics of investing, refinancing, building the perfect application, how to pick the right mortgage product, and so much more. We've had a lot of questions recently and had a lot of success talking about real estate as an investment and where to start. For today's episode, we are talking about how you can prepare yourself to invest and this is everything from your financial stage, your investment strategy, identifying your target market, and your property criteria. We're going to do break down those four categories and dig deep into some things you need to think about when you work your way through the spectrum of how to prepare to invest in real estate

UNDERSTANDING YOUR FINANCIAL STAGE

Number one, you have to prepare and plan. Knowing your financial stages is key because you can't do anything without money or the ability to obtain money. Do you have you know the ability to borrow? That's where you got to start.

You shouldn't spend time looking at homes without a proper pre-approval in place. When it comes to investment properties, there's a lot of different routes that you can go and there are many different lenders. Every lender is a little bit different with how they look at rental income. Some lenders require you to have some excess cash in the bank to buy a rental property and every single lender is going to require you to have 20% down.

Where's your down payment coming from?

Can we pull it from your existing home?

Is it being gifted?

Is it coming from your savings?

There are different components we have to look at to figure out what you can achieve and how much money you can get in the form of a mortgage or line of credit. It's the most important place to start.

YOUR INVESTMENT STRATEGY

The investment strategy and the financial piece can go hand in hand when you're trying to understand what you can do. Preparation, when you're understanding what you can do financially, is key.

When we're talking about preparing for your financials and looking at what you can do to get your real estate, we're not only talking about mortgages.

Do you have the ability to raise capital?

Are there other people who might invest with you?

Are there other sources of money?

When we're talking about preparing to invest, the biggest thing is understanding where you stand today. If you know where you are, that's going to help you get further ahead.

Look At Your Existing Equity

A lot of people don't realize that there is a lot of money that's sitting in their home, and it's if it's not being used, it's considered a dead asset. It's not going to work for you regardless of what the mortgage amount is on the title of your current home or properties. The value of your home is going to still go up. and it's going to appreciate no matter what so you might as well utilize that money and put it to work for you. Understand what your current property portfolio is valued at and where your mortgage balances are. Then start to assess how much can you borrow. The ability to borrow 80% of the value of your home, assuming you qualify based on your income, that's gold.

Start The Conversation Early To Know Where You Stand

We see it people apply at their bank or credit union and might not qualify for as much as they wanted. That's where it's important to have an unbiased opinion on your application. Maybe you don't qualify with every single bank in Canada, but you may qualify with one unique credit union because of how they structure the rental income. Don't get discouraged if you run an application and you're not achieving the numbers that you were hoping for. It's never too soon to do an application and figure out where you stand today. We can help you build a plan to get there. Start having conversations around buying with partners, friends, or family.

What Is Your Income Type?

Something to think about is your income type.

Are you self-employed?

Are you employed?

What is your current downpayment or cash that you have available?

How much access to money do you have today?

Do you have the ability to bring in someone else?

These are key parts of your financial situation that you want to be prepared for.

Go back and listen to our episode called the perfect mortgage approval, where we talk about that in a high level of detail.

Know your financial stage, build out a net worth statement, understand all the funds that you have access to and all the equity that you have available. That will help you start to determine where you stand and what types of strengths you can bring to the table or what types of weaknesses need to be addressed.

What Is Important To You In Your Investment?

Once you know what you can achieve, you can start looking at properties within your budget. Understanding what's important to you in regards to how you hope this investment is going to work for you, that's a key thing that you need to dig into. If you're a younger person and you're making good money at your job, you may not need the cash flow, appreciation could be a great play.

Equity Analysis

We've had huge appreciation since 2016. It's continued to cover up mistakes around cash flow, tenant issues, and tenant profiles.

The tools to look at these numbers would be the Equity Analysis, or the investment investor analysis that we use. Those are things that we're tracking.

How much is it going to cost to manage this property?

Is it long-term or short-term?

What is the management cost?

What are the vacancy rates?

We dive into the numbers because that's what's going to help you win and not have mistakes. Appreciation is just a cherry on all of this and you got to look at the nuts and bolts of this investment. If you're investing in other markets like Alberta or Saskatchewan, there is hardly any appreciation there. Cash flow, principal pay down, tenant profile, are so important because depreciation is just not something we should be banking on.

What Is Your Why?

Why are you doing it? Are we doing this because you want to have freedom for 55 or 65? Are you doing this because you don't want to work as much as you are because you want to spend time with the family?

Why factors should be considered in every part of this stage.

Why am I looking at this property and investing all this money to potentially see appreciation?

Why do I want it?

Is it to earn $10,000 a month and why do I need that 10,000?

Such a huge consideration that's always overlooked when I see people start the process of investing in real estate and it can get you through the tough times.

Treat Real Estate Like A Business

You need to treat it like a business. You wouldn't go and start a business if there was no purpose behind it. You need to have a solid plan and try to figure out where you want to get. You may have a goal of buying 10 properties and after the first one, realize it's not for you. It is a job. There's work that comes with it as you mentioned, you know, so it's another thing you got to think about.

Do You Have The Time To Manage Certain Types Of Investments?

One thing that we should talk about when it comes to that and like thinking about the investment strategy is how much time you have. This could impact not necessarily the types of investments but the way that you analyze investments because you may not have time to respond to tenants at all times of the day. If that's the case, then you need to consider hiring a property manager.

How does that impact your numbers?

Do you have time to personally manage and maintain properties all over the country or do you need to be close to home?

What is the time that you're willing to put into this?

This is going to help you understand and analyze your investment strategy.

Go back to the financial plan and build in property management costs because that's your worst-case scenario. It's always nice to know you can get out of sight, out of mind, and it's taken care of. Get to know those numbers.

Build A Good Team Around You

The whole team that you surround yourself with when you're looking at investing in real estate is important. You might not know what is the best investment for you and that's why it's really important to have a great team that consists of a good mortgage broker, real estate agent, property investor, property manager, lawyer, or accountant. You need to make sure you have the whole package together before you go hard at something like this. It's just like starting a new business.

WHAT IS YOUR TARGET MARKET

What type of market are you looking at?

This includes the demographic and includes the location area.

Are we looking at an area that's coming up or a rougher area where there's going to be some construction involved?

Is it a fully developed area where there are young families?

Is it more mature?

Is it a working environment?

These are different types of things that we're going to look at when it comes to your target market.

A one-bedroom condo, who's going to live in that? A one-bedroom condo is probably going to be a couple or a single person.

Is there going to be a higher turnover rate there?

Building A Tenant Avatar

You're already starting to build the avatar of what that target person looks like. You look at a three-bedroom townhouse with two bathrooms, that's probably going to be a young family. Somebody that's probably going to have more of a term. You'll gain further knowledge just by understanding how many bedrooms are on the property, how big it is, where it is, where is it located? Is there a school nearby? Is there a Starbucks nearby? The demographic of people buying Starbucks is different than the people that buy their coffee at 7-11. It's just a fact. That's just one way to start. Start to think about these things. You'll also ultimately start to picture what this person looks like in your mind.

Knowing The Area

If you live in the lower mainland and you're buying in Kamloops, there are good parts and bad parts of Kamloops and you don't want to go for the cheapest property in the worst area because you're attracting the wrong demographic of people. You're going to have people not making rent payments, making late payments, or not paying you at all. It's going to be a nightmare so you need to understand what's going on in that location.

Is it an up-and-coming area?

Is your realtor is not doing that type of work for you?

You should find out what is going on with the city plan in that location.

Are there redevelopment plans?

Are you buying a single-family home where they're going to build condos right next door?

There's a lot of different things that you need to look at. Location is key and making sure that you're getting into a decent area.

Tenancy Act

Understand the tenancy act. It's dramatically different from BC to Alberta. In Alberta, you can raise rent and there is no cap on raising the rent. In BC it's very minimal. In BC, it's very hard to evict a tenant for any reason. Before you purchase, you should have a firm understanding of what the tenancy act looks like. If you think it's a one-year term, and you're going to get that tenant out, or you're going to raise rent by $1,000 because your costs went up, it doesn't happen like that. Make sure you understand the tenancy laws wherever you're purchasing.

PROPERTY CRITERIA

Now that you know the other three factors, you can get tight on defining the property criteria. Some of the things to think about there, let's talk specifically in the form of a single-family home.

What's going on with the house?

What's the age of the property?

How much work am I going to put into this home?

Remember, somebody will have to mow the lawn. You're going to have to have all sorts of different considerations as far as upkeep is concerned. There's very limited control you have over the neighbors in the detached housing area.

What are the different types of things we need to think about?

Can this property be suited? Is it already suited?

Are you allowed to suite it?

Is it going to be an issue if you know the city comes by or someone calls you and says you have an illegal suite?

Defining the property criteria is so key once you define your actual strategy and your target market.

Areas To Look To Invest In An Airbnb Rental

You're not going to get a good Airbnb return in an area like Cloverdale, BC. I don't think too many people are traveling to Cloverdale for a vacation, but they are if there's a major employer there or a hospital. Airbnb thrives around Langley, BC hospital because there are so many nurses and doctors coming in and out for short-term stays. Looking for major city centers where there is going to be activity or events. Other factors will support Airbnb traffic.

Understanding Strata

You need to understand how strata is managed in the property you are looking at. Find out if it's in a financially good position, if there are big upcoming assessments to the complex, or rental restrictions are in place. There are good and bad in every industry.

When you're buying for investment, you need a good realtor on board that understands investment because you could go and write a subject-free offer on a townhouse to realize that it has rental restrictions, and you can't rent it. Something as minimal as that could just completely damper your first, second, or third investment. At the end of the day, strata is sharing walls with people. You have to consider that. Strata properties can be a great investment, you just need to know the condition that complex is in.

A lot of people in Strata's aren't huge fans of tenants. There are some phenomenal tenants out there that keep their stuff nice and clean. There's also a lot of tenants that will create a mess and they're loud and obnoxious. You can get a lot more complaints and it can be a lot more hands-on as a landlord and as an owner of an investment property.

In Summary

Every one of these topics could have so many questions that people are going to ask, but this should serve as an outline that is a base for someone who's thinking about investing in real estate. If you're thinking about one day building an investment portfolio in real estate, you need to think about these factors before making a decision. This will help you set your base but also be willing to adjust. Be willing to be flexible and if it ever gets hard remember why you're doing it in the first place.

Have more questions? Get a hold of us!

We're on Instagram!

instagram.com/thrivemortgageco

instagram.com/theyvrremoshow

Check us out on Facebook!

facebook.com/thrivemortgageco

How to Reach US! ��

Call 604.398.5575 or Email us!

More Questions or READY to get started!?

Just Ask US > Click Here to set up a call or EMAIL us

5 Reasons Why You Need To Refinance Today!

Fri, 15 Oct 2021 02:54:41 GMT

YVR REMO Show Episode 86

In today's episode, we talk a bit about why you need to be considering refinancing today.

We've had so many inquiries about refinancing and it's a lot of the same types of questions. It's clear to us that a lot of people are wondering about refinancing, accessing equity, and what they can do. There's so much confusion because it's not common education.

There will always be a good reason to refinance and now will always be a good time for you.

5 REASONS TO REFINANCE

1) Renovating To Upgrade A Home

When you look at the market that we're in today, it's challenging to find the home that checks all the boxes and people are realizing that. You can add that extra closet in the master bedroom or expand the kitchen.

All these things can be done through a renovation.

It's a different process from buying a move-in-ready home. There are challenges but accessing equity, especially in a market where you've seen a lot of appreciation, is a great tool.

How Does This Look In Today's Market?

There's a shortage of inventory in the marketplace. People are deciding to stay home to renovate and build up some value. $100,000 today on a refinance could be as low as $350 a month.

What could you do with $100,000?

Owners of single-family detached homes adding a basement or rental suite into their homes in preparation to eventually upsize or sell. Another example is building a garage with an additional living suite. With the cost of construction being high, the cost of money is low right now which creates opportunity. In a market where homes are staying on the market for 60-90 days, upgrading your home could help sell your home.

Another reason to renovate is buying a home to add a few key items and then sell it for profit.

2) Reducing Your Rate

When the cost of borrowing is 2.5% or less for conventional mortgages or all lending being 1-3% lower than the last few years, it makes sense to look at reducing your rates.

Refinance To Consolidate Your Debts

We mentioned the word consolidation. We talked about what people forget about all day long which is the credit cards, personal loans, and their unsecured lines of credit. People look at those and they see the minimum payment. The minimum payment comes out automatically causing it to be out of sight out of mind. You're only paying interest and it's a very minimal piece of what the actual balance is.

A 19% interest rate on a credit card or a 7-8% interest rate on a line of credit adds up quickly. To be able to drop those rates and consolidate those debts into a mortgage is incredible when you look at a cost scenario. We're talking five digits in most cases of savings in a short time.

It's easy to let that debt sit and pay off the minimum balance but people don't pay any attention to the interest paid. You have to train yourself to think differently and come up with a strategy to deal with it for future considerations.

Who Can Refinance?

Anyone who has at least 20% equity in their current home can refinance. Across the board, we're seeing 15-50% increases in property value in a few years. This means a home bought last year for $500,000 could be worth $700,000 today. This could be the case even if you bought for 5% down. You probably have enough equity built that you could pull money out to take advantage of refinancing. One of the biggest things that I see is people are afraid to ask about how do I take the money out? If you're wondering about this, ask the question.

3) Increase Your Cash Flow

Look at a car loan as an example:

A $70,000 Ford pickup truck could cost a client up to $1,300 a month at a 6-7% interest rate.
When you take that $70,000 in debt and you throw it back into the mortgage at 1.30%, we're seeing that monthly payment come down dramatically.
The argument always is, "It's amortized over 30 years, this is going to take me way longer to pay off." Yes, that is your minimum payment threshold and that is true. To increase the cash flow base at that interest rate doesn't mean you have to pay it off over that amount of time. You can still attack the payment in the same size payment that you had previously. All of that additional money would go towards the principal. The amount of savings that you see on interest could be up to $20,000 on a loan of that example.

As an investor or someone who's looking to buy more than one piece of real estate, your cash flow is extremely important.

4) Refinancing For Investment

One of the things that you could do is take money out and refinance to buy a second property. When we talk about buying a second property, we're taking the equity out of your home and using that for the downpayment on the next home. In many circumstances, it can cover 100% of that downpayment when financing a second property. It's very possible and we do it all the time.

Your Mortgage Qualification

Qualification is challenging with stress tests and everything that we're dealing with. Finding ways to increase cash flow could just be as easy as resetting your amortization.

If you're currently on track to pay your mortgage off in 17 years, that payment is hurting you as much as you can pay the mortgage off in that time. It's that minimum payment that's coming up in your credit bureau. That's what we're debt servicing for. and that is now restricting you from potentially buying the next investment property. Resetting the amortization to bring your minimum payment down to a 30-year is going to make a huge impact and that small change will allow you to buy that next property. There's no limitation on resetting your amortization.

5) Pulling Out Equity

Another good reason to refinance is for those people that are looking to buy that vacation home. People who talked about a vacation home for an Airbnb, they're doing it for themselves. We get a lot of people who wait on buying that big dream home because they think they need to save up all the funds to do that. You can refinance to take that equity out to buy the vacation home just like you would any other property.

There's money is sitting in the equity of your home and you're not utilizing it. If you can put that to work for you, you're going to see your wealth grow over a short period.

What Is Your Story?

These are just the key reasons why refinancing makes sense today. Commonly we can find another lender who may reconsider refinancing you again. You could have bought your home last year or you could have bought your home five years ago. It's all about the story. That's what we do when we're doing a refinance.

How are we building out your story to do a refinance?

What's your situation?

Early Renewals

A lot of people don't think that they can do an early renewal. They'll keep paying to sign a very high interest rate, waiting until they get to the maturity date.

There are a lot of strategies that you can do an early renewal. There are ways to potentially have no penalty, even at an earlier point in your trajectory to getting to maturity. It still makes sense to move forward due to potentially thousand's of dollars in interest savings. You may not be eligible for an early renewal, but you must investigate it and it's something that could save you a lot of money.

One of the biggest mistakes we commonly see is people waiting until the last minute for their bank to help out.

Real-Life Scenario

We did a refinance for one of our clients a few weeks ago.

We started the process 12 months out within the nine month period.
Their pre-payment penalty got knocked down to 3 months' worth of interest on a fixed-rate mortgage.
It made sense to refinance within that nine months early not only to lock in their new mortgage rate but also to pay off that nine months' worth of interest they would have paid.
In nine months they saved money plus they got started with a lower payment.

If you're 12 months out, you can have a conversation. Typically if you're within 12 months you need to be talking to us about that especially in this type of interest rate environment.

If you have $300,000 of equity and you're waiting until the maturity date to pull it out, a lender will want to know why do you need the money.

What are you using this equity for?

Having a conversation 12 months prior will allow you to start putting the puzzle pieces together and building a plan. When you get there and need the equity, it isn't going to be sitting in your account collecting interest, you will have a plan to deploy it.

If you're looking to do a renovation, if you're looking to reduce the rate on your credit cards or lines of credit, save hundreds of dollars every month, buy your investment property with your existing home, or renew your mortgage early, you know where you got to get started. Reach out to the team here at Thrive Mortgage Co. We can set up a 15-minute consultation and we'll figure out if it makes sense for you. We'll get you on your way to saving some cash and making sure to take advantage of this interest rate environment.

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Real Estate & Mortgage Market Update September 2021

Mon, 27 Sep 2021 14:17:03 GMT

What's New In September 2021?

What's going on in the real estate and mortgage world in September 2021 in British Columbia?!?

1. Believe it or not, interest rates have come back down again!

What does this mean for you?

If you got your home last year or have refinanced recently, you need to reach out to us! We can help you save by taking advantage of falling rates!

2. Subject-free offers are back?

Why is this happening?

Inventory is low and has been this way the entire year. We have a plan that can help you navigate subject-free offers.

3. Lenders are changing policies and programs for the better.

What's changing?

We have a new lender entering the market in 2022! They will potentially offer a mortgage with 10% down payment of up to $2 million. This has never been seen before and could help you invest in the home of your dreams!

Looking for more news, updates, and mortgage education?

Don't forget to check out our podcast 'The YVR REMO Show'.

Every Tuesday we release a new episode addressing current topics in the world of real estate & mortgages.

CLICK HERE TO VIEW OUR PODCAST PAGE

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WE ARE HIRING!

Thu, 16 Sep 2021 17:33:23 GMT

This Is Your Chance To Join The Best Mortgage Team!

Job Description

Loan Specialist

We are excited to bring a new member into our quick-moving and fast-growing team. As a progressive mortgage company, we pride ourselves on our client-focused, fun, and innovative ideas and systems.

This role is a key part of the customer journey and is focused on helping clients build their plan as a support of the mortgage advisor, working closely with other team members to ensure timely and exceptional feedback for a seamless client experience.

We Value:

Client first approach
Problem Solving (thinking on your toes)
Attention to detail
Positive work ethic
New ideas & innovation promoted
Team Player!

You Have:

Experience in processing the following types of Documentation: Income (CRA), Financials, Bank Statements, Contracts, and Property Documents.
Focus on supporting reviewing mortgage lending and clearly explaining information to clients.
Proven experience as an administrative assistant or executive assistant
Empathy and a HIGH focus on going above and beyond to exceed client expectations.
Knowledge of office management systems and procedures
Strong phone and communication skills
Excellent time management and the ability to prioritize work
Excellent written and verbal communication
Strong organization skills
Desire to grow, learn and willingness to EXCEED client expectations.
Ability to adapt and complete tasks with minimal supervision
Technical aptitude, including experience with CRM’s, Office, and ability to learn other web applications.
Experience with FILOGIX is an asset
Ideally has experience reviewing lending documentation.
A Mortgage Broker License in BC will be a requirement of this position. If you do not currently have a license we will work with the right candidate to find one.

Some of Your Responsibilities:

Client Communication of files & status
Document Collection & Review
Data Entry & CRM updating
Managing tasks & following up throughout files
Compliance Procedures
Client Correspondence (Email / Phone / Mail)
Client Care - Support & Happiness

Job Type: Permanent

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YVR REMO Show - How Could The Vaccine Mandate Impact Your Mortgage?

Thu, 26 Aug 2021 03:09:05 GMT

We will break down something pretty topical and something that not many people in the lending space are even talking about yet. Today's episode focuses on what the most recent ramifications of vaccination in the workplace will have on your real estate portfolio, your lending qualifications, and you as a borrower understanding what your options are. We outline the big five banks' big announcement saying that their employees coming back must be vaccinated. What could it mean to you're trying to get a mortgage? What if you're looking forward to qualifying for a new loan if you decide you're going to change jobs or anything of that nature?

Stay tuned to th e end of the episode. We will talk about some of our predictions

around what will happen and the opportunities in the marketplace.

Alex McFadyen

We're going to talk about facts that we know so far. Unfortunately, the COVID situation isn't going away anytime soon. We need to talk about the impact on mortgages, lending, and real estate.

The first thing that came up here is there was an article that was released. It states that the big five banks in Canada will now be mandating vaccines for their employees, contractors, and anybody coming into the bank. We're not going to talk about whether it's right or wrong, but we're going to talk about what that really could mean to you.

Deryk Williamson

Working from home has become common. A lot of businesses have adapted to allow their employees or team members to work from home. I think many people have found comfort in that, and many people are loving working from home. Because things are opening back up, many of these companies are trying to get people back into the office. I know that as a whole is going to cause some disruption in employment in general. People are looking for jobs to work from home and don't have to drive to a branch every day.

Vaccines are a touchy subject. There's a lot of people that are for them. Canada's numbers are very high for vaccinations. There's a lot of people that don't want it suitable for their reasons. If you feel forced by your employer to get a vaccine that you are against for your reasons, I can't imagine most people are just going to fold and get the vaccine. A lot of people are probably going to quit, or they get terminated, causing unemployment. I mean, my first thought is a lot of people in the banking world, if you're in the mortgage sector, they're probably looking for other opportunities such as where can I work? Do I get into the mortgage brokerage industry to work for myself, work from home, or work from our flexible company? There will be a lot of turnover from the banks and every company out there that will mandate this.

Dean Lawton

The banks are just the first ones to come out and say this publicly, and we're only talking about the big five banks as of right now that have come out and said this is what they're doing. You got to think of all these office administrative jobs and government jobs that have had a work-from-home mandate for the last 18 months. To that point alone, aside from the vaccination, people are so comfortable at home. They're more efficient. Many companies came out and said their efficiency with their employees is way up with them working from home. This working situation eliminates that travel time to work, that's key, as is the mental state of being able to drive to work, get to work, fire up your mind, and then get into the prime of your day. That alone, I think, will make such a significant impact on every sector, where people are looking for jobs that make less money to keep this lifestyle. The people that made actual huge financial decisions like upgrading their home, moving to other cities, building a home office, there's just so much there even before you touch on the vaccination side of things. When it comes to vaccines, hot button topic, and you're playing with fires. If you're a corporation trying to make those mandates, it can be challenging.

Alex McFadyen

We've never seen so many people work from home. We've got a lot of people who are being told to come back to the office. Without getting into whether it's right or wrong because that's not the conversation today, it will impact the bank's employees. Many people, believe it or not, walk into a branch to apply for a mortgage. They walk into the bank to get transaction statements all the time for us. They walk into the bank to pay bills. What does this mean? Prolonged service and wait times because they will be losing employees.

Dean Lawton

We're going to see an impact on timelines. More importantly, if we see some skilled positions, not only are timelines going to suffer but just the quality of the transaction in general. When we're thinking specifically with our business, the underwriters we work with at these banks are just incredible. They're the reason why these deals are so efficient. They're the reason why we get one-day approvals. If they start to lose this quality of people, we've seen it, we've worked with poor quality employees at these institutions, and we go from a one-day approval to a 10-day approval. We're asking for the same documents repeatedly and just narrowing down to how it will impact our business and get a mortgage. That's my biggest fear.

Deryk Williamson

Think about unemployment and people changing jobs. If you have an excellent broker or banker working on your file, you're probably getting some good advice. If you're in the middle of a mortgage application and people from companies mandating vaccines are losing their jobs, what does that do to you? Can you still buy your house? We saw a ton of this when COVID first happened, and there's a ton of unemployment when everything shut down. We had countless clients that were mid-purchased. They removed subjects and are waiting on completion. We saw different banks take different approaches. Some of them turned a blind eye, and they didn't want to look into it.

How long do you have to be at your new job?

Is it a contract position?

Is it commission?

Can we use the income?

Alex McFadyen

Look at the rental rates in these different cities. Perfect examples we've discussed would be areas like Langley or Chilliwack, where we've seen rental rates go up by 20-30% in a year and a half. There's not enough housing. If you haven't found a way or don't understand how to get started, that's what we do all day long. Start listening to some prior episodes or reach out to the team.

Dean Lawton

We're getting back into a very competitive market. It started to slow down, and now we're getting into multiple offers again. I've heard from many of our top agents that being prepared and financing is pre-approved, you're ready to go. You could put yourself in a position to have short subjects or even subject-free, not that we recommend that, but you could win in these competitive multiple offer situations. That would be an opportunity; just being prepared.

Deryk Williamson

People are seeing the repetition of what's happening in the weather and moving away from specific areas. It's driving people to these areas where we haven't had these issues. That could continue to grow population and grow housing demand.

Alex McFadyen

I've had three people reach out to me and try to save deals that we quite simply don't have the time to keep in some circumstances, not because we can't do it but because there's not enough time. That could have been changed by being more prepared. Be prepared, have conversations with professionals, and if you're working with a real estate agent who's not introducing you to a team like ours, reach out to us directly to take care of you.

We hope you're enjoying every single episode. Leave us that five-star review so we can get you one of these beautiful Thrive Mugs. For everybody who leaves us a five-star review on iTunes, we try to shout out once a week.

Thanks again for listening. I hope you enjoyed the show. We'll talk to you guys and see you next time!

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YVR REMO Show Episode 78 - Should You Sell Your Home?

Mon, 23 Aug 2021 05:51:02 GMT

In which situations would you want to sell your property?

Alex McFadyen

Today we’re talking about the market and when to sell or when not to sell your home.

We're in August right now 2021 and the market all year has been crazy. The news has been reporting over the past few weeks that the market is slowing down but we haven't experienced that. Typically we see things roll back up and get really busy in the fall. A lot of people are starting to ask questions around selling their real estate and starting to reach out slowly around selling their home, upsizing their home, selling their investment property, or letting go of land. We think people should, as much as possible, keep their real estate. There are circumstances that do not agree with that statement. We want to make sure that people know that there are some other options here.

Deryk Williamson

A lot of people go into their next home purchase with the mindset that they have to sell. Most people think I have to sell my house to buy my new house or buy the bigger house to get into the detached. A big part in working with us is we make sure to do an in depth analysis to see if there is any way to maintain that existing property as an investment. Real estate as a whole, if you look at the history of where we live in the lower mainland, it's been a massive asset for people. This can really change your life in regards to retirement and just overall wealth.

Alex McFadyen

We're going to break off this show into a few key components, one of those is knowing when to sell and kind of counterintuitive to our argument of keeping and maintaining your property. The other one will be a little bit more about investment properties, more specific around investment properties and when you may want to consider it. We're going to walk through what we've seen and what makes sense from that perspective.

The first thing right off the bat, I post a lot on my social media about never selling your property. I started off the episode by saying we want to keep your real estate as long as we can. It's an appreciating asset for the most part. However, let's talk about the independence of where that doesn't make sense.

When looking to make a move or buy another piece of real estate, when could it make sense to let go of a property?

Deryk Williamson

I think the biggest one is you have to sell because you need all the equity in your home to create your down payment on the next property. You may not qualify to buy that next home with the amount of equity that you could extract if you were just to refinance.

Alex McFadyen

Let's talk about debt payout. One of the fabulous things about equity and being able to access it, whether it's through a refinance or a sale of a property, is you make the difference between what your home is worth now and what you owe on the home.

People take on debt and we've seen a lot of people look to consolidate that debt. One way that can stop people from keeping their real estate, where it makes more sense to let go, is actually paying out debt. This can be in the form of car loans, credit cards, or lines of credit. In some circumstances, it does make sense to clear off those debts. If we're talking about car loans, the payments could be $800 to $1,000 on a truck loan where it only has $25,000 left. That $25,000 in the mortgage is worth $100 a month. From a lifestyle perspective alone and releasing yourself of all the stress of that debt, it may make sense to sell that property and still achieve your goals of buying another piece of real estate too.

Do You Pay Tax On Equity Appreciation?

Deryk Williamson

Another thing to consider in a primary residence is the growth. The equity appreciation is non taxable. That can be very beneficial. I've had some people sell property because they need to invest in business. If you can gain access to tax free money, it can obviously be a life changing situation.

Alex McFadyen

In August, we currently do not get taxed on selling our own primary residence or principal property. You would get taxed on other options or other properties, such as your investment property and otherwise. Your primary residence is non-taxable. We had a guest on the last episode, Tony Spagnuolo, who mentioned that it's possible that we could see a government change to that in the future. Look out for that.

Alex McFadyen

We've actually seen clients who have taken a huge risk and they didn't have enough equity. They couldn't pull more than the 80% of their home, invested into a business and that business is now doing very well for them. That can make a huge difference. You're betting on yourself in that case?

Deryk Williamson

A property might not work for somebody and they literally don't want to maintain it. They want nothing to do with that property or those neighbors anymore. It just makes sense for them to sell and move on. You live there and you spend a lot of time in your home so you have to make sure it's somewhere that you're comfortable and happy.

When Is It A Good Time To Sell Your Strata Property?

You should go into an investment property with some sort of a plan. If you work with an investment or financial advisor, they have a plan with you and your money timelines. If you are buying an investment property and you have a specific goal, maybe you want to gain $100,000 in equity. If that happens in six months, you've achieved your goal. You might feel confident selling and moving on to the next thing. If it takes five years, you should probably stay there and try to achieve your goal with that property. That's really important because selling a property and moving is not cheap anymore. With the values of homes where we live, you spend a lot in real estate fees, legal fees, mortgage penalties, property transfer tax, and insurance. It can work out to a pretty dramatic bill if you're constantly selling properties every few years. You should try to have a pretty confident plan in place before selling out on a limb all the time.

Process Of Deciding To Sell Real Estate

Alex McFadyen

Let's talk about the process of making this decision and deciding to sell a piece of real estate. Typically, we do an analysis with our clients to understand their current situation. If you're working with us, we're going to put together a detailed summary of your existing equity in your property.

We should have a conversation about what it would look like to keep or let go of this property before we get into all the ins and outs of the subject matter. Looking at moving forward and working with a real estate agent or someone who could represent you and your sale is a big decision. If you are the person that's not sure what you should be doing and you're trying to be comfortable with the agent you’re working with, do your due diligence. When you're working with that agent, are they asking you questions around this or bringing up things around this as they're selling the property? Are they suggesting how long you should keep that piece of real estate? Are they helping you understand the reasons why? What you really need to be thinking about or looking for is someone asking you those questions. If you're a real estate agent and you're listening to this right now, you really need to be thinking about going into these conversations instead of just thinking how do I just sell this home? Think about what's the best thing for your client to keep or let go. If you are going to suggest that they let go aside from the personal matters, be specific in the reasons why. Do your research to know the area. They'll thank you for it and they'll probably never go anywhere else.

Figuring Out Costs

Deryk Williamson

Another thing is figuring out costs. It's a big one, especially with mortgage penalties. You want to do a detailed breakdown and budget of what you're going to spend to sell this property. You also want to get pre-approved for the next one. If your plan is to buy another property, it’s the same process as always. You have to get pre-approved but make sure you figure out costs before you pull the trigger.

Alex McFadyen

That's a huge part of the picture. If you're nine months away from not having to pay a $25,000 penalty on a $400,000 mortgage because you took the five year fixed mortgage rate, you want to look at that as part of your decision of should I sell or not.

A big part of what we try to do is to help people keep and maintain real estate. We implore a lot of our clients to continue to keep the real estate as much as they possibly can. What we are suggesting is to take an educated approach to look at all the parameters around how you use your money. If there's one thing that I would take from this episode, if I were listening right now is what Deryk mentioned about opportunity cost. If you do this or don't do something, what could you be doing otherwise? If you've got access to this cash, and you can make more money, then you should be considering that as an option.

Deryk Williamson

I'm not an economist, but I do understand that having cash in a bank account right now is probably one of the worst things you can do. Everything is rising in value but the dollar is not. If you're not invested in the markets that are rising, your dollar is shrinking.

Alex McFadyen

A lot of our clients are interested in learning the basics of how to buy their first investment property. A lot of people are interested in learning about how to buy second, third, fourth, and fifth properties. Listen to our podcasts. There's a bunch of great episodes whether it's construction, multi-family homes, buying Airbnb, and all sorts of topics. We're going to continue to bring you more but if you're interested in learning more about real estate investing, please reach out to us at Thrive Mortgage Co.

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YVR REMO Show Episode 75 - To Port or Not To Port?

dean@thrivemortgage.ca (Dean Lawton) — Wed, 28 Jul 2021 21:58:29 GMT

Are you planning to port your mortgage to a new property?

Alex McFadyen

We're seeing a lot of families moving homes to different locations all over Canada. When we get into the summer months, we do a lot of purchases. We've seen a lot of clients upsizing. One of the first topics that always comes up in that process is about the idea of porting your mortgage.

If you don't know what porting is, it's the idea of taking your existing mortgage on your current residence and transferring it over to another property. There's a ton of misconceptions around how it works.

Who can do it?

I found that ports actually take longer than new mortgage applications because that goes to a different department which is typically slower. On the broker side, we don't actually have as much contact with them like we would for a purchase application. They don't seem to have as much pressure on the timelines or as much concern.

Deryk Williamson

Part of that is there's more administrative work. For example, they're taking an existing mortgage with 23 and a half years left at a 2.79% rate and have to blend it with an extra $147,000 of a 3% rate. There's just a little bit more work for the lender to actually calculate all the numbers and process that approval. I would say it's not anywhere near as quick as a standard purchase. We're still typically getting them done in subject periods if we need to.

Alex McFadyen

It's just that extra day or two. That makes a difference.

That penalty scares people into porting all the time. You got to look at the numbers because the right numbers will tell you.

Alex McFadyen

Alex McFadyen

If your property was a rental property, moving to a rental property, or there's any rental income involved, that becomes a greater challenge.

What's been the most common thing we've seen in the last year is parents co-signing with mortgages or families moving together. I feel like every second homebuyer, first-time homebuyers we work with, is buying with a family member, friend, someone's co signing, or the parents are helping. It's tougher to get into the market, especially in British Columbia and Ontario.

What if someone is currently co-signing, and they're trying to upsize to that next property without a family member?

Can you qualify for that on your loan?

You can't just take them off, as you mentioned.

What about someone who's in a certain mortgage product that wants to switch?

What if you have a variable rate that you love and you want to take that mortgage over to another property?

You know, we could talk a little bit about that. A perfect example would be TD Bank. TD Bank has a reporting policy where you can port your variable rate mortgage over to another. You can't take the variable, you have to move it into a fixed rate if you port it. They're not the only ones. That's just an example of a larger bank, there's a bunch of different banks that have that same thing. Let's say you got a fantastic variable rate and you're wanting to take that over to that next property. If you port that, they're going to convert that into a fixed rate and they're going to convert it into whatever fixed rate they want to at that time. This is probably their posted rate, which is typically higher than market options. You're paying more and you're not, you don't have the option or the flexibility to adjust it or keep that variable rate. That's one of the nice things of going variable in general.

Deryk Williamson

The beauty of the variable is that you could pay your penalty and it's going to be three months of interest. You're not going to see these $30,000 penalties being in a variable. You do have that flexibility and you're not stuck by any means.

If we flip over to the fixed rate conversation, most of the time, if you talk to a bank they're typically talking about a five year fixed. lThat's why 75% of Canadians have a five-year fixed mortgage rate, because that's what the banks are trained to push. You have to consider that if you have two years left in your fixed rate term, they may say we can get you into another five year and the blended rate is x, it looks great. You say let's do it, not really thinking ahead, you're putting yourself into that same product. If you find yourself in three years having to refinance, sell, upsize, downsize, or move, you’re dealing with the same thing. If you're going from fixed to fixed, you really need to think about the term that you're taking. We typically recommend a three or four year because the stat is that Canadians break their mortgage just over every three years. You just got to keep in mind, you're putting yourself back into that same situation if you jump into a five year again.

Alex McFadyen

It sounds like we're saying don't port and that's not the case. It's not the case at all, we're not saying don't port your mortgage. I hope that's not the feedback that you're getting, if you're reading this, but I think the feedback that you should be getting is that in so many circumstances porting either doesn't work the way you thought it would or doesn't make sense.

In my experience, where have I seen it work for porting?

Most people don't realize you get into that five year fixed mortgage because you think it's safer. Life changes and you have to downsize your job or move. Nobody sees most of these things happening and even if they do, they don't really think too far ahead to notice. These things might change so you have this $25,000- $30,000 pre-payment penalty and you don't actually need to borrow a lot more. That makes a lot of sense. If you got a great mortgage rate and you got this $25,000 penalty, make that move and see if you can make that port because in so many different situations, it does make sense for that purpose alone. Save that $20,000, you don't need to pay that to the bank.

Deryk Williamson

We're super honest with all of our clients and we crunch these numbers for them. We have your best interests in mind. We send a lot of people away if it doesn't make sense to work with us, we send them back to their bank and at least they have full confidence that they've had a diligent conversation. They know what else is out there. They know what the numbers look like and they know they're making the best decision to go back to their bank or credit union and port that mortgage.

Alex McFadyen

Those are the situations where that can make sense.

A second one is that this is not common in the BC or Ontario market because the house prices keep going up. If you're not borrowing any additional funds and there's no extra money and you qualify, assuming that there's no interest to be saved, in those circumstances it often makes sense to just port it over to save the penalty. We're kind of reviewing this episode.

Interest rates are obviously a factor and a consideration. If you're in variable, you're basically looking at a better discount. You might want to look at that as an option.

Deryk Williamson

The only other thing that we didn't really dig into was an interest rate. I had a client call me that got a 1.59%, five or three year fixed about six months ago. He's already selling. And like You're not getting that interest rate anymore and he really wants to maintain that for the rest of the term. In that situation, if you have a phenomenal interest rate and you've got some good duration left, it can of course make sense.

Alex McFadyen

If you're a real estate agent you definitely now know a lot more about porting your mortgage and you should treat this like any other pre-approval. Make sure to introduce them to your trusted professional that's actually going to go through the details.

If you're a client listening to this, I feel like you know what questions to ask. Get someone to run a quick analysis for you to make sure what the numbers are. You're not going to get that kind of service and support from your bank. Make sure that whatever broker you choose, if it's us or somebody else, that they are running a quick analysis just to compare the numbers and have questions.

Where are you going?

What are your plans?

These are the questions that people aren't asking.

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YVR REMO Show Episode 74 - Buying Real Estate In A Holding Company

Tue, 20 Jul 2021 10:37:11 GMT

DIGGING INTO THE PROS AND CONS OF

PURCHASING REAL ESTATE IN A HOLDING COMPANY.

The question comes up all the time and there's lots of misconceptions

and a lot of suggestions that don't make sense.

We will give everybody a high-level breakdown of where we suggest it be

used and some situations where we don't think it's a good fit.

You should have a conversation with your accountant and lawyer before you

consider doing this but we can speak on it from a financing perspective.

Alex McFadyen

This question comes up every single day.

We have people reach out for their qualification on a mortgage or when buying an investment property as commercial real estate.

Make sure that the lawyer or accountant is not only giving you independent advice but also having a conversation with your mortgage broker team so that we know what's going on. A lot of times accountants and lawyers recommend things without considering the ramifications of what you can do on your mortgage financing.

BUYING IN AN OPERATING COMPANY VS. HOLDING COMPANY

Dean Lawton

One of the big misconceptions that we get is buying in an operating company versus buying in a holding company.

An operating company is a company that's actually doing active business. They have a source of income and they're generating that income.

Let's use an electrical company as an example, potentially looking to buy real estate for their officer work yard. It would be very rare to see an operating company buy that property in their company name. There's a couple of reasons that they would do that. The biggest one would be risk and liability. It's quite common that a company like that would form a whole new holding company to hold the real estate.

A holding company just holds assets, it does not generate income. The only income that a holding company would generate would be interest on money that they're lending or rental income from a rental property, which is what we're talking about today.

Once again, it's very rare that you would see an operating company purchase a property.

Deryk Williamson

This electrical company that we're talking about, that company is actively doing business where they have multiple projects on the go. They're very susceptible to lawsuits and liability. There's a lot of action within an operating company.

With our company, as an example, we work with thousands of clients every single year. A holding company doesn't have exposure to liability like that. It could be a lot of people drawing money from their holding company. They might not want to have a ton of money sitting in the operating company because of the risk of liability. They'll actually move the money to the holding company and it just sits there as a level of protection from the risk of the operating company. That's a huge one, getting those major assets away from any type of liability or lawsuit that can be drawn from the operating company.

Alex McFadyen

One of the considerations is not understanding the fact that there can be layered companies under companies. Our accountant explains to us tiered strategies where you'll have multiple people in our company and there will be a company under that which holds your holding companies. There's a lot of reasons behind going this route but it does allow for you to separate your taxes and income.

Dean Lawton

Where we would potentially see an operating company buy real estate is a company that's strictly built to buy real estate and build a business around rental income. It's a pure rental business.

As an example, let's assume somebody has five plus properties. One property is a legitimate business. As you grow and buy more property, we do see some people do re-organizations where they will turn it into an operating company that is managing these properties as a legitimate business. In those cases, we may see an operating company hold title and hold the mortgage. It's quite common that we see that layered approach as they accumulate them. The operating company is managing the holding companies that are holding and managing the asset. There's a lot of different ways that you can go down this road, but I'd say the most common property or entity would be a holding company opposed to an operating company.

SELF-EMPLOYED

Deryk Williamson

A lot of people who are self employed run into the same issues, which is they don't claim enough income on their personal taxes. There's obviously tax benefits. If you have a corporation, you can leave money in the corporation. We run into this a lot where people who are self employed don't qualify for the size of the mortgage that they were hoping for with traditional lenders.

The question always comes up,

can I just buy it in my business?

Can I use my business income?

Can I buy it in a holding company?

Can I use more income for my business?

That is not how it works for residential lending. Purchasing a property in a holding company is not going to allow you to qualify for more. It is quite literally a different entity going on title for potential tax benefits which your talk to your accountant can clarify. For asset and liability protection, talk to your lawyer.

We're looking at your income, credit, and debts. That is how you're going to qualify for that rental property. There are programs out there where we can look at business income, but that's a totally different lending piece.

Alex McFadyen

I hear it from people who are buying their second or third real estate investments. It's not necessarily allowing you to qualify for more to stick it in a corporation, I think that's an important factor to consider.

MULTIPLE HOLDING COMPANIES FOR EACH BUSINESS

Look at a holding company as another person, another entity. Where you're buying for commercial use, it is very common that the operating company will set up the holding company to buy the property and then that holding company will rent the property to the operating company. It's one owner that manages everything, but he's actually paying himself rent. Himself being the holding company that we should look at as its own entity, it's almost like another person.

Is there risk in this mortgage going under?

Is there risk in foreclosure?

They look at it from that aspect. They always will add a bit of a risk based premium.

Alex McFadyen

What is one of the first things that people ask us? What are the interest rates?

The first time someone buys an investment property, they're often surprised and say, why is this lender surpassing the interest rate or adding a certain amount? We have to be honest, lenders are not looking for rental properties on their books. These lenders are looking for what they would consider to be the safest possible investment which is your owner occupied residence. Another thing to keep in mind is the vast majority of lenders that are out there, it's not their money, they're lending money from investors. These investors decide what the parameters of your mortgage should be to offer you X amount of rates. Going back to the rate conversation, that's why when you see these rates online, it's so difficult for so many people to qualify for them, because you don't fit those parameters. You're going to get surplus for your rental rate already, the holding company just adds another layer where you are reducing your options. The more you reduce your lending options, the less that we can qualify you for. You always want to provide yourself the most options.

CONSIDERATIONS IN CREATING A HOLDING COMPANY

Deryk Williamson

In creating and buying a company, there are costs. It's a little bit more administrative than just purchasing in your personal name. You have to physically get a lawyer to incorporate that company for you. That'll cost around $1,500 bucks. I've seen them to be around $2,000. There's paperwork, time, and effort that goes into doing that. If you've already purchased and you're trying to scramble at the last minute to do this, it might not work. There are ongoing costs that you would not typically incur if you're purchasing in your personal name. That company has to have an annual legal filing completed every single year by a lawyer. It's not overly expensive, around $100, but that has to happen every single year like clockwork.

You also have to prepare financially. Do you have to do taxes for that company? Depending on the cost of your accountant, that could be $1,500 bucks a year going forward. You really have to look at this and say, I'm buying a $300,000 condo that I'm netting $5,000 a year, does this make sense with the costs that I'm going to incur? There's typically a level of income or profits that you should be anticipating for it to make sense to buy in a holding company. Those are just some of the other considerations.

Alex McFadyen

As a side product of all of that is the time. You have a life and probably work a full time job, and now have to fit in conversations with accountants and things of that nature. There is time that goes into managing, creating, building, and looking at all these structures. That's where things can fall apart.

Deryk Williamson

On the asset protection piece, it does put a layer between you and that property from a liability standpoint, there could be tax benefits. Tax deferral is typically what we see so chat with your accountant. That's where you're typically holding the proceeds or the profits, it goes back into the corporation. Until that money is drawn, you typically won't see that major tax bill. Sometimes we see that mortgages don't register on your personal credit bureau, it really depends on the bank. Most of the time they do but sometimes they don't, which can be beneficial in certain personal property acquisition situations. From a business standpoint, if you have an operating company,you're separating that liability again. The operating company is where all the risk and liability is and it allows you to acquire property and separate that liability completely.

FLIP STRATEGY

Alex McFadyen

You brought up the flip strategy, why would someone want to do that for the purpose of flips?

Deryk Williamson

Are you expecting this property to produce a fair amount of profit? Most of the time, if you're going into a flip you plan on it or it's probably not a good idea. If you're going to make $100,000 on a flip, that's a fair amount of money. If you do that in your personal name as an investment, all the taxes that come with that can be hefty. That's a cost that you have to consider to see if it actually makes sense to take on that project. If you're doing repetitive flips and you're turning it into a business, in those situations it can be looked at as business income. Including the corporation in buying the property can actually have some tax benefits there because you're looking at that like business income with write offs. You draw dividends from the corporation, it's just a different structure. It's a one off for sure, there's probably some short term benefit if it's ongoing and that's what you're doing for work. You can actually try to structure that as a business with your accountant and have the income looked at in a different way.

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YVR REMO Show Ep. 73 - Secrets To Success In Real Estate Investing w/ Jared Hope

Wed, 14 Jul 2021 01:35:20 GMT

Secrets For Success From An Experienced Real Estate Investor

You have to go back to our previous episode with Jared, he gave us a good backstory, a lot of information about where he's from, and insight about the market conditions.

Today's episode is going to be more topical. Jared has been nice enough to pop on the show and help give us a roadmap for the entry level investor. You will get a few key topics, in terms of how to get started, what to look for, what types of areas and so much more. We're going to rattle through four or five different key points that you're going to start looking for as it pertains to beginning investors. Any investor should be looking at these things. It doesn't matter if you're a beginner or not because these are foundational pieces.

Alex McFadyen

Welcome back Jared.

Jared Hope

Thank you for having me.

Alex McFadyen

What are the different categories or areas someone looking for a property should consider? How did you come up with this list of four or five different ideas?

Jared Hope

Experience.

I've been on stages all across the country for years. I've been teaching it and I see people flying in and randomly buying a house. They don't think four or five years down the road. They don't think about what happens in a downturn.

What happens if the market shifts?

It's just a list of just things I see every rookie investor make when they're just starting out. I see these mistakes happen all of the time.

#1. Tenant Profile

Alex McFadyen

I think the biggest thing right off the bat is something that no one thinks about. On your instagram page

@jaredandkrista

You guys posted recently about the tenant profile and the kind of tenant that you want. It's the same thing in our business as far as what types of clients and people we want to work with at the end of the day and thinking about that first. How does someone go about figuring out what kind of tenant they want to look for and why is that important?

Jared Hope

This all started back in 2003 when I bought my first house. I had no idea what I was doing. I was following some agents who told me to buy in this certain area because it was the cheapest and it was the best place to buy. What I found out was it was the cheapest but it was absolutely not the best place to buy because my tenant profile was bad. The tenant profile was perfect for the area. I knew I wanted a different kind of profile than that house was actually giving me. I bought my first three or four houses like that. I was listening to these other people telling me where to buy and I was buying it expecting a different result.

After about number five or six, I came up with this simple strategy, it's just show up where you want to buy. If I was buying in area x, and that's the area I thought I wanted to buy, I would do some recon before I bought there, I would go you know, if I lived on the other end of town. I would drive to where I wanted to buy, because I wanted to buy in an area that gave me the best return. I would go shop at the Safeway or I would go for a coffee in that town. I would walk the streets at 10am in the morning and 10pm at night. I would ride my bike or take the dog for a walk there. I was researching the tenant profile to see who lives there. Was it a shopping cart community? Was it a low income community? Was it a middle class or upper end community? What kind of cars were there? I got to understand that area because of the tenant profile. A lot of times people buy a house in an area that doesn't attract upper end clientele but they think it does. They buy the house and now they're screwed because they're not getting the results that they want.

Alex McFadyen

How do you even build out a tenant profile? How do you know where to start?

Jared Hope

A lot of it starts with your down payment. If you have only $40,000 for a down payment or $80,000, you can only buy X amount of a property. If you only buy a $400,000 property, that’s low income housing and your expectation is a middle class tenant that makes $80,000 a year.

It's almost like creating an avatar. In my management company, we have an avatar for our coaching clients. We're crystal clear on what we want for those types of clients. We also have an avatar for every single property that I bought. Here's the tenant profile; 30 to 40 years old, young couple, young kids, small pet. That means I need a yard, I need to be close to a school, I need parking, and I need to be close to a Starbucks.

Where people have to start if they don't start with the house, they have to create the avatar of what it is that they want for the candidate. The truth is it's so easy to buy a house, it is harder to buy multiple houses and have success because most people don't understand the avatar of their clientele.

Dean Lawton

It's just such a great idea just to get to know the area and go for a walk. What are the types of things you're seeing at 2am compared to 10am? It's going to be a different world and that's where the people you don't want to be around come out.

Jared Hope

I get calls all the time from people from Vancouver who want to invest in Alberta and Edmonton. They'll call me up and say they just bought this property, I'm from outside of Edmonton and it's on 107th and 109 Street. There's nothing but hookers and drugs in that area. It's probably the worst part of town. They got a great deal on it. Their agent says it's awesome. I was there in town at 5pm and we wouldn't check out this place. Were you there at 5am though? That place turns into the ghetto at about 9pm. There's drugs, shootings, hookers on the corners, drug deals on every corner. If you put a tenant in there, they're gone in 30 days. Your tenant turnover and stress levels will be through the roof. A realtor gets a commission and once the realtor gets the commission, they're gone.

Alex McFadyen

So it's really interesting to hear you say that because it's the exact same thing that actually some good real estate agents that we work with advise our clients.

Jared Hope

There's a lot you can read on realtor.com or MLS, you can click one of the tabs in any property in an area that's listed. They're going to tell you the average age and the average income. Don't buy into that info. They take a 20 block radius. There's a lot of little pockets in that area that are different especially when you're buying in the downtown core of a city. If you're buying in that downtown core, a 10 block radius can have five different areas.

Nothing beats traveling to the property. Before you remove conditions on a house, go visit it if you're going to do the homework before you put an offer in. Be very careful with conditions because you really don't know what you're gonna get until you buy those.

#2. Location

Alex McFadyen

Number two is about the area, which we're already talking about right now. Let's just build on that. There's a lot of people who want to invest in different areas in different cities across the country. When you're talking location, there's probably two levels to that, high level being city and the lower level being neighborhood. What are your thoughts? From a high level perspective, how does somebody pinpoint?

Jared Hope

I would say macro/micro. The macro is the city, which city you invest in. You want to look at areas that are going to lead the country in GDP, gross domestic product. You want to look at natural resources. Tech is big here out in the Okanagan, there's a lot of tech stuff happening. The movie industry is picking up a lot here in the Okanagan as well. You want to look at whatever the big sectors are. Are they in an upward swing or a downward swing? You want to look at net migration into the city. You also want to look at job creation and unemployment, how do they compare to the rest of the country? If the unemployment rate in the country is 4.5%, and the city you want to invest in is sitting at 6.8%, might not want to invest there. GDP growth is a big indicator, that's the number one indicator that's going to decide if the city's going to take off or not. These are all macro.

There's some simple signals that are pointing to the micro. That's when you get into different communities in the city. That's where it's so important to understand your tenant profile. I got probably 20 to 25 properties that would be low end, my rents are dirt cheap and my tenant profile is low. That's my avatar and those tenants work, as long as you have the right property for them to live in.

When you get into the smaller areas, a lot of it's going to depend on what your credit profile is. I only buy within a five to eight block radius of Starbucks. I only shop around schools who do not have hot lunch programs. Nothing wrong with a hot lunch program, I think it's a great system. My kind of profile doesn't fit that mold 85% of the time. My tenant profiles, they drink coffees from 7/11. My tenant profile there has subsidies for daycare. They all take classes or train systems for transportation, parking is not a requirement. I can buy a little bit denser properties. It's really important that when you fly into a city, you understand that certain areas have their challenges. You have to flesh out what those are, and then say, is my tenant going to be bothered by those challenges? If they are, then you don't buy it because you're going to have high tenant turnover. That's going to create all types of headaches.

I like major road transportations. I'm going to reference Edmonton because I invest a lot in Edmonton. If you were to take Edmonton and break it into four quadrants north, east, south, and west and then if you were to break that down even further and say where's the light rail transit or train system? I sit there and say, Where is the train going next? The train has to go in the northwest section, they're not going to put another one anywhere else because it doesn't make any sense. Right now I'm buying specifically in the northwest part of the city with the requirements of within a five to eight block radius to Starbucks. Within a five minute drive to shopping and a non-hot lunch school system or programs.

I love roadways and I love potential. I think areas in transition, they can take a long time to get in transition. I don't want to be the first one or the first 20% of people in the area of transition. There's all kinds of headaches that come with it and to be totally honest, it's not worth it. I want to sleep at night, I'd rather have strong cash flow than have the headaches of hoping for the home run in 10 years when that area finally transitions.

Alex McFadyen

And that's traditionally been kind of what we've seen a lot of in the Fraser Valley in the last few years where people are getting in on the bottom floor and habits of success as far as purchasing pre sale properties and so forth.

I don't like anything strata.

I just had a client messaged me the other day. He's like, hey, if you were to buy a condo anywhere in Edmonton, what area would that be? I replied back, I would never buy a condo because they make no sense. I have 151 properties and one of them I have a condo, one of them is a strata. The 150 other units, my tenants shovel, my tenants cut the lawn, my tenants pay their own water, my tenants do their own cleaning. Why would I pay condo fees for all that? All that does is eat out my cash flow. My condo fees can go up $100 just like that when I can only raise rents 2% in Vancouver. Whereas if utility fees go up $200 that's on the tenant. That's not on me, it doesn't impact my rent and the tenants are going to pay that anyway. I just don't dabble in condos. I don't touch anything with strata.

Alex McFadyen

Is there a break even point in terms of the age of a detached home that you would invest in?

Jared Hope

I have lots of detached homes that were built prior to 1965 but what we're doing now is when they come up for renewal, we're renovating them. I bought them 15 years ago, and now they've lost that wow factor. Maybe they never had the wow factor when I bought it and we've been able to rent it out this whole time, but the tenant profile has changed so much over the last 10 years. Typically, what I find is tenants who rent out the single family detached houses or the single family homes, they're going to stay there up to 10 years. They typically don't turn over all that much. When they do turn over, we have to fix the house because whoever was living in there is not the same kind of profile as what is coming.

Alex McFadyen

This all leads us to our final point, determining what your cash flow is and how to determine that based on all these other factors. Where do you start out of all these things?

Jared Hope

The newer the house you buy the tighter the numbers can be, the older the house you buy, the looser the numbers have to be.

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10 Credit Facts You Need To Know | YVR Real Estate & Mortgage Show Episode 72 | Thrive Mortgage Co.

Tue, 06 Jul 2021 18:45:55 GMT

Everything You Need To Know Surrounding Credit When Buying A Home

Dean Lawton

Stats say the average score is 650. I would say the average score we see is closer to 700. It's good to know that you should have at least a 680 if you want to obtain triple A interest rates from a lender that's going to give you a mortgage. 680 is where your minimum threshold should be. Anything below 680, you are going to be scrutinized and potentially declined.

Deryk Williamson

I talked to a lot of people, especially people that are in their 50s to 70s. They've been around for a long time and they've got equity in their home. Back in the day, if you had a good credit score and you had a reasonable level of income or affordability, you could typically get a mortgage. That's not how it works anymore. A lot of people come in and they have an 880 credit score and they think that they should get a better interest rate than the guy that has a 680 credit score. That is not the case. If you qualify based on income and credit, everybody is essentially offered the exact same rates and products. The main driver in a mortgage application nowadays is income. That's how you're going to see a higher qualification, simply based around that service. Having good credit is more of a requirement these days. For many different reasons, having the best possible credit score is awesome. I think everyone should continue to work at that but having a slightly better credit score than somebody else isn't going to push you further across the line.

Alex McFadyen

The 680 to 900 range is pretty key. There are a few lenders that will offer promotions and things of that nature that we see where the credit score has to be around 750, although that's not the norm. That doesn't limit you from having great options.

Below 680, just touching on that, there's a lot of concern that people can't get a mortgage. I see things online saying if your credit score is under 680, you can't get a mortgage.

With credit, it's crazy how quick you can improve it and get your credit score up.

#5. FACTORS THAT WILL IMPACT YOUR CREDIT

Alex McFadyen

There's five factors impacting credit score.

Length of Credit History - How long have you had the credit?
Are You Using The Credit? - It's great that you have this second credit card, but does it just sit there in your wallet and you never use it? Or do you only use the same credit? Card? It’s an important consideration to the amount based on how much you have available to you to the amount that you're borrowing.
The Different Types of Credit You Hold - Is it for car loans? Or is it for credit cards?
The Frequency Your Credit Is Used - How often do you use your credit? If you're looking to buy a car, just a heads up, you want to be smart about how you're doing it and who you authorize to pull your credit, that's a key.
Payment History - How often are you paying your credit back?

Deryk Williamson

I find a lot of people, when they're trying to re-establish credit, they stop using it. I've actually had people go through a bad situation where they have a bunch of missed payments and stop using credit. That's not how it works. No credit is just as bad as terrible credit because there's nothing for the bank to rely on. There's no history. If your credit score is below par or you don't have credit, oftentimes, they actually won't use your income. If we're really reliant on your income and an application, and that's not an option, you're not going to qualify for what you are pre-approved for.

Dean Lawton

Somebody mentioned it is like a report card, I look at it as a resume. If you're applying for a job that requires five years experience, but you haven't done that job for five years, you're not going to get the job. Look at your credit score as your resume and it has to be current.

#8. KEY TIPS WHEN CHECKING YOUR CREDIT SCORE

In the beginning of the episode around getting a free credit report. This comes down to actually checking your credit report.

Dean Lawton

I have a personal account that I pay, $9 a month through Equifax. I thought that was the most prudent agency to use because that's primarily what most lenders utilize is the Equifax Bureau. I monitor my credit pretty regularly and then I go to redo my mortgage. The score is different with the score that my personal Equifax account provides. It's very rare that it's even 30 points close to each other.

There's a lot of rumors out there as to why but the one that seems to make the most sense is the fact that when you're pulling your credit score for a mortgage, there is a heavy emphasis on utilization on payment history. The algorithm when we're looking at Equifax for the purpose of a mortgage is different than when you're just pulling it for your personal purpose. A bank is going to be far more concerned if you're likely to go into bankruptcy because all your credit accounts are maxed out. They're probably not going to want to give you a mortgage.

Deryk Williamson

The unfortunate side of that is, maybe somebody does have damaged credit and they go on their way. We set up a plan for six months and they're following along on Equifax and they come back to us thinking their credit score is 750. Sure enough, we pull it in, it's still 670, or whatever it might be. That part is really unfortunate, because you're not really going to know the proper score until you go through and get a hard pull from a mortgage broker. Nobody can really wrap their head around the why behind that, obviously, there's a reason. Get your correct score, you'd have to get a proper pull.

#9. BEST PRACTICES TO IMPROVE CREDIT

Alex McFadyen

The first and most important thing is to make sure to pay your balance in full as much as possible. If it's $50 or $500, paying your balance in full is key. That doesn't mean that you can't pay the minimum balance, paying the minimum balance is obviously much better because you're not missing your payment. If you can show that you could borrow and actually pay that back on a monthly basis, that will improve your credit score and that will put you in a much stronger position than the alternative of not paying it or not making the minimum payments.

Deryk Williamson

If you have a $5,000 credit limit, you don't want to be sitting at $4,900. You don't even want to be sitting at $4,000. You want to keep the balance below 50% of the limit at all times. When possible, I recommend that you increase your credit limit to a point where you don't need to utilize that full amount consistently. Just make sure you stay on top of where your balances are at most credit card companies.

Dean Lawton

A lot of people will get like a $20,000 credit card and be like this is way more than I need, I do not need any more products. That could be the case. Having a good mix of credit products is important too. Adding a line of credit as well just shows that you have more banks that are relying on you to pay back more than one product. Having more than one product is important. If you can throw a mix in there with a line of credit, a car loan, or some sort of an installment loan shows that lenders are willing to lend you money. It's a bad thing to rock that up and turn it into debt but having a lot of access to credit is a good thing.

#10. WILL MULTIPLE HARD PULLS DAMAGE MY CREDIT?

Alex McFadyen

The amount of time that you actually apply for credit or the frequency at which you do, there's not a specific number you can only apply. It's a combination of all these factors together. If you are shopping for a car, that's probably one of the times that you want to be the most careful because these guys will keep hitting your credit over and over again. You have to be very careful when you're working with the car dealerships. That's something where we've seen a lot of issues occur.

We hear people say, I checked my credit last year, is that going to be okay? What the lenders are looking for is if you check it five times in a month. When you go and shop for a mortgage on your own, going bank to bank, you're doing not only a credit check but you're doing a hard credit check at every single one. We've seen it and this is one of the first things we look for when we pre-approve or get someone's mortgage. We've seen people that have as much as seven or eight different pulls from different mortgage companies and banks. That is a huge red flag for a lender. That is the first question that they're going to ask us when they look at your credit, unless there's a bankruptcy or something of that nature. Remember, as a mortgage broker, we pull your credit one time to review and we can work with multiple agencies. Is it a bad thing for you to go out and get pre-approved and then have to pull your credit again? No, not a bad thing, but shopping around is a very bad thing and lenders actually look for that.

Dean Lawton

It's a human that's making the lending decision. There's an underwriter that's underwriting for the bank and looking at this credit. If you've pulled your credit 10 times in the last month, the underwriters thinking, what happened? Why would you possibly go and pull your credit score 10 times, something must be wrong.

Deryk Williamson

A lot of people come to us and they want a pre-approval but they don't want us to pull their credit because they think it's going to dramatically damage their credit score. This is not the case. That's not the way the system is built. You have to be able to access your credit to use it. We actually had Julie from Equifax on a podcast and she had mentioned that there's an algorithm that Equifax has. If they see a credit pull from Thrive Mortgage Co. today and then another four months later, and then one from Scotiabank, in that situation it's not going to lump that in as three credit pulls. It actually lumps them all into one because it can read and understand. Don't get caught up in worrying about your credit score dramatically dropping unless you've done what these guys just mentioned and gone to 10 banks first. If you're just going directly to one and you know you're working with one good mortgage company, it'll be fine.

Watch our episode with Julie Kuzmic from Equifax below.

Alex McFadyen

Does that mean that you can't go to TD Bank and then come to us? No, that is not the case. What we're suggesting here is scenarios where people are quite literally going from multiple banks before coming our way. We do lots of second opinions for people, that's not going to hurt you. It's more about abuse of the credit that they're looking for.

Your credit forms such a massive part of lending, it is not talked about. When you're listening to this stuff, make your key notes because here's some really important points.

If you're talking to your bank, and they don't know how to explain this stuff to you, you have some serious issues. That's why people come to us. We're professionals and this is what we do for a living.

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How To Build Your Next Home | YVR Real Estate & Mortgage Show | Podcast Episode 71

Wed, 30 Jun 2021 08:24:03 GMT

What To Know When Building Your Next Home

You’ve heard a lot in the last few weeks about the construction series and we broke it up last week with more current events getting back to the equity piece.

We're going to continue talking about different ways to get into the market and take advantage of the market. If this is your first episode, go back and check out our previous construction based episodes.

If you're more interested in investing, first time buying, or general guidelines, we've got so many different episodes so make sure to check those out.

In today's episode, we have two guests that we actually asked to come back on the show based on all the feedback that we received. Steve Hill and Danny Evans joined us last year, which you can watch below.

Danny talks a lot about what he calls getting a home for free which is basically using a rental income and construction to reduce your costs and build a home at no additional cost. We also had Steve on as one of the first five episodes because he was really strategic in one of his first moves when he bought a home. He bought a home with zero down payment leveraging another property and essentially had his entire mortgage covered while he was living there and gaining equity. These two have a lot of experience with building wealth and construction but more importantly as real estate agents knowing what to look for.

Alex McFadyen

Obviously, one of the things that consistently comes up in our conversations with all sorts of people right now is building a home, more specifically, how do we get started? It's a lot of first time builders that are going through this and we're also finding a lot of real estate agents inquiring as well. The question that always comes up is what do I do? Where do I go? How do I buy a lot?

Danny Evans

When you get people looking at the whole package, you can't just break out any one component. I'll use Fort Langley for an example. My clients were excited because they bought a lot for $100,000, cheaper, but it was right in a main corridor, which is a very busy spot. They were building a beautiful home. They elected to spend another $100,000 on a same size lot, but in a different location where the sale value of that property is probably $500,000 difference. It's really critical that you don't just try to grab a couple of pearls out of this session and say I know everything. If you can work with really good people, and listen, your podcasts are phenomenal. I think if people did listen to them, they would learn a lot.

Deryk Williamson

I've seen a lot of people that when they get involved in building, they look at all the dollars. They look at the cost of the land, build, and the digging. People start to penny pinch and they go for the cheaper lot but when they're buying the existing home, they're not having those thoughts. When people go through that financial process, they are always trying to skim things down because they know you can make good money building a home. They're not really thinking about the big picture.

Steve Hill

They like to buy the end product because they can see, touch, and walk through the house and know exactly what they're buying. The biggest hurdle that we find with a lot of our clients is the unknown for the build and that's what we try to comfort them through it and make it as easy as possible.

Alex McFadyen

It's much different than just buying the home that you're moving into, that you can touch and feel. Even if it is for your family and your home, you do need to understand that investment value and potential but also things like setbacks.

Should I be purchasing in a more rural area? What should I be looking for?

Where do you guys start when it comes to talking to someone about location and what to look for at the beginning?

Danny Evans

One of my favorite mantras is making the house pay for itself. People always say how expensive housing is and I also say how cheap it is. One way it can become cheap is building a house that has a suite or something that you can Airbnb. In combination with zoning, what you're building, and what you can build on that lot, you might want to know what components as well. For example, can it take a basement?

If you're relying on your own knowledge of that, it can be dangerous. Furthermore, if you go into a municipal hall, you need to go in with the details. If you don't go in with the details, they won't be able to magically come up with a formula that you're after. What you'll have to do is get together with a builder who is knowledgeable. Also get a few mentorships from people who have built their homes and ask them what went wrong. Usually what went wrong is they tried to do it all on their own to save money instead of using professionals.

Alex McFadyen

What I'm hearing from you is before you pick a location, understand the specifics around what you want to build and make sure that it suits the location and the cities.

Danny Evans

Another downside is that people overbuild. They overspend and they spend money in the wrong spots. Those are the downsides and those can kill you quickly.

Steve Hill

That's probably a good thing to touch on as well when we're going through the process or trying to coach clients on building. There's no point in having a nice beautiful $5,000 front door and then you go and spend equal or close to the same on your main doors in the garage. No one's going to really pick up on that on the resale. You won’t get your dollars back on it.

Alex McFadyen

In this type of a market or any market where there's scarcity, running short on funds. There's a lot of unique situations right now with building and how construction financing works. Lenders typically hold back enough money to complete your build at all times.

Deryk Williamson

There has to be a good buffer of cash going into the project. The further progress that you make on your build, the bank can then release more money to you to keep things going. A big challenge that some of our clients are seeing is they're having to pre-order flooring and doors and everything you can imagine because of delays through COVID. They're shelling out $100,000 for this material, but that material isn't installed in the house. These clients are running out of money because they've had to pre-order materials. Lenders are doing a progress report and saying the money's not invested in the home yet so we can't give you a drop. A lot of people are actually in positions where they can't get more money from the bank. That material that they purchased adds no value to the lenders in their eyes because it's not affixed to the home. Some people are lucky enough to have additional savings but others are borrowing from family. A lot of people will be going through that right now with COVID.

Danny Evans

Another key component is that the person that's doing the financing has to understand what a build is. You're doing a number of these podcasts and they are critical, because you guys understand it. One of the big warning issues that I put out to all people is that they'll go to the bank and the person that's advising at the bank has never built a new home and has never been involved in it. They're lost as far as the financing. One of the first things to do is make sure the financial advisor that you're talking to about your financing and your mortgage understands the process.

Deryk Williamson

Something that we've been doing is getting people approved for larger mortgages than they actually need. There is a buffer built in, or if they have X amount of dollars of downpayment, we're only using 75% of that so that they have a buffer set aside. Not everyone's in that situation but if you can do that, it helps.

Alex McFadyen

People need to be smart about the type of lending they're looking at and not restrict themselves just to the banks. This is due to the rigidness of a lot of the banks in regards to the draw schedules and so forth. They have the cash or they have the capital with some of the private lenders. Alternate and construction lenders just understand it better. They're not under these corporate guidelines and structures where they can look at it. They can be a lot more flexible to people. A little bit of cost upfront but as Deryk mentioned, long term it will save you the money. You can get access to the funds that you need.

If anybody wants to reach out to you guys, just search up Steve Hill, search up Danny Evans on Google.

If you guys have any more questions about buying lots, construction, financing, and that kind of stuff, make sure to check out these gentlemen and reach out. Their wealth of knowledge and information in this space will allow them to take very good care of you once we get your financing in place.

Danny Evans' website

https://dannyevans.ca/

Steve Hill's website

https://royallepagelangley.com/agent/steve-hill/

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Investing In Real Estate Under The Age of 30 | YVR Real Estate & Mortgage Show | Podcast Episode 70

Sat, 26 Jun 2021 05:03:29 GMT

Key Strategies For Investors Under The Age of 30

This was a fantastic conversation with someone that we've really connected with, Jared Hope.

You're going to love this episode.

The amount of experience this guy has from owning hundreds of properties, to a real estate management company, to almost losing everything and going into bankruptcy to reestablishing himself and basically figuring things out. He's got a lot of information and a lot of education.

This will be actually part of a series with Jared, this is the first part we're going to be talking about today, tailoring our conversation around people under 30 years old.

How do I even get into real estate investing if I can't own a home?

How do I buy the next property that's going to make me wealthy in 10-15 years? Play the game that way. Your next two or three purchases should be with the mentality of I'm going to try to run this as a business to make me wealthy.

Back in 2003, I had zero interest in owning real estate. I was of the mindset of the poor dad, if you reference Rich Dad, Poor Dad. My wife was of the mindset of a rich dad. Her parents were entrepreneurs, they were grain farmers and had this gas station. Krista was taught to work for yourself and be your own boss, be a business owner. I was taught to go to school and get your grades and go work for the man. What I started to realize is that no companies have pensions anymore.

We went to this real estate course. We couldn't even afford the $200 a month membership fee. Six months later, we bought our first house. That year, we bought three. The next year, we bought eight. The next year, we bought 64. The next year, we bought 32. We just kept on buying. The mistakes that we made were so unbelievable.

What I realized now is that buying in a hot market, everyone looks like a genius. That's part of the problem that we're seeing right now in this economy. A rookie investor could be 50 years old but there's all these new investors getting on having some early success. They're thinking that they're a superstar because they've made $100,000 in the last two years. In a hot market, everyone looks like a genius, but in a down market everyone looks like a moron.

In 2008, we had that financial recession and all of a sudden, my rents dropped 20-25%. I started to realize I was playing the game wrong. I was following advice from people that didn't know how to play the game. I was listening to people up on stage who I thought were smart. When you actually look behind the scenes, they only had one or two properties or they were getting paid to be on stage. I'm not blaming anybody but this is just the way the situation was. We went off and built all this real estate that turned out to blow up in our faces back in 2008. Come 2010, we had to restructure everything to the point we're at to make my portfolio recession proof. In 2016, we hit another recession in Alberta and we smoked through it. I made more money in 2016-2018 than I ever have before in my life in the middle of a recession in Alberta. I didn't restructure our portfolio to make us recession proof, which was awesome. Then the pandemic hit and I'm like, I'm going to go broke. I have 100 plus properties, I'm going to get one of these tenants that won't pay rent, I'm screwed. That was all the media saying you don't have to pay rent, no rent increases, and so on. We got through the pandemic relatively smoothly. What I've realized is that the way we restructured our portfolio in 2010, we changed the way the game was being played. It's made our portfolio pandemic proof. What people need to realize, which I didn't realize back then is you don't need 100 properties. What if you could do it in 10? What if you could buy one a year for the next eight years and rinse and repeat for the next eight years. 16 years later, you have 26 properties that's doing $45,000 a month of cash flow and your quality of life is through the roof. Your stress levels are way down here.

These big groups that are teaching all this stuff on YouTube, and these non-educated investors, are giving the wrong advice. This is why we created Tilt. We created Tilt Property Group in 2010 but we officially rebranded as Tilt Property Group in 2017. It's a one stop shop for real estate investors. I play the game every single day and that's the biggest thing about our program. I'm trying to buy a house right now. So far this year, I bought 12 houses. Go talk to any other investor or coach like me, they're not as active. Odds are they're not buying anything.

Alex McFadyen

Just like you, my dad was blue collar and worked in a mill his entire life and mom stayed at home to take care of us. The mindset wasn't necessarily, let's acquire properties. It was like let's pay off our mortgage. I think the vast majority of people would agree that when they see someone else who made some money off some appreciation, it strikes their attention.

Jared Hope

I don't actually have a problem with buying a house and paying it off. I have no issue with that. I'm not trying to convince anybody to be a real estate investor. If you have a little bit of an interest in it, at 25 years old all you know is your last 25 years of life. You actually don't know what the journey is going to be. So why not?

If you're buying your first property, why not entertain the idea of what if this is not an asset. It's a liability in the first 10-15 years because you're just paying off interest and you're fixing it. It's just going to cost you money, which is fine. What if 10 years from now, you're 35 years old, now you want to get into real estate. Now that first house, you played the game for 10 years all wrong. I think that the way the game should be played is to go front end load those mutual's and rsps. Banks like those for lending because they look at that as security, they look at that as protection, they're going to qualify you because you have high rsps. Go buy a house and start filling the funnel over here and have investments that get high cash flow that you can then cash out and then go acquire more real estate.

Dean Lawton

What hit home for me is just that business mindset. Even with your primary residence, even if that is your only home, looking at that as a business. I think that's where a lot of people do go wrong, because they don't look at that as an asset that can continue to grow and leverage from, even if that is the home forever, which is very unlikely that would be your forever home. If that is your forever home, what you can do with that appreciation and that equity, that shift of mindset of getting in and getting that business minded approach is where a lot of our clients don't think that way. A lot of them are in great jobs and are making great money with an employer. They have that employee mindset, which is not a bad thing. When you take that into the real estate side, that's where they get a closed mindset.

Jared Hope

This is exactly why we're launching our under 30 program. I was talking to a girl, she's 21 years old. Her name is Morgan. Krista’s best friend calls me up and she asks me to talk to her daughter because she wants to get into real estate investing. She doesn't know if she wants to be a realtor, property manager, or own. I'm sitting there chatting with Morgan and on the zoom call I'm explaining all the benefits of real estate and how I play the game. I closed the zoom call with Morgan and I turned to my wife and said I'm going to start an under 30 program. These kids do not understand how real estate can really leverage things out. Kids under the age of 30, they don't really understand how to run a business, even people under the age of 50 don't understand how to run a business. I want to teach them. I'm going to teach them the power of leverage and teach them how not to be leveraged out. I'm going to teach them because that's another mistake people make when they keep on refinancing their primary residence. It's okay to play the game at the start like that but at some point in time, you have to get away from it. I'm going to teach those under 30, how to attract money, how to find the right property that's going to work, how to do joint venture partners and what types of properties work. The truth is that they're not being taught that. Their parents are people who are just paying off their debt for the next 25-30 years. They believe that real estate is their asset. One piece of real estate, that's a totally cool mindset, however, there might be a different way to play it. I want to educate these people.

Dean Lawton

That's cool to hear. That generation is so fixated on being an entrepreneur. With the older generation, that wasn't the case. We all had blue collar parents who just beat the hammer every day and went to work. Now, it's so cool to be an entrepreneur, but they're going into it close minded and not having that education that you're providing, which is second to none.

Alex McFadyen

In your first couple years, you acquired a lot of properties. The first thing we need to explain to people is the climate of lending was very different. Taking that approach today is very different, it's very different from what it was before. The second thing I heard you say is a lot of people don't need to own 50 properties. I would agree with that. Getting to five could change your life.

Jared Hope

If you buy five properties over the next five years, and those five properties cashflow $500 a month, that's $2,500 a month. In 25 years, let's just say rents are the same, you're now making $15,000 a month of revenue, they will change your life. If you start the game at 30 years old or at 25 years old, when you're 50-55 years old, doing $15,000 a month and you have $3 million worth of assets, it will change your life. In 2003, the game was different, I could walk into a bank and the banks were just handing out mortgages like crazy. I didn't go acquire 100 properties in my own name, I got 13 in my own name. I ran out of money and then I had to build with investors. From 13 to 120, I have investors which I've now bought out. I've bought the houses in my own name, I've raised something like $28 million of capital, I've done $140 million worth of renovations, I've played every aspect of this game. I look at getting to 13 for me back in 2003 is probably the equivalent of getting two to four today.

The big difference between me and anyone else is I'm still playing the game today. All these other coaches and investors, they're not playing the game today. The rules are different. Tenant profiles are different, properties are different, areas are different, and understanding the markets are different. What I was doing 15 years ago does not work today.

Alex McFadyen

Let's go back to the under 30 crowd because we want to focus our energies today on those people who are listening and buying their first or second investment, to be clear, you don't have to be under 30. A lot of people are buying their first home, property, or investment in that younger age category. One of the biggest barriers is them not having the experience. I just got to get into my first home. Only recently have I seen a lot more younger people open their minds to this idea because of entrepreneurship and business ownership being bigger. Most of the people we're talking to that are interested in investments are a little bit later in life. So one of the things that we want to do is open ideas in the minds of younger individuals and say you can do this, you can get into the market. Why do you think it's a really good idea for younger folks to be starting and having that mindset right now? What are some of the things and recommendations that you're making immediately to those folks?

Jared Hope

Great question. If I was 25 years old again, what would I do? I would house hack. I would buy a house for 5% because you have the ability to do it. Buy a half a million dollar house and come up with $25,000. I would borrow the money from my dad, I would go get a job and save, sell my car, whatever it took. I would live in that house and have a couple of roommates because I'm 25 and have no kids. I can pack light. It's pretty easy to pick up and move and then move a year later, but keep the house. You can do that two or three times. You can actually acquire your first few houses with very little down. When I go to buy a house, I have to put 20% down whereas a first time investor can actually put $25,000 down. They can build a bigger asset base. That's how I would play the game. If I was starting out and I didn't have any money or equity and I was fearful, I'd rather put that money towards something that I own. That's what we did.

We bought our first house in Edmonton, we couldn't afford anything, we were broke. It's not like I started this game with a million dollars, we legit had $15,000 to our name. When we bought our first house for around $147,000 I had to borrow half of the down payment, we put 10% down. That's all we were allowed back then. I had to borrow from my dad. Krista owned a condo with her mom that they sold and Krista’s half was $10,000 of the profit and her mom made the same amount. That's how we bought our first house. It was a house with a basement suite. My mortgage payment was $847 a month. We rented out the basement for $550 and we took on a roommate for $300, we were living for free. We did that for two years where the house appreciated to $300,000. I refinanced it then bought three more properties and moved out of that one. That's how the game started.

Everyone always says the market is too hot, so fear stops them from getting in or greed makes them jump in. I look at the market right now and I actually think the market is probably one of the best markets to get started.

My first mortgage was around 7%. Now you start looking at what you're coming out of the pandemic, you look at GDP growth, you look at activity in the market, you look at the travel industry, everyone's going to be dumping money and dumping opportunities back into the economy to make it pop. Then you factor in interest rates and there's just a massive opportunity right now all over the country. Some are a little bit hotter than others. But there's still opportunity.

Alex McFadyen

Opportunities are everywhere, you just have to be looking for it. Be present, be available, and be right to do so.

We had a gentleman actually on our show and his parents set up a line of credit on their home. The real estate agent that he was working with helped them purchase a house that had two basement suites and a coach home. He literally rented out both suites and the coach home and he rented out a room in his house. He wasn't only living there for free but he was being paid to live in that home. He lived in that home for a number of years, refinanced that and purchased another property. He eventually sold it and built a house, which is one that he's made a bunch of money on.

We got a couple episodes about housing hacks that we talked about. One of the things that we talked about was what you said, which is getting to do the 5%. You don't have to be a first time buyer to do 5% you just have to be moving into the home. You just have to qualify for it. Rent out that second room, put somebody in there and get them to help you own that.

Kosi Stobbs was one of our guests. He came on and he talked about how he did that. We've got a lot of people who said the exact same thing.

Jared Hope

I have a client. She just bought her third property. She's been with us for a year and a half and she came to us. She was living with her mom, just out of town in Edmonton. She bought this house with a legal basement suite. She bought it and lived downstairs, rented out upstairs, and did that for about eight months. She bought another one and moved to that one. She kept this one and moved to that one. Now she's just bought her third with 20% down. She bought a cabin on the lake, which is where she wants to go back to. These two properties are cash flowing $1,500 a month and it's in Edmonton. Cash flow is a lot higher in Alberta than BC. These two properties are now helping her offset the debt and letting her make some good income. Now she's bought this property where she's able to acquire a million dollars of assets for $50,000. Her game is that, she's just gonna hang on to these for eight to 10 years. She will rinse and repeat that model over and over again. She legit lived on a couch.

If you can make a million dollars, would you not live in boxes? For six months? In eight months? For 10 months?

She will make a million dollars from living out of boxes for one year. Someone who is aged 50 could play this game too. It's just a little bit harder as you get older. It's just a great concept. It's a great way to play the game, as long as you can keep on qualifying.

Alex McFadyen

When you said that right there, I think we just want to focus this around somebody who's young and has that ability. If you're at a different stage of your life, or a different point, there's still an opportunity, just different opportunities

Dean Lawton

We have a ton of clients that come to us with expectations to buy that $500,000 home or whatever the price is, and they don't qualify. Their job doesn't allow them to qualify, even with 5% down. It's just not going to happen for them. What's your advice to somebody that's so keen on getting into this industry, but they just don't have that income bandwidth to get them into the market to actually buy a product?

Jared Hope

Hire someone who can show you how. I bought 35 properties with no money down.

There's something called agreement for sale. I have transacted 30 to 40 properties agreeing for sale where I might give the person $10K. They hold the mortgage for me for the next 10 or 12 years. Legally I own it and technically, I own it all. I have to make all the payments. There's ways to buy real estate with no money, or little to no money down.

Joint ventures raise capital. Whether it's on your first property or your 10th property, at some point in time every investor runs out of money.

Raise capital, go to your parents and say I got a business proposition for you. Let's go buy this house. You put the downpayment and you cosign for me, we're going to be partners. In five years, we're going to sell that house, I'm going to give you all your money back. Plus, I'm going to give you 50% of the profit and appreciation. I'm going to take 50%.

I was in the gym the other day with my trainer. I'm working out with Luke, a phenomenal kid, 30 years old. I'm working with Luke and ask, what's going on? Are you ever gonna grow up? He responds, “what are you talking about?” What are you going to get out of the basement? He's renting a basement right now for $1,000 bucks and he said he can't afford it. I said, I'll make you a deal. Here's the deal. It's called a hassle free landlord. Let's go buy a townhouse for half a million dollars, you go buy it for 5%, he makes about $80,000 a year for sure. So I said, you go qualify for the mortgage and I will put $25,000 into your bank account right now. Three months later, because banks want to see the money in your account, we'll put the money in your account right now and we'll do a letter of intent. This is so you can't take that money out, we'll put it in your account, you go get the mortgage, and now I am a partner in that house. He's like, what's the benefit to me? You're getting a house for free in five years. Over the next five years, you're going to cash me out, I'm going to get my original investment back, I'm going to get half the profit and half the appreciation, but so are you. At that point in time, you can refinance the house to pay me out or you can sell the house to pay me out and go buy another one. I would do this deal all day long with first time investors who have a contract, screen them and get credit checks that protects my interest. 10 years from now or five years from now when we cash out, I'm going to make hundreds of thousands of dollars off of that money. It's very little risk because they're going to pay the mortgage, they're going to clean it, they're going to cut the yard, there's no tenants to worry about. There's no rent to manage. I just got to tie up $25,000.

What would I say to these people, if you really want to do it? Find a way and if you can't find a way, hire someone who can teach you how to do it. I talked to somebody the other day, from Ontario. Our under 30 program is $9,000. It's a nine month program. She's like, it's too much money. I can't afford it. She's sitting there trying to save this money at $15,000 versus spending nine grand to go learn how to buy the house. I could have shown her in one conversation how to buy a house. That $9,000 I would have quadrupled the value of that, but the mindset of those under 30, I got to hoard my money because they're still thinking about saving to get rich. It's impossible. Can someone teach you how to buy a house with no money down and how to raise $100,000? I went up to my dad when I first started and my dad told me no. I went up to my Dad and said I got this idea. I ran out of money. I went to my dad and I brought up my whiteboard. I'm drawing all these houses, and I'm crossing things out and running numbers down. It was the best sales presentation ever. My dad comes back to me, he's like, no because I've seen 20% interest, it’s too risky. If I would have stopped at that point in time, I would not be living in a $6 million house on the lake, I would not have my boat, I would not be living in the Okanagan, I'd not be working two hours a week in my company. I just wouldn't have done it, I would have stopped, I would have gone back working for the man. I look back at that experience, which is kind of the same thing that you're saying.

You either want it bad enough or you don't. It's a select few that sit there and say, I want it and I'm willing to do the work. I'm willing to be misunderstood. There's people that are going to be sitting there saying don't do it. Those are the people that you just tune out. Don't listen to them and start hanging out with the people that do want you to have success. That's your mortgage brokers who understand the game who actually have your best interest. That's your real interest, to understand the game. Stay away from the big groups, those big groups are not like minded people. You go to a room with 500 people. Good luck finding someone who you can resonate with. They're all there for the same thing, in my opinion, and I've been in those big rooms.

Back to your question and this has many answers to your question for sure. What do I say to those people who just can't do it or don't want to do this or are having a hard time finding a way? Because 10 years later, you'll be grateful you did.

Alex McFadyen

I tell people the story all the time, I still own my first condo. At the time, it probably would have rented out for $900 bucks. I could rent it out today for $1,900. This is nine years or 10 years later for that same property. If I keep this property for another 10 years, I'm just getting more and more cash flow. Having that mindset of getting in and partnering, using the 5% down, these types of things are key. Are there any other tips or feedback that you have here for someone who wants to know how to get in? What should I do? What do I look for? Any thoughts on the actual property types?

Jared Hope

Buying real estate's easy but getting your head around buying is hard. If someone wants to get into real estate, what they'll do is they'll just start reading every real estate book out there. They'll start following YouTube and get the free stuff and they'll start listening to every podcast, there's a point where you actually take on too much information. Everyone you talk to is guiding you in a different direction. You have to be careful with the advice you get.

The feedback I would give is I would be spending my time on personal growth and personal development. Rich Dad Poor Dad, The Millionaire Next Door, The Big Leap, these are all books that can help you. The Big Leap is one of the best books I've read in my life. I've actually read that book a number of times. It's about your upper limit of thinking. We all have upper limit thinking. It's the upper limit of thinking that prevents us from actually achieving a result because we actually started listening to the naysayers more than we actually listened to the yay sayers. As far as the type of property, there's so many different types of property. The mistake people make is they think they have to buy in their own backyard. Obviously you want to buy in your backyard as far as an investment but you don't have to buy in Vancouver for an investment. You look at oil, you look at GDP, you look at the rental tenant act. The tenant act in Alberta is the best in the country because I can always rent once a year unlimited. Year over year your taxes go up, your interest rates go up, your property expenses go up, and labor goes up. Inflation is going to push costs up but you're still not raising your rent. Three years later, you haven't raised rent 2%. You just missed out on all those rent increases. This is actually going to hurt your lending power as you grow. You want to make sure that you're playing the game properly. As far as real estate, I'm a big believer of two for the price of one, which means two suites for one house. Suited houses, duplexes, or triplexes for renting out rooms. If you're young, rent out rooms because you're going to make a pile of money in 10 years. Have iron tight ironclad agreements with these people that if you don't like him, you can kick them out. Take security deposits that hold the course and run it like a business because things go sideways. I wouldn’t just wouldn't rent out to anybody. Buying real estate's easy, I keep on saying that, it's just do you really want to do it? If you do, go find someone who knows what they're doing, and they'll guide you through.

Alex McFadyen

We talked to people all the time. From a lending perspective, you buy one house, but you have two sources of rent or three sources of rent. That's key from our perspective, because in your mind, maybe you've got two doors but the lender thinks you only have one house which is fantastic. That helps you out long term. Shift your mind from scarcity to where's the opportunity? I can get more, but where is it? You just have to figure out where it is and find it.

The second thing is, a guy like you is willing to share all your ideas and strategies with people that come in. Dean and I, as partners, pay for a coach to help us in our business, not because we can't figure it out but because it makes so much more sense to talk to someone who's already been there to help guide us and eliminate a lot of the mistakes that he's already made. He's the one who recommended the big leap to us. We were familiar with that book.

The third piece is just the confidence. The mindset of I can do this, I can get into my first property. Learn how to house hack because it's okay to have a roommate for a couple months, or a year or whatever. Look at those opportunities. Those are three key things.

Can you talk to us a little bit more about this program? Who is it for and how can they reach out to you?

Jared Hope

There's I don't believe in refinancing your property and leveraging it out to the nines and adding all this stress. I think there's a different way to play the game that can keep balance and structure while leveraging out just a little bit and buying different properties that are going to increase your cash flow.

We started the coaching program in 2017. We started with a small group and it was the first evolution or the first run of the coaching program. I had six couples at a table and we used to meet once a month. I looked at those six couples at the table and we met for eight months. I kind of got away from it because we got into one on one coaching after that, which we still do one on one coaching. We're going to go back to the drawing board and take these under 30 investors who don't like their job or they want more opportunity. They want some wealth or they want some pension that they're just not going to get. We're going to take them and teach them how to understand business, how to understand cycles, how to raise capital, and how to do presentations. Once a month, there's a group call with everybody from all over the country. It's a three hour group call. We've had all kinds of coaches that have real world experience. We've spent hundreds of thousands of dollars on coaching. We're gonna take everything we've learned over the last 10 plus years of our personal development and give it to these under 30 kids. Once a month is going to be a three hour group call with guest speakers. We're going to have our topics, we're going to have our agenda, and we're going to walk them through the process. They're going to have small groups, we call them pods. So you're going to have pods of four where they're going to have assignments and they're going to have how to do presentations, how to give feedback, and how to ask. We're going to have a presentation, for example, they're going to have to do and then they're going to get real time feedback. We're going to have the main group and then we're going to have pods. These pods are going to teach them how to get feedback to make them really sharp and crisp when they go to attract money, when they go to deal with a mortgage broker, when they go to deal with their dad, or deal with their tenants.

To find out more about Jared and Krista’s coaching program, or to get into touch with them, follow the links below!

Their website!

www.jkcoaching.ca

Contact them directly!

www.jkcoaching.ca/contact

Find them on Instagram & Facebook!

instagram.com/jaredandkrista

facebook.com/jaredandkrista

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First Responder's Program | Thrive Mortgage

Thu, 03 Jun 2021 20:00:06 GMT

Are you a first responder?

Here are some benefits for your next mortgage!

We are here today with Kristy Masaro, Real Estate Professional with Royal LePage - Wolstencroft, to bring you a First Responder's Program!

This program is being offered by two major banks and feature the following bonuses:

- Lower Incentivized Rates

- Cash Back On Completion

- Funds Towards Legal Fee's

What kind of mortgages?

- Must be owner occupied properties

- Purchases

- Refinances

- Transfers

This program starts June 1, 2021

Who can take part in this program?

- Law Enforcement

- Paramedics

- Firefighters

- Correctional Services

- Border Services

- Search & Rescue

- Doctors

- Nurses

If you have any questions feel free to reach out and we'll help you!

Have more questions? Get ahold of us!

We're on Instagram!

instagram.com/thrivemortgageco

instagram.com/theyvrremoshow

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facebook.com/thrivemortgageco

How to Reach US! ��

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The YVR REMO Show Episode 59 - Down Payment Strategies You Need To Know

Tue, 11 May 2021 03:29:42 GMT

Everything You Need To Know About Down Payments!

We're going to do a broad overview on all the different ways to get down payment.

1) GIFTING

What is a gift of money and what isn't a gift?

A lot of people are looking at an early inheritance. Typically an inheritance is when someone passes away and funds are passed down to their kids or family members. We see a lot of people help their kids with an early inheritance take advantage of that, helping them get into the market.

Gifting is the easiest way to structure a down payment from a regulation standpoint. It does have to be from immediate family but on exceptions, for example, it can come from an aunt or grandpa. The gift or the person giving the funds has to sign a gift letter noting that it is not to be repaid. That's part of the verification process for lenders.

Let’s use an example. Your mom gave you $50,000, there are a number of lenders that will actually ask for your mother's bank statement to confirm that she actually had those funds in a legitimate way.

This is because of the anti-money laundering act.

We've seen people that are buying with parents/grandparents and it's a two dwelling property. There's a suite in the house that the parents are going to occupy but you're essentially using the parents equity from their sale. The kids would essentially move into that property with their mortgage, so they would be paying all the debt and the parents are living mortgage free.

2) EQUITY

Equity is a very common way to obtain a downpayment. You can borrow up to 80% of the value of that home, assuming that you income qualify for it.

There's likely an existing mortgage on that property. You always have to keep in mind that if you can borrow 80%, subtract what's already lent out on that property and then the difference is what you're going to be able to utilize for a downpayment.

If you're taking equity out of a home and you are looking at buying a home at the same time, you have to tell that lender that you are going to own another property. It's very important to structure that correctly.

How long do you have to own a home before you can use the equity for down payment?

There's not any set amount of time. There are certain lenders that don't have time restrictions on how long you've had to own the home.

It depends on the value or the appraised value.

There's no limitations on being able to do it as long as you can qualify. There are lenders that will want you to be in that home for a minimum of 12 months before you can refinance, so if that is your goal, knowing how the lender looks at that policy is very important.

Don't assume just because you have equity in your home that you can access it. You have to qualify just like you're purchasing a property. If you're trying to increase your mortgage, you have to go through the exact same application process as a purchase.

3) USING RRSPs

Using your RRSPs typically is reserved for Canadian citizens who are looking to buy their first home. You can pull money from an RRSP which is an investment fund for the purpose of down payment without paying tax on it.

$35,000 is the maximum that you can use from RRSPs for a down payment. It has to have been on the account for at least 90 days.

More than four years since you've owned a home and/or being divorced also qualifies the same as the first-time buyers to use the RRSP.

Number one question I get around this program is when do I have to pay it back? 15 years is the rule.

4) PERSONAL SAVINGS

Personal savings is the most common source of downpayment with a pretty in depth verification process. We have to prove via 90 day bank saving history, lenders want to see a full transaction history.

We see these statements come back a lot and people have blacked out sections of what they've purchased or how much money they've withdrawn. Lenders need to know every single thing that's happened within that account for a full 90 days including any large deposits typically over $1,000. They'll ask for proof of where that came from.

5) COMPANY FUNDS

This is for self-employed individuals. If you own your own company and you have money in your corporate bank accounts, you can typically use that money for a down payment.

If you're drawing a large sum of money from your company, it's typically going to trigger a personal tax bill. There are some ways to set it up as loans but it's usually very short term. A lot of lenders will actually want to see the funds run from your company account to your personal account.

They'll want to verify the transfer.

6) BORROWED FUNDS

Can you use other money for borrowed funds for the down payment? There’s a two part answer to this question.

If we're talking about lines of credit you have to ask, is it a home equity line of credit?

Is the line of credit from your home?

Is it an unsecured line of credit?

The one from your home is very easy to use, the one that is unsecured, less so for a variety of reasons. Usually, it's just qualification. There are programs that will allow you unsecured, however, it'll reduce your qualification dramatically. The only one that is unsecured that we commonly see is for medical lines of credit, doctors and people in that field. We've seen lenders make very fair exceptions for those types of situations.

TYPES OF DOWN PAYMENT YOU CAN’T USE

1) CASH UNDER THE BED

Strangely enough, some people do keep cash. They take money out of the bank when they get paid and they put it under their bed.

Do not do that.

If you're going to do that, put it back in your account because it has to sit in there for 90 days before you can use it. People that are in a line of work where you receive cash tips, put them in the bank.

2) ALTERNATIVE INVESTMENTS

A big one right now, especially since 2020 when COVID really changed the financial markets, we're seeing alternate sources of investment in trading cards & jewelry. Basically ways to trade for money right now. One of those ways is Bitcoin. At this point right now, it's still unregulated and the banks just don't want to use that for the purpose of down payment yet. We're not seeing them accept Bitcoin or any cryptocurrency.

The reason that banks won't use it is because of where it's held. It's not like a bank account that you can typically track a transactional history.

It can't be tracked.

3) PAYPAL ACCOUNTS

We've had some issues using PayPal accounts, unless it's verified through your bank statement. It's difficult to verify. We've seen a lot of people create side jobs while they're off work. They're receiving all these funds from PayPal because of this new business. Get that into your bank account as soon as you can.

Have more questions? Get ahold of us!

We're on Instagram!

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How to Reach US! ��

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We Are Hiring!

Wed, 28 Apr 2021 17:46:12 GMT

We Are Hiring For A Residential Mortgage Underwriter

Mortgage Underwriter

Vancouver, BC

Remote

Full-time, Temporary, Contract

Top Mortgage Broker with Dominion Lending Centres

If you consider yourself to be a rock-star underwriter we would like to have a conversation with you!

The underwriter role is a key member of our team and extremely valuable to our high touch process.

This role will manage deal placement and conditions for a minimum of 15 to 20 LIVE files each month with a goal to manage 25-30 LIVE files each month.

Our team has a very detail-oriented system that requires our underwriters to work on specific aspects of each file while being supported by a minimum of 2 other team members at all times.

The following attributes are required:

Mortgage licensing in BC is required
Require a minimum of 3 years of experience as a lender or mortgage broker underwriter. (References Needed)
Handle all underwriting and lender communication for a high producing mortgage team
Ability to communicate effectively with mortgage clients on conditions required.
Knowledge of underwriting & lender policies
Expertise in alternative, private and construction financing would be an asset
Strong understanding of technology
Able to adapt to change
Strong work ethic
Detail-oriented
Strong task & time management
Able to handle administrative duties in an organized, efficient, and accurate manner
A team player with strong interpersonal skills
Willing to research mortgage-related topics and present in a concise manner

Additional:

Flexibility to work from home
Opportunity to earn an additional performance bonus

If you have less experience but are eager to learn and have a "get it done" attitude let's talk!

Contract length: 12 months

Job Types: Full-time, Contract

Additional pay:

Bonus pay
Commission pay

Benefits:

Paid time off
Work from home

Schedule:

Monday to Friday
Overtime

Experience:

Mortgage Underwriting: 3 years (Required)

Work remotely:

How to Reach US! ��

Call 604.398.5575 or Email us!

The YVR REMO Show Podcast Episode 62 - Bank Of Canada's Announcement Explained

Tue, 27 Apr 2021 12:35:17 GMT

Why does the Bank of Canada make several announcements per year and how does it affect your mortgage?

We're going to help you understand what was brought up recently and summarize key details of the announcement.

Should you be worried about interest rates? What should you do regarding real estate? Tune in to our episode to find out!

Alex McFadyen

The Bank of Canada recently had an announcement. This isn't something unreasonable because the bank of Canada does announcements around eight times a year. This is where they look at policy changes, adjusting interest rates, and a variety of other factors.

What's notable about the Bank of Canada's most recent announcement is what they said about when they might make potential changes. It's starting to make waves among the industry, among consumers, among businesses trying to understand what it all means.

We're not going to try and break down everything but the goal here today is try to decipher a little bit about what they're talking about, what they're suggesting, and what you should continue doing with your mortgage.

Dean Lawton

The big takeaways for me was just the fact that they have changed their prediction on when they potentially will raise rates and the overnight lending rate is what we're talking about here.

For pretty much the entire pandemic, we've been hearing about towards the end of 2023 is when we could start to see a correction and start to get the rates going back up again. They've changed that. They've adjusted it towards the end of 2022 or potentially earlier. They could start to look at raising rates as well. Bumping it up by a full year is definitely going to cause some confusion. That's primarily the big takeaway. They've again made a change on their bond buyback. They're going to be buying a lot less than what they have been. They went from 4 billion to 3 billion on the bond buyback.

Deryk Williamson

People would read or hear this and it might cause a sense of panic and urgency if you're in a variable or a line of credit product. Keep in mind that these are predictions and predictions can change. This is all based on the first quarter of 2021. Canada's growth is actually looking pretty well. There are a lot of drivers behind that. I know real estate is a big component across the country, real estate is absolutely booming since COVID happened for multiple reasons that we've talked about before. These types of things could change what we're seeing again, and the adjustments in interest rates could be pushed out even further. We just don't know yet.

Dean Lawton

One thing on this second and third wave of lockdowns and seeing now that we are in another lockdown, especially in Ontario, it's even worse than it was when we officially locked down the first time. Everything is closed. The one thing I noticed in another article was that the second wave and the third wave didn't have anywhere near the negative impact that the first wave had. The thought of going into another lockdown and fear of things changing and rates going down again, because of economic issues, we were not seeing that this time. That was a big takeaway. I've seen from all of this that there isn't really much fear from the economy with these other lockdowns, which is a little surprising.

Alex McFadyen

I think there's a few things to take away based on some information that's leaked out in the last few days about this.

Who does it impact?

What is the communication outside?

What are people hearing?

What are people taking from it?

A lot of people take this as rates are going up today, or they're going up really quickly.

Should you lock in my mortgage?

Should you stop buying homes?

Should you be concerned about your budget and so forth?

We have to look at that first and foremost and temper our feelings and expectations. One of the things that we talk about to our clients all the time is trying not to be emotional in our decision making and really look at it from an analytical standpoint. Look at the dollars and look at the situation. Perfect example is that there are some projections suggesting that we are seeing greater anticipation of growth because of inflation and real estate because of some markets doing really well. The flip side of that is there are still record job losses. We're now just entering the third wave in the lockdown. A lot of this information that's being presented was from previous data for months in the past before we hit this new lockdown and before we hit this new wave.

Going into April and May when we're back in another little bit of a lockdown, what does that look like? If things don't continue on at this pace, do the projections get adjusted?

It's too early to tell but that was a very interesting announcement because it is a little bit different one than what they previously suggested. Any thoughts on that guys?

Dean Lawton

I've always found that the government will make these types of announcements. They're usually a lot earlier. The fact that they've been so transparent in the fact that it is way out in the end of 2023 was so new, a refreshing messaging that we've had from the government, which we weren't used to. This feels like a little bit back to the normal messaging.

Deryk Williamson

We're in a position where our government's trying to slow housing. We saw a potential stress test. When you hear about a big federal mortgage regulation adjustment, you think it's catastrophic and it's going to change the market. When you dig into the numbers, it's not huge, but I think it's more of a mental block when people see that. With the new potential stress test and maybe seeing rates going up, those two things could change a lot of people's minds on whether they should be buying.

Alex McFadyen

I think the point that you're making is a lot of what they're announcing, although it isn't a dramatic change, it gets people talking and thinking. It gets people doing one of two things, they're either going to rush right away to make a decision or they're going to hold off. We've certainly seen that already. A good majority of the real estate agents that I talked to don't fully grasp who it will or will not impact again. They probably don't know their clients finances from that perspective. That can mess with the way that they're thinking too. So again, that's the media impact, and it's probably highly intentional.

What should you be looking at doing and what shouldn't you be looking at doing?

We talked a little bit about what that means if the bank is projecting interest rates to adjust in 2022 vs. 2023. The first thing that happens is you get emails, texts, and phone calls saying should I lock in my variable rate right now?

If you want to know a little bit more about why you should be looking a little bit more long term, what are your responses to that?

Dean Lawton

I personally don't think there's any reason to lock in at this point in time. It's only an early prediction. Seeing these experts contradict, I still think that we're on track for the end of 2023. My opinion on this has not changed. I'm still very much pushing a variable rate for a number of reasons, the fact that the spread is bigger than we've seen in a lot of years. What I mean by that is the variable rate today for a five year variable compared to a five year fixed with the same bank, it's a pretty big spread. It's at least a half percent difference. We're talking potentially thousands of dollars over the course of those two years in savings. It just doesn't make any sense to change the mindset there. I'm very much thinking the same way as I did before this announcement.

Deryk Williamson

1.4% interest rates compared to a five year fixed at 2.3% or 2.4%, it's pretty close to a 1% difference between those two products. If you're sitting at a 1.4% and you go to lock in, you have to keep in mind that you're not locking into the 1.4%. You're locking in at whatever fixed rate the bank is offering you. They have different term options. A big part of that plays into this is let's say you ride out the 1.4% and you get two years out of that. When rates start to rise, nobody holds a crystal ball, but it's probably not going to be a 1% rate hike, it's probably going to be a .25% increment hike which is going to bring you from 1.4% to 1.65%. Whether that sticks around for two months or six months, you have to keep in mind, you're now still in a 1.65% compared to that 2.3% that you would have locked into. There's a lot of savings and just having these dates and these predictions in place, we've never really had this before. There's a lot of benefit in sticking with a variable. There are some really good strategies that go along with that. We have a lot of clients that will actually set their mortgage payment higher than what they should be paying but they're in the variable. They might set their payment to that fixed rate payment. They've already accounted that they're paying down a ton of additional principal, they're saving on interest and they're building up that buffer even further. When rates do change, there's so much savings in that mortgage already that they really can't lose.

Alex McFadyen

When COVID hit last year, you shouldn't sell off all your stocks investments immediately to get out. You got to hang tight and you got to hang on for the ride. It's no different in the variable rate market here as well because I think a lot of people don't realize the fact that one of the key reasons they usually get into it is because it is a long term play. The other factor that people tend to forget immediately is half the time people take a variable rate of probably more is because they don't have to stress out about prepayment penalties. How many times a day do we have to talk to people about prepayment penalties? That's quite literally one of the main reasons to go variable, especially for clients who want to be able to access equity and repay other debts, expensive debts, and invest in real estate. Doing variable for 10 years now, I won't go back.

Deryk Williamson

Risk and reward. Obviously there is a risk of rates going up but if you can educate yourself enough on the product and understand timelines or predicted timelines, you can make a decision from there.

Alex McFadyen

If you're having that thought, should I lock in or should I not lock? You got to reach out to your lender directly and ask them to get you their offers. If you want a second opinion, you can send the specific offers and scenario over to us and we'll let you know, again, assuming you're a client of ours. We'll let you know if it makes sense if you're looking to restructure the loan and take advantage of current rates because generally speaking, if you're locking in, you're not going to get best rates.

Longer term projections. We talked a little bit about the stress test, let's just really quickly touch on that one more time. It hasn't taken effect yet. but are you noticing any difference in the marketplace and people's reactions yet?

Deryk Williamson

I think it's been misconstrued completely. I've probably spoken with 20 different clients that have had some fear behind it when they've seen the news just because of how it's portrayed. When we run the numbers, for them, it's a fairly minimal adjustment. What I've been telling everybody, as of now, the mortgages that are being impacted are uninsured mortgages. When there is mortgage insurance, the lending guidelines and regulation is very tight. On uninsured mortgages, there's typically on a fairly strong file and there's room for exception. If your qualification has decreased by $30,000, typically in that type of a mortgage, because of the down payment or the strength and the borrower, we can usually get an exception if you need a little bit more money. As of right now, I haven't seen any real dramatic impact to any of our clients, even if these changes do take place, which they probably will.

Alex McFadyen

What is typically an uninsured situation? That's rental property, that's a 30-year mortgage, and that's a refinance. These are the people that are mostly impacted. It's going to get people to make changes just 100% based on not understanding things. Talk to an expert first.

I was talking to a client the other day and they went and talked to a teller at the bank who told them it impacted them and that was their understanding of it. This client was buying with 5% down. There's no impact to that client. You're buying with less than 20% down new and first time homebuyers. Keep in mind, this does not impact you at all.

Anything that you've seen change in regards to first time buyers in the last 6 to 12 months?

Deryk Williamson

I think a lot of people, especially if you weren't in the market, were watching to see what would happen with COVID. A lot of people thought the market might crash. When we started to see what was happening, a lot of people were on the fence and they started to see the market pick up and then it's kind of this rush of buyers trying to get in as prices increased. We've actually seen some first time buyers get priced out of what they could have bought eight months ago or a year ago. I'm also seeing a lot of people actually lean on family, if it's available to them. Maybe it's getting their downpayment from 5% to 20% to increase your qualification to get that detached home that has gone up and over their qualification, but I've just seen a lot of family support. This has been from co-signing to increasing downpayment. If you think you're hitting a wall, have a conversation, it doesn't have to be a gift necessarily. You can lend the money from your parents and you can pay them back when you sell the house, but definitely exhaust all of your resources if you think that you can't get into the market.

Alex McFadyen

I have been getting a lot of questions lately about the first-time homebuyer program. I don't think we funded a single one yet. It's not what I would consider to be an impactful program a year and a half later. It was introduced in 2019. Still not an impactful program, not a material program. Here's the biggest confusion that I'm hearing about it: it does not increase your purchase price, it does not increase the amount that you can borrow, you can still borrow the maximum amount which is exactly the same, and it just slightly decreases the loan in exchange for giving the government some of your house. There are certain situations where it makes sense, but still very minimal from our perspective.

Let's talk a little bit about just some of the things that we're seeing on the investment front and the investment area. With the last episode we had Michael Ponte talking about out of town investing and in different regions, the first quarter of the year I saw a lot of interest from an investment standpoint in the marketplace. In the last 30 days since this whole stress test and a few other factors, it's been a lot quieter from my end on the investment front, which I think is a huge mistake.

Deryk Williamson

What I have seen with the value of properties and what's going on in the last year, it makes it very tough to create cash flow. If you're doing 20% down, you're typically going to be losing money month over month. There’s unique properties out there but I think a lot of people are forgetting that they can look out further. I have some clients that are buying some properties in Chilliwack. There's great cash flow. We're not seeing that rental investment type purchase in and around Greater Vancouver at all right now.

Alex McFadyen

Speculation has been the only thing that I've seen a lot of people jump into, which is a bit scary for me. That's something that actually was up in that most recent announcement speculation. Basically, if you're not sure if someone is buying and holding onto a piece of property, hoping to quickly sell it and flip it in a short amount of time, sometimes not even doing any work at all. The market that we're in right now, one of the hottest commodities is a single family detached home with a suite to provide rental income. I'm seeing houses with a strong suite go for an extra $100,000-$150,000. I've actually had in the last few weeks, people come calling me and saying, “I think I want to buy a house, suite it and then flip it in 30 days. What are your thoughts on that?

Deryk Williamson

I think it opens up this whole other window of buyers because what we see from a qualification level is you throw a suite in a house with rent, we can sometimes get people an extra $150,000 of the mortgage. It's changing a lot of people's pre-approval and it's opening up that next level of purchase price. This brings another wave of buyers. If you're buying a detached home in Langley for $1.3 million, most people want to have a suite. There's just a huge market for it.

There's an interesting stat that I read this morning in regards to the year of 2020. There was $34 billion in interest savings in mortgages, just in Canada alone. That's because of rates being at the bottom end that they've ever been, but in addition to that people paying down more on their mortgage and taking advantage of this while we have it so doing lump sum payments and increasing your payments by $200 bucks. I think a great piece of advice that these rates are not going to be like this forever, take advantage of it. Increase your monthly mortgage payments if you can afford it. Realistically, if you're in a fixed rate, you are going to see a pretty dramatic rate increase at the end of your term. If you're at a variable rate it will start to go up eventually. If you can, make use of this while we have it and pay down a big chunk of your principal. It's huge savings in the long run.

Alex McFadyen

Get that refinance into a lower rate and open up your equity. Get your line of credit set up or pull the equity out right now so that you can do that investment.

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The YVR Remo Show Episode 61 - Investing In Real Estate Out of Town w/ Mike Ponte

dean@thrivemortgage.ca (Dean Lawton) — Thu, 22 Apr 2021 18:49:28 GMT

Key Tips For Investing Out Of Town!

Alex McFadyen

We are bringing a second time guest on the show to talk about investors, specifically investing out of town. With the equity growth we've seen in real estate in the past few years, the biggest question is what do I do with it? Where can I invest my money? And where can I put it and that's why a lot of people are drawn to working with our team at Thrive Mortgage Co. Because we care.

For this episode we brought on Michael Ponte of Prosperity Investments. Michael runs an online Facebook group, it's dedicated to helping investors learn, grow, and gives back quite a bit. More importantly, he's been in the investing space for about 20 years now.

We love to show people how to get into the market and by just one extra property, to create wealth. We thought it was a great idea to have Michael come back on for a second time around because he was such a great guest the first time. He talks a little bit about some of the things that he recommends for people who are thinking about investing out of town and why you should be considering it.

Check out Mike's Facebook group, Savvy Investor.

https://www.facebook.com/groups/341243106757064

He's done a fantastic job of curating a lot of content and some great people, and he's not out there trying to sell you all day, he's given a lot of education to people.

If someone wants to buy an investment property, you've got to manage it and decide what it is that you want from that property. Some people go into it purely for cash flow. Other people might not necessarily want or need the cash flow and are looking for appreciation.

With everything that's happening and people migrating out, are you starting to see that in some of the markets that you're working in? Are you starting to see dramatic appreciation and value claims as well?

Michael Ponte

That's exactly what we're seeing right now. We're seeing these different markets again. We talked about interest rates and we talked about affordability. Some of these markets have been depressed for a while. Recently we're seeing increases in valuation, Calgary, that's been a real challenging market for a long time. These last three to five months, we're seeing prices going up. It's a very interesting phenomenon that's actually happening. A lot of people are moving just because of affordability. They have the ability to work outside. So, the answer is yes. Pretty much any of these smaller communities, even some of the markets that were kind of sleepy, we're seeing appreciation in many of these markets right now. It's quite interesting.

Deryk Williamson

Do you have an example of what type of appreciation is actually happening?

What are you seeing in those other markets?

Michael Ponte

If you guys go to my recommendation for anybody looking at some of these different markets, and you want to look at appreciation variances, there's a lot of these reports. Every month Calgary real estate board, Edmonton real estate board, there's some great statistics in most major markets. I think Calgary was the last one that I saw, we saw about a 5.9 % or just under 6% appreciation where the market was actually depressed. In the event of Edmonton, I thought it was roughly 7.2% but again, what are you comparing it to Vancouver? That's nothing. In those particular markets, that's a big change, because it's been flat for years and in a lot of cases in decline just based on those two markets in itself.

Alex McFadyen

Do we have any concerns looking forward?

One of the primary reasons that people start to look out of town for a real estate investment is cash flow. There could obviously be the inverse effect in three to five years if things clear up really quickly such as people starting to miss their friends and family and so forth. Anything can happen.

How are you looking at some of these cities in these places to actually determine which ones make the most sense? Is there anything else like that we should be looking for as far as rent values, property types, anything that's a little bit more bulletproof than something else?

Michael Ponte

I'm a big believer that you make your money on the buy. I'm looking for those types of motivated sellers and those opportunities where there might be some type of distress in a particular property. This way, there's always a cushion in case the market takes a dip. That's my strategy. I treat every real estate transaction as a business. I want to make sure that the business is generating me income every single month. I don't like a lot of political interference in regards to my ability to increase rent. I don't want limitations as well. I'm looking for some of that flexibility. For me, if the market takes a downturn and you're buying with cash flow, you're still in a really good position because the property is still performing. If you've got a long term approach with your real estate, real estate investing strategy, tenants are paying down the mortgage, and you're still collecting cash flow every single month then you may not be getting that appreciation lift. This is something that you can't plan for. The market can change in any market. Vancouver is not Teflon, they've had a run for 20 years which is unbelievable but that's not normal. Any slight downturn can have an impact right off the bat. The important part is to make sure you're buying right, it's sometimes challenging when you're dealing with multiple offers. The important part is to try to buy right, that's really key when it comes to investing in some of the better segments to be looking at, if you can have something that has multiple streams. For example, up and down suite, or here in Vancouver and Surrey, they've got that carriage home as well in the back in the garage so you're getting two or three possible income streams. This way, if you've got one vacancy, you may be only 33.33% vacant versus just one house and one renter. When it becomes vacant, you may be 100% vacant. Anything that you can do for yourself to try to get multiple streams, the better it's going to be for you from an income side.

Alex McFadyen

That's a real good call for the cash flow that you noted right there, having multiple unit properties. A property that can be converted with a suite or has a suite is a great and comfortable way to get moving along. There's a lot of them out there which makes it a lot easier to find them. We just had a client secure a multi-unit property in Kamloops for around $700,000. They bought it with their HELOC on their home here that we helped them set up and they are even after paying it off. They're going to be generating $1,000 a month cash flow. If you're afraid to step outside of your local city, you might be missing some of the jewels. The neat thing about a city like Kamloops versus let's Moncton, New Brunswick is you can still touch it, feel it, see it, you're three hours away if you live in the city. If you've done your research, you'll know that's a city that is going to continue to see some form of appreciation.

How do you feel about the idea of someone making a step out of town maybe a few hours away instead of across the country?

Michael Ponte

What it's all about is that comfort zone because if you live in Vancouver and you want to invest in Kamloops, it's far enough away where the process is no different than if you are in Edmonton. You will most likely need to have a property manager out there and you will have to manage that property manager. You can drive out there so it's not a significant variance. The Kamloops drive is about four and a half hours. You're going to make a day out of it. You're probably going to be staying at a hotel or something like that most likely to go out and see the property. A flight to Edmonton, If you're just looking locally, it's probably about $100-$150. I've done that trip overnight or the same day. It's not a significant amount of expense. I go out to check my properties every six months. I always make that as a trip for myself to go out and make sure all the work is being done. If you're uncomfortable to begin with, just dip your toes in the water if you see better markets like in Kamloops. Try to set up systems in place where you are not necessarily needing to be micromanaging. Hire that property manager and build those expenses into your analysis. If you really want to grow it, you have the ability to scale your business. The better the systems you have in place, the better and more effective you will be as an investor.

Deryk Williamson

Mike, I'm personally curious if you can share some flaws or mistakes that you've made.

What mistakes have you seen people make when investing out of town?

Michael Ponte

The biggest issue that I tend to find for out of town investors, including myself, is the team. They are instrumental in making sure that your business or your real estate transaction is going to do well. You may invest right and get fantastic terms when it comes to mortgages and great interest rates but at the end of the day, once the acquisition is done, the real work actually begins. Make sure that your tenants are being managed appropriately and your property's being managed appropriately. Make sure property managers are not taking advantage of you.

One of my very first transactions that I had, I hired a property manager in Edmonton. Things seemed to be going well, rent was coming in every single month, it's going into my account every single month, cash flows coming in, I was doing great and though everything must be good. I didn't go out to see that property for about a year and a half. I went out to go take a look and do an inspection of some of my other properties and knocked on the door on the property with my property manager. I had problems right away when my property manager actually introduced himself to the tenant as well. The door opened up and the smell coming out of this house was atrocious. It was a disaster. It wasn't that it was super thrashed, it was just a mess, an absolute mess. It wasn't until we walked downstairs in the basement and saw where the tenants had a puppy mill running in a townhouse downstairs, It was a three bedroom, one and a half bath townhouse. Part of our agreement that we have in place is that they're supposed to go into the property every six months to go take a look and do an inspection. It's my fault for not ensuring that he was actually following through and making sure that he was accountable to his job.

If you're investing in other markets or different markets, you should budget in your analysis that you're getting out to see your property roughly every six months. This way, you're ensuring that your team is doing their job responsibilities.

COVID has changed the way we do our business. Virtual inspections is becoming a much more common theme. Right now I'm doing virtual inspections with a lot of our properties. What I'm doing here locally, I can do this literally across the country and still have that same visibility as I did before.

Finding your investment team is extremely crucial. You need to find the right fit with good credentials. You always need to have backups, just in case. You want to be making sure that your team is solid. You always want to have those backups, especially when it comes to your management. That was a big lesson for me and it cost me a lot of money. I learned from that and I made sure that those systems are in place moving forward and I constantly adapt. That's the one thing about real estate as you guys are well aware in the financing world. Things are always always evolving, things are always happening. You have to roll with this and you have to adjust. As long as you're staying on top of this with your systems and building the right people and connecting with the right people, it will be fine. It will be good and that's the key aspect. If you're just burying your head in the sand, that's where problems are going to start to arise.

Alex McFadyen

No different than any business. If you neglect it, those things will eventually end up rearing their ugly heads.

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The YVR REMO Show Episode 60 - What Are The Proposed New Stress Test Rules?

Tue, 13 Apr 2021 11:31:33 GMT

Everything you need to know about the potential stress test changes

Alex McFadyen

Welcome to a breaking news episode of our show. There were some guideline changes that were announced on April 8, 2021 that could have some pretty big impacts on the marketplace as far as lending is concerned.

We'll cover what's happened, the timelines and dates you need to know, who it’s going to impact, and what you should do.

Dean Lawton

After looking at the numbers and seeing the impact, if the goal here was to make this change to help and slow down the market, I don't think that's the tool to do that. Looking at the actual numbers, it's going to reduce our buying power by around 4.5%.

When you have offers on homes going to $100,000 over asking price, how is this really going to impact that? My first thought is, this just doesn't seem like the right action.

Deryk Williamson

The housing market is absolutely obscene right now all the way across Canada. They're trying to implement a few regulations and the goal here is to essentially decrease Canadians' borrowing and buying power to slow the market down.

There's a stress test on all Canadian mortgages and OSFI is a regulator of all the banks. They have suggested that they're going to increase the stress test rate. It's currently at 4.79%. They want to increase it up to 5.25%.

The Stress Test

It's been around for a few years and there's been a couple changes already. A stress test is where we have to qualify your mortgage at a much higher interest rate to make sure that you will actually afford and qualify for your payment if rates were to rise.

As much as people are walking out of their institution or purchasing a home at 1.5% right now, all mortgages are being qualified at 4.79%, which is already a dramatic increase. When this was implemented a few years ago, it was about a 20% borrowing power drop. That made a huge difference and it actually created this massive funnel of panic purchasing. A lot of people knew that their qualification was going to go away and their pre-approval might not be firm. It created this mad panic up until the stress test actually came into place. We're thinking that we might see a little bit of that again.

I don't think this is going to have the impact that they want it to but at the end of the day, it's just a conversation with your mortgage broker to figure out what your qualification is prior to June 1, which is a potential date.

Dean Lawton

This isn't concrete, things could change. It could be even more of a drastic change or it might be a little bit more relaxed. It’s a bit of a waiting game but we're preparing that this is going to take place and we're preparing our clients for these timelines.

Alex McFadyen

The original stress test was implemented back in 2016. That's when there was a variety of changes that occurred, not just to how you qualify but to how the mechanics of lending works behind the scenes. This is why today we have quite a few different interest rate categories for someone putting less than 20% down, more than 20% down, more than a million dollars, and so forth.

I've already run the numbers on some of my clients, and I can tell you, it will definitely impact them. It's not going to impact, in my opinion, the right issues at hand and the right issues that we should be dealing with regarding supply. There's more people and more Canadians that want to own real estate than there is supply. We're still struggling on a day to day basis for cities to issue permits to build the proper types of buildings. If they address that actual issue, we're not in the position that we are today.

There's a lot of people out there who are at their max qualification already because of the stress test. They could actually make payments with no issue because again, the rates are 2.5% or 3% lower than that right now. My projection of this is that, with this information coming out, the markets only going to heat up for the next two months. We're not going to see a big drop off like we did back in 2019.

Deryk Williamson

This is not for everybody purchasing a home, this is for uninsured mortgages (if you're buying with less than 20% down or even if you have more than 20% down for a 25-year amortization and the property is worth less than a million dollars.) There are some guidelines where you actually won't be impacted by this. One case is If you're buying with more than 20% down and you need a 30-year amortization and your property is going to be worth over a million or your purchase price is over a million. We don't know which lenders are going to be impacted but we know that this is directly funneled towards the banks. As of right now, most credit unions actually have a different provincial regulator. We don't know if they're going to follow suit, they typically will eventually but as of right now there are still no stress test programs available. Don't make the assumption that this is going to impact you, ask the right questions to figure out if it's going to and we'll make sure to keep everyone up to date on those changes.

Alex McFadyen

Last time around, we were given one or two months before they made the rules. There was a mad rush for someone to get a pre-approval, because at the time, if you had a pre-approval from a lender you could actually close within 120 days and they would honor those rules. We should be aware of two dates, May 7 and May 24. There's a questioning period starting on May 7 and then a closing period on May 24 where they're going to make their final decision. Announced changes will happen on June 1.

Dean Lawton

That's the key difference from last time is there wasn't this question period or this comment period where experts in the industry could comment on this. That's key because this isn't final and when we heard when the announcement was made in 2016, it was pretty much this is what's happening, here's the dates to get prepared.

We would hope that if you had a contract written before June 1, even if it is closing after June 1, it would be honored. Last time around, that wasn't the case with the foreign buyers tax as an example.If the contract was written years before such as a pre-sale, those people still had to pay foreign tax on those pre-sales even though those contracts are written well before the foreign tax was imposed. We're really hopeful that they will honor contracts written the date that they're written. If they don't, gosh, pre-sales can be very risky.

Alex McFadyen

Who does it impact? It's been talked about already that it’s federally regulated institutions, which basically is the big banks more or less credit unions. Some of the bigger credit unions like Coast Capital picked it up pretty much right off the bat and decided to implement the new guideline changes in the past. Even to this day, some of the more local credit unions do make exceptions and still don't use the traditional stress test, they might charge a higher rate. I would imagine that most local credit unions are looking at this and probably not implementing immediately.

If you're purchasing a property over a million, this is going to impact you. These are the people that are going to feel it the most just based on the volume of the price point. Refinances to me is a really key point. We've been doing a lot of refinances in the last year. And it's not just because people have a ton of debt, it's because they're trying to reduce their total costs. It makes a lot of sense, especially given like the lower interest rates right now. Who is it going to impact negatively? Those who have an uninsured mortgage and a 30-year amortization. We have to think about that and say, that's actually going to negatively impact the people who are renting, because it's going to potentially reduce the supply, which means at the end of the day, there's less rental properties. This is going to cause higher rental prices.

Who is this helping from that perspective?

Dean Lawton

We have clients that purchased townhomes in early 2020 with less than 5% down that now could potentially refinance into a conventional product, and that will potentially impact those people.

Deryk Williamson

A lot of times, we have certain institutions that can bend and extend that servicing. Typically, most lenders can use 39% of your income to cover the housing costs, which is mortgage payments, property taxes, and strata fees. We have examples where we have lenders that will go up to 46% and 47%. Having a strong application and knowing that there are different solutions out there is really important when you go into this because one bank might say no and the other might say yes,

Alex McFadyen

Looking at the dates and at the timelines that can be affected, what are you guys thinking that we're going to see here as far as market conditions?

Dean Lawton

People that are sitting on the fence and maybe thinking of buying in the late summer are likely going to be buying before June 1 now. We're going to see an extreme amount of pressure in the market from now until middle of May. Lenders are already significantly delayed with volume so we're going to see extreme extreme delays. There's a number of lenders that won't even look at a file for four weeks right now. Waiting until these deadlines are confirmed, I wouldn't wait. If your goal is to purchase a home I would get in now and move forward and get that approval in place as soon as possible. I just see extreme pressure coming.

Deryk Williamson

We're already seeing a bit of a slowdown in the detached market, there was a massive boom over the last three to six months. It seems like it's kind of toppling off, there's still multiple offers, but there's maybe two or three offers instead of 30. It seems like the strata market is really going crazy. If someone's qualification has actually been pushed away, or they were just barely qualifying for detached and they can't find another option, they might be more keen to move into the strata market. This could cause that to bloom even further than it is.

Alex McFadyen

If you're selling detached, sell that detached home now because the fuel is back on the fire. The detached housing market has slowed down a little bit. I think this brings it right back for at least the next two months. As an investor, you want to be prepared, but you don't necessarily want to just dive in without having the information.

Be prepared for longer wait times, but does that mean? If you're purchasing a home, you have to get a little bit longer subjects or you have to make sure to do that due diligence upfront. There's a little bit of a risk to be had there.

Dean Lawton

This is not impacting businesses or self-employed clients that are looking for alternative lending solutions.

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The YVR Remo Show Episode 58 - Self Employed Mortgages: Everything You Need To Know

Thu, 01 Apr 2021 02:48:19 GMT

Are you self-employed and looking to get a mortgage?

This episode we are breaking down everything about self-employed mortgages. We will outline hot tips, what you should look for, what the banks look for, what's changing, what's changed, and so much more.

We've had so many people in the last three months reaching out, whether they recently started a business in the last year or their business has changed. The dynamics are different right now especially with the COVID year, which is going to impact our businesses for years to come. A lot of banks are now declining people and they don't understand why. Typically what happens is people either say I just can't buy a home or they will find someone like us, which is the best case scenario. We can actually guide you as to what to do.

Let’s start with some basics.

Gross Vs. Net

The net income is the amount that we're going to use for most cases. Gross income is going to be every dollar your company received in that calendar year. Net income is going to be the amount that’s left after paying taxes and payroll expenses. At the end of the year, especially if it was a tough year, nobody wants to hand over a bunch of money to the CRA. A lot of times accountants will help people find ways to reduce that tax bill which typically means reducing your net income, which is going to hinder your financing.

If you have plans of buying a house in the next year or two, you need to make sure that you're structuring your income properly. Have that conversation with your financing advisor, your mortgage broker, and that accountant and know what your plan is over the next one to two to three years. If we can structure a little bit of a higher net income amount, that is really going to set you up for success. You shouldn't try to cut corners when it comes to finding a good accountant. You definitely want to find someone reputable.

*Have conversations with the people that you're working with.

Are You Behind On Your Taxes With CRA?

The planning approach of gross versus net really correlates with being caught up on CRA. If you're essentially claiming a lot of net income, you need to be prepared for a very large tax bill with CRA. The other options, alternative lenders, that's where the tax strategy can really be a key conversation. If there's a $30,000 tax bill that has to be paid before you close, the lender will not fund your mortgage. If you're trying to calculate downpayment and closing costs, take that into consideration.

Can I get a mortgage if I have not paid my taxes for that year or the previous year?

That's one question we get a lot. The answer's no with some lenders. If there is CRA owing, a lot of banks will not allow you to use those proceeds from the refinance to pay CRA so it does have to be done ahead of time.

There are some exceptions to that. There are types of lenders that will consider paying them out. We would help some clients where we just put them into a private loan for 3-6 months or even just a 30 day period and then transition them into a conventional lender. That's where the whole idea of private financing can make sense. Private finance is a good option but can be costly with legal and lender fees. We started to see deposit loan financing as people are actually using that idea to pay CRA and then doing a refinance. There's some strategies there to save money but it ultimately does come down to some sort of a private lending company to help you. Basically, taxes do need to be paid. It's just how you do it is the question and what does that look like?

*If you have a really strong application, we've seen a couple credit unions actually help us with CRA.

How Does Incorporation Impact What I Can Qualify For In A Mortgage?

Let’s speak to the conventional lender. If you just incorporated less than a year ago, or less than two years ago, you are going to have a difficult time getting approved for financing with your typical conventional bank. They will want a full two year tax history of your newly incorporated company. I think we should note, one exception is depending on the time of year, if you've just recently become incorporated, it is possible to consider looking at your previous couple of years. Once you file your taxes and you are now paying yourself as an incorporation, things change. That's where we need to look at different types of lending options. If you're earning more than you need to live, incorporating is a very good idea because you can leave the excess funds within the corporation. If Alex is living off $50,000 a year, and that's all he draws out, that's what he's going to be paying personal tax on. That's what the lenders are going to be using to qualify. We see a lot of people that make a ton of money, but they just leave it on their corporation and that can cause issues for financing as well. It's the same concept of gross and net and just making sure that you know, your personal income is staying at a reasonable level. Having the requirement to have two years history being incorporated, that isn't the case with all lenders. People are sole proprietors for a number of years or contemplating going incorporated and you know trying to plan that with bank financing. Back to the self -employed lenders, to B lenders, those alternative type lenders, you don't need to have the two year history. It really does come down to the story. A lot of times the bank might just see a tax document, and it doesn't line up because it was a sole-proprietor and now it's a dividend. They might just say no, right? But we've also had success in building a story and explaining why you incorporated and showing them proof that it is the exact same business and nothing has changed? There are exceptions that can be made.

Individuals that are recently incorporated, I get this a lot where they have a hard time understanding why there's all these additional documents requested. When you're incorporated, the banks look for financial statements for that company. When you're incorporated, your company is now looked at as another person, another entity. There is documentation that is specific to that incorporated entity. That comes up quite a bit where there can be confusion. Just be prepared, when you are incorporated, there are more doc's going to be required. That's why a clear communication-line with the broker, the financing advisor, and the accountant is so key. Someone could claim a ton of personal income but the lender could look at the financial statements from the company. If it's running a massive deficit or there's a huge loss, they could decline the file because the financial statements of the company where you're drawing your income don't actually support it. Typically, a lender wants to see a two year average of someone's income to see how their business is doing year over year.

*If we're starting to see lenders starting to look at a year over year decline, for example, you claimed $100,000 one year and $50,000 the next year, they're more likely going to use the $50,000. They're not going to average the two of those because that is a 50% drop in your overall income. That's a very dramatic drop there. There are certain lenders in that scenario where it was $100,000 to $90,000. They'll take the difference between the two and say use $95,000. Your average income is very important. Talking about that tax planning year over year couldn't be more important. If you had a really low year in 2019 and then 2020 was 10 times the amount of income, some lenders won't use the average because they think it's unrealistic.You need to make sure that if you have a very low year, we understand why. We have a client that bought a ton of equipment in 2019. His personal income was actually really low. Because we explained that to the lender, they were willing to use an average.

Has COVID Affected Self-Employed Lending

There's been a lot of industries that have had a hard go with COVID. There's been some industries that absolutely boomed because of COVID. We've seen massive increases just because of COVID as well. Someone who's self employed, this is going to impact you in 2021-2023. You have two to three more years where this is going to make a difference. As we get a larger sample size, you're going to notice more lenders compare you to someone similar in your field. That's the subjective side of lending.

Instead of looking at a two year history, they're allowing us to use a three year history because of that declining year. The three year is actually getting them to where they should be. There are some exceptions there, which has been nice to see through CMHC, they have made some flexibility for these types of individuals. This also makes me think a lot because we talk a lot about pre-approvals and how some people go shopping without getting pre-approved. Some people come to us in the middle of the process of getting declined. The reason I think that happens quite a bit is they think exactly to your point, I made a lot of money last year, I should be able to buy this home. They're obviously frustrated to find out that they need, you know, 300 documents and a large story about what's happened. The pre-approvals with being self employed are much different than being an employee. Typically, it's not exactly a cut and dry situation, there's a lot more coaching. This is just the importance of working with a professional in these cases to at least coach you through the process and help you understand the risks and rewards of the home buying process. Even though you can't get an exact pre approval, you should be able to get ranges as to where you should fall and have that. Just be prepared for that because how much would it suck to go out and think you've made X amount of dollars and then get declined by the banks and not know about any alternative options? It happens all the time. People walk into the bank where they've had their business account for years and they've been declined or they've been given a mortgage amount far lower than they would have ever expected. Having access to these different programs is key, lenders look at self-employed individuals differently.

*Part of our pre-approval process is just to make sure everything's still in line. That comes back to communication throughout the year. Touch base with your mortgage professional and let them know about the changes in your income. You should be proactively telling your broker about these changes because we can't anticipate what your business is doing.

What Is B-Lending And What Does It Look Like?

These are local banks such as Canadian Western Bank. They are very common for people who are self-employed or people who have rough credit. Those are the two most common reasons. Where a B lender can really benefit someone who's self-employed is if you're not qualifying based on your actual personal income, which happens constantly. A B-lender could be a really good short term solution, maybe for a year or two while you work on your income. They'll actually look at bank statements, they won't even ask for your tax returns to look at 12 months of bank statements We work with you to fill out a spreadsheet that includes some expenses and we can state your income at a more reasonable level. B lenders will actually sign off on that. A lot of times we can get clients, triple the mortgage qualification if not more just based on these programs. There are extra costs. These lenders are taking on greater risk. You're typically paying about a 1% higher rate. There is a fee involved. It's short term, we typically would never put someone into a product without having an exit strategy, which is if you're not qualifying right now, here's what you need to claim for 2021 and 2022. At that point, we can transition you back to a conventional lender. Some clients come to terms with being with a B lender forever, just simply because of the amount of tax savings that they're having with their accountant continuing to go forward with this aggressive accounting strategy.

What About Co-Signers?

Last but not least, co-applicants and co-signers, what does that look like? There has been a lot of confusion again with co-signers when it's added to a self-employed file. If we have to state the income it's either treated as stated income or it's not. Merging those two applicants together can sometimes cause some confusion depending on who the lender is. So again, back to people walking into the one institution and getting declined even with the co-signer having options. Looking at your options is really important when it comes to co-signers as well. Don't just step back because you've been declined, right? Get a second opinion. Families usually are willing to help. If it means getting into a property, a year earlier or six months earlier, it can go a very long way. Whether you're a real estate agent and you're working on commissions, whether you're someone in the health field, working contracted, maybe you have a new clothing company or a store that you shared, all different unique circumstances is again the importance of working with somebody who knows what they're talking about.

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EP. 57 - How To Navigate A Hot Real Estate Market w/ Logan Crowder & Caileigh Anderson (Real Estate Expert Series)

Tue, 23 Mar 2021 07:56:40 GMT

Key Tips To Navigate This Current Hot Market

This week we have a special episode. We were guests on the 'Hard Asset's Podcast. This new podcast is brought to you by real estate professionals and co-hosts Logan Crowder and Caileigh Anderson. We have decided to bring you that episode here today!

Tune in as we talk about subject-free offers, how to get things accepted, pre-approval strategies, and how to navigate a hot market!

Click the YouTube link below to find out where to find Logan and Caileigh as well as their podcast!

What were some of your concerns earlier on at the outset of the pandemic and how did things from a mortgage standpoint playout?

Deryk Williamson

It was frightening to say the least, our phones stopped for probably two weeks when the pandemic hit. Our phone started ringing because people needed to figure out deferrals. We knew that it was an opportunity for us to call every single one of our clients and see if they needed assistance. A lot of people that were working, we tried to find opportunities to help them refinance. There was a lot of fear. When we started seeing the rates go down, we saw a lot of opportunity. We figured that we'd buckle down and focus on our database and just try to support them.

Alex McFadyen

That timeline actually cemented our business and helped us more than anything, I think it took about a month for us to really settle in and feel comfortable. We started doing a lot of presentations and said now's the time to pull your equity and start hopping in as everyone's afraid to get into the market, because it's not going to crash. It's going to rebound.

Deryk Williamson

I think that's kind of what created part of this boom that we’re in. There were a lot of people waiting for the market to crash and it didn't happen. When things started to pick up, everyone's like, we missed it. Everyone got off the fence after probably a few months.

How can you prepare for the current hot market where everyone is going subject-free?

Alex McFadyen

We’re talking about a market that's imbalanced. You've basically got people who aren't willing to sell until they buy and now there’s so much strategy because we have such a limited amount in the actual marketplace. There's little inventory right now, and everybody wants to get in.

Deryk Williamson

With refinancing you're paying off your existing mortgage, which triggers a penalty. If it's a variable, a three month interest penalty. If it's fixed, it could be through the roof. With restructuring, you're paying off your loan at whatever the existing interest rate was and you're taking on a new, bigger, mortgage most of the time at the current rates. With the rates being so low, it makes sense for a lot of people because you're saving so much on the interest to pay the penalty and refinance. Sometimes you run into situations where a penalty is $40,000 and doesn't make sense. In that situation, if someone still wants to access the equity, you get a line of credit. A line of credit is a bit of a higher rate, our mortgage rates are one and a half percent. Line of Credit is always typically prime plus a half. Right now, when you compare the line of credit to a mortgage, it makes way more sense to go with the mortgage, a line of credit is a great option if the penalty is huge. If you don't want to restructure, refinance is a good way to access equity without triggering that.

Alex McFadyen

There's a third option here which is a second mortgage. These allow you to access equity if you don't qualify based on your bank's guidelines or you don't want to pay the penalty. The difference, there's a little bit of a higher cost associated with the mortgage but payments can be much more manageable because they're extended over a longer timeframe. There's actually a lot of value in knowing and having access to that, especially if the payments are high or you can't access the line of credit. A reason these companies are pushing so hard is because people are afraid to talk to their bank about it. After the decline, they're afraid to talk to other people.

Deryk Williamson

The line of credit is an interesting product because it gives you the option to pay interest only. The actual payment is going to be higher as much as you're paying down the principal. I've had clients that just want a line of credit, they don't care about principal pay down. They're in it for cash flow. They will buy an investment property, get a line of credit, they have this super low interest only payment, but their cash flows $1,000 a month. They're in it for appreciation and now money.

Deryk Williamson

Not all lenders offer this, only a handful, but it's a re-advanceable mortgage. As you pay down principal, a line of credit increases. The Smith Maneuver is what you do with that line of credit, how you structure it, but I honestly feel like everybody should get into that product if it's a fit and you like the interest rates that the lenders are offering.

*We've had clients that are selling and they have no cash. They'll use this line of credit that they've built up over two years to renovate the place before they sell it.

From a mortgage standpoint, how can people be prepared to kind of write these subject free offers?

Alex McFadyen

The most important thing is don't do an online pre-approval. Physically talk to someone and make sure that all of the documentation that the lender would actually ask for has been submitted. Get your appraisal done.

Are there any tips that you could give on that subject?

If you've been properly pre-approved, don't change anything. Don’t buy a car and stay up on your credit card payments. Make sure your money's not going anywhere. Conversate with your mortgage broker and make sure that your mortgage broker is in talks with your realtor. If those two people are not talking, please don't go subject-free. You actually have to understand why the true pre-approval is so in depth. We're looking at every single document and bank statements for three months. If people haven't done that, if you haven't signed a credit authorization form, you should not be going subject-free.

What is going to be happening for the rest of the year?

Deryk Williamson

Bank of Canada's prime variable line of credit rates are predicted to stay low until 2023.

What happens with fixed rates?

Deryk Williamson
It's tied into bond markets which can change. Rates should be staying low, which will continue to fuel what's going on right now. I think that we're going to see more inventory. I don't think that's going to slow down our market. I think that creates more buyers at the same time. All these buyers that have pent up demand, they're trying to get in right now. When there's more inventory, it continues. I think we're in for an absolute crazy spring and summer.

Alex McFadyen

The government's basically held off on bringing anyone into our country for an entire year, which means we have an insane amount of immigration coming in the next few years. The guidelines for lending to new to Canada people have actually loosened up in the last couple of years. Based on the debt to income ratios, the typical person qualifies somewhere between the four to $600,000 range for a first time buyer. My only feedback would be if you aren't in the market, get in the market.

The only other thing I would point out is the lending market because it is so hot right now and the real estate market. We've had more applications. We've broken records every week and it's nonstop. When you do commit to working with a professional, whether it's a real estate agent or a broker, commit and just preach patience because it takes time. Don't rush this sort of thing.

Any closing tips?

Deryk Williamson

Lock into these five year fixed mortgage rates at 1.69%. Human nature is people build their lifestyle and their budget around their costs. It's almost unrealistic what people are paying for a million dollar mortgage, literally two years ago, it's a massive difference. When people are doing this and moving into this beautiful new home, because the mortgage payment on a million dollars is $4,000, that is going to change in five years. Take that into consideration. If you're in a five year fixed, and it's 3%, in five years, it's a massive jump. People that are in variable rates, you're going to see a gradual climb and probably be okay. You got to think ahead.

To learn more watch the full video by clicking here!

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Should You Be Buying Pre-Sale?

Thu, 11 Mar 2021 00:07:47 GMT

Common questions surrounding pre-sale properties!

We join Tyra Sauriol from AXIS Real Estate on their latest project, Keystone Developments, to talk about pre-sale properties. Keystone is located in the heart of Willoughby Langley, BC!

Find out the benefits, investment opportunities, challenges, and key tips when dealing with these types of properties.

Why are people investing in the Willoughby, Langley area?

Willoughby is very close to the highway, making it very easy to commute to. There's a lot of growing family potential in this area as well with the additions of new schools and parks.

Where are people moving to this new development from?

We are seeing people coming from Vancouver, New Westminster, Burnaby, and all over the lower mainland moving towards Langley.

What should you look out for when buying a new development?

If you are buying a new development it's important to know your disclosure statement, the outside date of the contract, and what you are buying into. Do your due diligence on the developer and the sales team who's building it for you because they will be your point of contact. It's important to see their past work to get an idea of what you are purchasing.

Who should be looking at a new development?

It's for everyone, as long as you are ok purchasing something off of a plan. Not all new developments have something to show that's already built. A good sales team can walk you through what you can expect when the build is done.

What is the investment potential for a pre-sale?

If you have a good realtor working for you, they can have the leg up on new developments and what's coming in the area. Depending on the location, it could be beneficial to get in at the very start of a pre-sale. If you take that risk you could see upwards of $50,000-$100,000 in one year.

What are the biggest challenges in the pre-sale market?

Manage your expectation when buying a pre-sale because you do have the potential for delays and minor changes.

Is there anything we should know regarding financing?

Sometimes people think that they need to rush and get a rate but what's important is building a good relationship with your mortgage broker. Interest rates can change a lot so put your trust in them and allow them to help you.

What are pre-sale timelines like?

Because you're moving in as soon as the home is built, the walk through doesn't always happen 30 days in advance. With a new development it's typically 7-14 days in advance. If a trade does need to come back, access will be needed to your home. It doesn't change the fact that the work is going to get done and you are covered under warranty.

Visit The Keystone website below!

www.lifeatkeystone.com/

Want to reach Tyra?

www.linkedin.com/in/tyrasauriol

www.axisrealestate.ca

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The YVR Remo Show Episode 55 - New Ways of Accessing Your Home's Equity w/ Hayden James (Mortgage Expert Series)

Wed, 10 Mar 2021 04:22:16 GMT

Learn about this new way to access your home's equity!

We love it when someone takes an old concept and turns it into something new. Today's episode features a friend of ours, Hayden James , who just starting a company called Fraction. Let's get started!

How long ago did Fraction launch?

We launched officially in the beginning of February, so about three weeks ago. We've been working on this since summer 2018.

What is your official role within a fraction your company?

I'm the co founder and CEO at fraction. We're in Canada and soon in the US.

When you came up with this concept and this idea, what were the initial reactions that you had from people?

Everyone thinks you're crazy. I know the payments part but when you start working with the lenders, investing in debt products, that becomes a big issue. On the legal side, there becomes a lot of work. W e went through about a six month legal process just to get our first set of loan documents put together. We did our first loan and then started working to put together a debt facility, which we just announced, which was $289 million to fund these loans.

Where did this idea come from?

My co-founder and I, Joshua, were working over at a real estate brokerage in Vancouver. What we got to see was a lot of the reasons why people were selling their homes. On the other side, we saw people buying residential real estate but then not living in it and not renting it out. What we really saw was that there's a massive liquidity problem that we need to solve. Homeowners don't want to give up control. Investors ask, who owns this home? What are they going to do with it? What's the downside risk? Equity investors just wanted returns that were way too hot, too high for what our homeowners were going to be willing to pay. They wanted 10% plus a year. What we saw was debt was cheaper. We started coming up with was a product in which the rate of the loan is based on the appreciation of the home. It acts a lot like equity, it has downsides in terms of we have a minimum rate that we charge, the home doesn't appreciate. If the home does well, we have a maximum amount that we charge. The effective rate is essentially the average appreciation over the term with no monthly payments.

What was your initial concept and how far are you from then to where you are today?

When we first started, blockchain was a really big thing. We were coming from a technology background. I come from working at www.realtor.com. S elling shares in your home is a lot different than a mortgage product or a loan product. What it really came down to was just getting a lot of feedback on what is possible and what isn't, what the market is willing to take, and what homeowners are willing to do.

How do you see this unfolding in other markets and do you have certain markets that you're targeting?

Because our product is based on the appreciation of the home, we have to be able to accurately judge that, which means we have to be able to come up with an initial value that's fairly accurate and come up with the final value that's accurate as well. We must have comparables that have transactions so that we can actually gauge that value. Rural properties are really hard for us because there's just not a lot of comparables and they're unique. Mobile homes or leasehold land, we just can't do. We focus on major urban areas. Anything under $10,000 people becomes pretty difficult to get enough comparables and transaction data. In the US, we do the same thing.

Markets such as Calgary, Fort St. John, and the middle parts of Canada, what's your approach in those markets?

We've done stuff on the Sunshine Coast and in places that have 1,500 people, it's all dependent on the home. The key piece of our product is that there's a minimum rate that we charge. We don't have to worry about if there's only going to be appreciation from a lending perspective, we can work with a lot of different people.

Can you explain equity to our viewers?

So equity is the amount of actual net worth that you own in your home. Imagine if you have a million dollar home, and you have an $800,000 mortgage on that home, you own 20% of the equity. If you were to sell that home today and you had to pay back that loan, how much would you be left over with? If you have an $800,000 mortgage on a million dollar home, you're essentially seeing that 80% loan to value or the mortgage is worth 80% of the value of the home. What we'll do is we'll go to 40% loan to value, which means we'll do the first $400,000 on a million dollar home, for example. That doesn't mean if there's an existing mortgage, let's say for $400,000, we won't do another $400,000, we will only go into first position up to the first $400,000 on a home.

What makes you different than a private lender?

We have five year terms with no penalties. I t gives you a long duration with all the flexibility that you want. Our minimum rate is around 3.5% that we start with. That's our interest rate, not our APR. That's about 200 basis points less than the best private lenders out there. They might be charging a little bit less on preferred deals, but on average, we're about 200 basis points better than almost any private.

In your case there is no payments? Is credit and income a consideration?

Today, we have a minimum beacon score of 640. W e're going to want to drop that over time. We're also willing to look at credit scores that are potentially lower than that but we're really going to be looking into why the credit score is less. If you have really high credit utilization, which means that you have $100,000 in available credit to you through credit cards or a line of credit and you're using $90,000 of that, that's going to impact your credit score severely, which is what a lot of people don't know. If you're going to use the proceeds of our loan that we're giving you or the equity of your home to pay down that debt, we know that your credit score is going to rebound fairly quickly because you're improving your credit utilization. Those are kind of the scenarios we'll look at. Things like bankruptcies, or gross misuse of credit are things that are harder to work with. From a repayment perspective, income is not relevant.

We work with a lot of people who are retired with zero income. We will ask for income documents. That's for our records more than anything. That doesn't factor into the decision making process on whether we'll actually do the loan , but for instance, if you're having a private go behind you in a second mortgage position up to 65%, we want to make sure you're not putting yourself in a bad position and we're not enabling that. Those types of scenarios, we'll look at it and say, does this person have an actual ability to repay this? Are they going to be potentially in a negative equity situation?

What are the different types of creative uses that you're seeing people use your product?

The scenarios that we're seeing are people are taking 40% of their existing equity in their home and going and buying an investment property . We can actually give them 40% on that as well. You can take a million dollar home with all the equity built up, and essentially go purchase a $650,000 condo with no monthly payments, and earn all the income off of that. It enables you to create an income stream as well as share the appreciation on the home.

The other one is people who are taking a portion of their home equity and putting it into other investments that are more diversified and give them a dividend. You can think of dividend paying stocks, ETFs, or retirement funds. In the US, we're looking at long term healthcare. We have also seen renovations of the home. They take out 40%, go build a laneway house, for example. What we'll do is actually make an adjustment to the appreciation or the average appreciation we make based on the improvement. You are completely taking advantage of all those improvements. We don't participate in that to be very clear.

Has Fraction been the only one who have done this type of product?

We're the only ones doing this. We're competing against the existing reverse mortgage players. We don't have as many restrictions as them because our product is very different in terms of how the rate is calculated, what you can do with it, and the types of properties you can use it on.

What is the key difference from your product to a reverse mortgage?

Privates will include their payments in a one year contract. Typically there's no actual monthly payment. and that's how we're similar to a reverse mortgage. A reverse mortgage, you have to be 55 and older because the loan to value is based on your age. The older you are, the more you can access. On the private side, it comes down to rate and the ability to access the absurd amount of cash that would be at the rate we're committed to.

There's no penalty to get out of it when life is is treating you better again, is that fair to suggest?

We're in a similar space like a home equity line of credit. We play much more in that type of space, but without monthly payments.

You can pay out this quote unquote, equity debt, and in that case it's no different than a typical mortgage with the exception of the fact that you're not making payments. Is that fair to suggest?

We put in protections for the homeowners as well. If you're seeing an appreciation, we're not looking to charge homeowners that, we have a maximum cap that we charge. We're taking the risk. The homeowner is as well but we're charging the lowest rate when the homeowner when the home isn't appreciating. We do charge a little bit more when the home does appreciate. It's all based on your net worth game. That's really what we're focused on is having what we call socially conscious finance and this alignment of outcomes with homeowners.

What is the thing that sparked interest in the last few months, as far as use case scenarios?

Building an Airbnb or a laneway house is really cool to see them put that cash to use in a positive way. We've seen people that would have most likely had to sell their home because of the pandemic. They don't have cash flow, and we've been able to help them.

What's been the number one attractor for Fraction?

Our product is not an ordinary product, it's not a standard off the shelf market product. There's an educational component. For some homeowners, that's just a bit too much, they just want to go something they have come to known for a long time.

What is the best way if someone to find out more about your product besides the obvious of coming to us first?

Give us your call. We'll help you out. Our website is the is the easiest way to find us and find some information on our product., they'll be able to get an estimate calculator which allows you to run your own scenario of what you're looking to do with the cash and see what you could do with it. You can submit your information and we can connect you.

Check out more from Fraction!

https://www.fraction.is

https://www.linkedin.com/company/fraction-technologies/

Have more questions? Get ahold of us!

We're on Instagram!

instagram.com/thrivemortgageco

instagram.com/theyvrremoshow

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facebook.com/thrivemortgageco

How to Reach US! ��

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The YVR Real Estate & Mortgage Show Episode 54 - Rising Rates & Long-Term Planning For Success

Fri, 05 Mar 2021 08:36:53 GMT

Let's Plan For Long-Term Success!

Today's show we're here to help you understand what is happening in the mortgage & real estate marketplace and offer long-term planning of what you need to consider when the market shifts like it has right now.

Where is the confusion in the market?

All of a sudden, we're seeing fixed rates start to go up when the message has been that rates are going to remain extremely low and not go up over the next two to three years.

Why of all sudden are these rates going up?

In the last week, we saw a message come out from Sherry Cooper, letting us know about the government bond yields rising 27 basis points. A day or two later, we hit 1% on the bond yield chart. We are talking first and foremost about a lever, which will impact fixed rate mortgages, and not variable rates. The bond yield is one of the key indicators of where fixed rates lie at a certain given time. With this type of an increase in a short amount of time, there was undoubtedly going to be a surge in the banks looking to increase what they call their spread, which is the difference between the cost and what you're paying for your mortgage interest rates.

Is the BOND rate affecting FIXED rates?

The bond rate reached a level above 1%. That was pre-COVID. Fixed rates were at around 2.89% to 3.1%. The fixed rate market is essentially being dictated by the bond rate. It's not going to get up to where it was pre-COVID but it just tells us we do have upward pressure coming. We're already starting to see that. We're in a low interest rate environment right now, it was only over the first month of the year where we saw rates hit rock bottom. We are still extraordinarily low.

There's so many factors that are still lagging behind such as unemployment. Based on the economic predictions right now, we're still looking at the Bank of Canada keeping its effective interest rate. This rate is what impacts impacts lines of credit and variable rate mortgages at 25 basis points for another two more years. It's important for people keep a level head about the fact that not all interest rates are being impacted, and this doesn't mean that the economy is blowing up right now.

Should I Lock In My Variable Rate?

We're seeing this surge in bond rates but we could easily see it drop back down. It's going to be very gradual, because everything's going to be taken very slowly in this current climate. The big five banks are the ones to lead this charge when it comes to rates going up and it's very minimal. People who are in a variable, and they're thinking, is now the time to lock in because we are at rock bottom? We very much could be at rock bottom. There's no need to urgently react and make decisions short term. There's nothing wrong with riding out a variable rate term.

If you had a short term plan to sell as soon as you hit the bottom, then you're going to lose. It's the same thing if you to ride the wave, you are in a better position, because you had a long term strategy. Long term planning in every capacity makes sense. If you are already converted to the fixed rate mortgage market, it does make sense to of lock in a pre-approval rate hold with us. When you are looking to shop, keep in mind, these are only held for up to 120 days. Typically, it means you have to buy in the next 120 days. It's very important to keep that in mind. This is going to impact the housing market. We're going to see when rates increase quickly or when people think they do. We see a lot of people get off the sidelines and start rushing out to make offers. If we thought things were fast and furious before, there will be an echo in one to three weeks if things continue where we'll see things heat up even more in the next little bit.

Will There Be Another Surge In The Real Estate Market?

With chattering, confusion, and mixed messages out there, it is going to cause another surge. Anyone in the real estate industry is thinking when we hear another surge, how can it get crazier? Making urgent decisions is not what we're encouraging here. We're trying to pull the curtains back and look at the true facts. We're also dealing with new variants of this disease of which I have no understanding at this point. Let's just say things go back into hiding, I don't think we're out of hiding yet but if things go back into hiding again we can see everything we just talked about reverse long-term planning.

More On Variable Rates...

Variable rates are always based on prime and the discount has increased. So what that means is the final rate that you would receive went down by .10% with a big five bank, one of our top lenders. That same lender raised fixed rates by .10%. This makes that variable interest rate option just continue to look better. If you are locked into a variable right now, and it's prime minus 50, or worse, talk to us because you can do better than that in this market right now.

Long Term Planning For Success

So let's talk a little bit about how that fits into long-term planning.

If you're if you're sitting on the fence, and you have a pre-approval locking in, that definitely goes in line with long-term planning. When you're putting in for a rate hold, you're not getting today's best rates. The banks aren't going to give you the best fixed rate today and so I just want to make that really clear, because a lot of people think fixed rates are 1.84%. The bank typically gives you a little bit of a higher rate when it comes to rate holds .

Going back to the center of COVID people are getting loose with their money right now. They're spending money on housing and all sorts of things for their houses, which is great, because typically that means they're increasing their property values over time. They're also spending a lot of money and we're seeing a lot of people paying more than they need to in this low interest rate environment.

Do a breakdown of all your expenses

Look at your credit cards, your lines of credit, your car loans, and all these other considerations when interest rates are low. They're not going to last like that forever. Look at your consolidation strategies. The interest savings are astronomical. I sometimes people that say "I don't want to refinance. I don't want to put my credit card or these types of debts in my mortgage." At the same time they're willing to spend 19-20% on their their credit card interest. That means you're just giving more money to Visa and MasterCard. They do not need any of your money.

Consolidate your expenses

Consolidate your debt into a lower cost mortgage. Increase your payment so you're paying off more faster. We do that with a lot of people. The best rates for a car loan are typically 4.99%. If your rate on your car loan is anything higher than your mortgage, you should absolutely consider rolling that car loan in and then to your point, just increasing your payments to make it meet the same timeline of paying it off. In fact, you'll actually pay it off quicker if you we actually look at those numbers, and you just increase your payment accordingly. The other thing that's crazy about car loans is it really impacts your qualification. If you are looking at long-term planning, you are looking to buy another rental home or your first rental home, vacation home, or upsize your home, a $700 payment on a $30,000 loan is going to significantly impact your ability to qualify for more. If we can restructure things now, that is the best thing you can do for long-term planning.

Start considering a nest egg

What if instead of increasing your mortgage payment, because you're paying less, what if you start putting that money aside into some form of investment. Let's say for a second, you're not interested in investing in real estate. Why not start investing in some mortgage investment corporations or start investing into anything else. You have to think about your opportunity cost if it's going to cost you 20% and you've reduced that cost down to 2%. You can take that cash money and you can earn 8-15%. That should be working towards your future nest egg. Do not forget about that nest egg because that is key. You're going to be hit retirement age before you know it. If you don't have this conversation now, it could be a really crappy conversation when you're 65. Now, this is a time of year to actually have those conversations with your financial planner with the tax season coming around. This is the time to do it with RSPs and everything else. If you're looking for somebody, reach out, we'll be happy to help.

Revise your budget and cash flow

What's in and what's out? A big example is streaming services. Some of us may have multiple subscriptions that may add up such as: Netflix, Spotify, Disney+, and more. You have 15 different things that you're subscribing to on a monthly basis not to include skip the dishes you're doing every single night because you're working late. Look at your cash flow. During COVID this was a bigger conversation because people weren't working but your budget can balloon right back up quickly if you're not paying attention to your numbers. This is the time to look long-term. We have great tools that we can share like budgeting spreadsheets and just really effective tools that can help you. If you'd like that, we'd happily share that with anyone. Also, think of your bank account. It is like your own dashboard. Nowadays most banks will offer pretty much free online accounts that are just meant for online banking. You got your main account, which has your all your expenses and your income going into, think about setting up some other accounts for certain things like taxes and vacations. Just general savings. Revise your budget and recalibrate your mindset when it comes to budgeting.

If you're a first time buyer trying to figure out should I buy into the condo that I don't want to be in for the next five years or if you're that person who's wondering how to buy that first or second investment, how do you figure that out? There's a few key points that we're going to talk about on that vision. Number one, let's just talk about it right now you're getting into the mortgage space. We saw fixed rates going up, it's going to get a lot of people to question their decision to think about going variable. I had a bunch of my clients who are already approved, calling me back over the last week asking "should we actually go fixed right now? Should we lock in today? Like, what do we do here? I always say the same thing, let's go back to why you went with that variable rate mortgage. There's one factor that seems to be the same for most people, it's something we call flexibility.

Bank Penalties

Your bank penalties are so massive, that this can impact your ability to do other things. Depending on the lender you're with, we're looking at historical low fixed interest rates. We could be looking at historical size penalties in the next two to three years when rates do come back up to normal levels. We're looking at penalties, and there's no forgiveness. It doesn't matter what the situation is a bank almost never forgives a penalty. We're starting to see the first time buyers start to get squeezed out too.

You're living in this property and you're paying off a loan, this is forced savings for you, part of this is going to principal, you're building equity, you now own this real estate. If it goes up in value, you're also gaining money on the equity of the home. Just because you buy this home today, you don't need to live in it for five or 10 years, you could buy it and move into it for a year.

Put your money in the market.

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YVR Real Estate & Mortgage Show Episode 53 - Beating The Market

Wed, 24 Feb 2021 03:53:25 GMT

How Can You Beat The Current Hot Market??

Alex McFadyen

It's been the better part of six months of nonstop fire in the real estate market. The difference right now is that it's spreading like wildfire to every market and every different region of Canada. We're going to talk about some opportunities to beat the market. There's a lot of buyer fatigue right now in the real estate space. Conversations that I'm having with real estate agents on a daily basis is that there are people dropping like flies that are stressed out. We want to give back some hope to the market, not only to those people that are shopping for resale properties, but also different ways and opportunities to beat the market , whether it's what you're actually looking for right now or just different things that you might not have thought about.

Deryk Williamson

It's a super challenging market for buyers. People are literally throwing the towel in and saying, forget it. We have a couple really good strategies that we've seen some of our clients pursue to try to get around this. Some people are deciding not to purchase here, but they're looking at other locations.

Dean Lawton

You got to really find what's going to fit for you and your lifestyle and then look at these opportunities that we're going to go through today. If one of these can work for you, I highly recommend asking more detailed questions about these opportunities. We're happy to share further details on all this stuff.

Alex McFadyen

Why is this still happening? I think we've had this conversation since May of last year. I had the same feedback all the time.

"I want to see what the market does."

"I want to see what's going on."

"Rates might come back up."

None of those things have happened other than the market going up and less people wanting to sell.

Dean Lawton

There's just not a lot of inventory. Everyone wants the same thing and that seems to be the single family home with a basement suite. There's just not a lot of inventory for that. When you have 100 people looking at one property and only one person wins that offer, we have now another 99 people looking for that same product the very next day.

Deryk Williamson

It's been starting to pick up in the Langley area. You're starting to see more people listing. Another couple of factors that play in is people can work remote, so people are moving away from the city. Interest rates are a big part of this. A lot of people were on the fence and were skeptical of the market when when the pandemic hit, no one knew what was going to happen. Everyone's going to watch and see if the market is going to tank and then when it starts going up. Now you get all these people that were on the fence and they're like, I guess now's the time. I need to make this move because I'm getting priced out. You get all these people that were looking for six months wanting to buy.

Alex McFadyen

This is across Canada. We just had clients purchase a detached home in Ontario, which was listed for $199,000. They bid $125,000 over asking. They bought it for 324,000. Literally almost double the price of the property is what was offered. I personally just purchased another piece of real estate and I was able to obtain this on what we call an off market deal, which is a private sale. I came across someone who wanted to let go of their property, we found a fair price at the time, and came to an agreement to buy the property. So and I'm not the first person to do that. Having gone through that myself, it was a fantastic experience on my end of the equation and a perfect opportunity where I didn't have to bid. I got full subjects, the seller is extremely happy, I'm extremely happy, and we will be able to make that work.

Deryk Williamson

Off market opportunities are not easy to come by. You're not gonna bump into someone when you're walking down the road and they're going to offer to sell you their home. So how do you achieve this? Talk to people and let them know you're looking. It can be anyone from friends to people in your workplace. If you're a pre-approved buyer and your realtor knows exactly what you want and need, they could potentially have a lead to put that together for you. I've seen posts on Facebook with people posting, "I'm trying to buy a house for under a million in Walnut Grove. Is there anybody out there that has anything?" It might not come to fruition, but it's definitely worth a conversation.

Alex McFadyen

It can make sense as an opportunity for a lot of people to look at making that kind of situation occur. Moving on to a second opportunity outside of market or private transactions...

Deryk Williamson

The resale market is hot. That's where a real estate agent is doing showings on a Saturday and Sunday. We're seeing 100 parties come through and accepting offers on that Monday by 5pm. Those are the situations that are causing the rush and the panic. You're getting multiple offers and everyone's really thinking "how high do I have to go?" New Development properties, I believe by law, actually have to offer you a seven day rescission period, which is essentially a subject period. You have seven days to line up your financing, typically no inspections because it's not built. After seven days, you can either decide to proceed or walk away from that offer. If you don't have a strong enough application to go subject free on a property, that's a way to get into a property because they legally have to give you that seven days.

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Everything Canadian Borrowers Should Understand About Penalties of Fixed-Rate Mortgages

Thu, 18 Feb 2021 02:41:45 GMT

Fixed-Rate Mortgage Penalties

In this article, we are going to talk about a crucial topic, how lenders calculate penalties for fixed-term mortgages.

Though often disregarded, if even noticed at all, the penalties related to fixed-term mortgages can have an enormous impact on your borrowing cost. Not surprisingly, the lenders with the most substantial penalties aren’t the best at making sure you know what you’re getting yourself into. As we’ll see, this is one of the reasons the small print is so tiny.

Based on mortgage rates staying at a similar level, penalties on a mortgage of $250,000 could be over $7,000 if it is broken within three years. The most expensive penalties for a five-year fixed-rate mortgage can be more than five times as high as the cheapest. Though nobody expects to need to end their mortgage prematurely, the unexpected can, and often will, happen in life. As a result, many homeowners with fixed-rate mortgages tend to break it earlier than they had planned, and need to pay large sums of money for penalties that they hadn’t necessarily budgeted for

In the current market, it is essential to be aware of how these fixed-rate mortgage penalties are calculated due to the different methods used being more pronounced if rates rise only slightly, or remain the same, for a long time. This is exactly what analysts are predicting for the coming years.

Let’s get down to ensuring you understand what could be the most vital piece of fine print in your fixed-rate mortgage contract.

To begin with, surprising as it may be, many lenders will use basically the same definition for their penalties on fixed-rate mortgages. It tends to be “the greater of interest rate differential (IRD) or three months interest.”

The main difference is in the IRD calculation, the rates that are used. Let’s take a look at an example.

You have a $250,000 mortgage with a rate of 2.59% fixed for five years.
You’ve had your mortgage for three years.
Interest rates today are precisely the same as when you took the mortgage.

First, we can calculate how much three months of interest would be:

2.59% X $250,000 X (3/12) = $1,619

Then it is just a matter of lenders comparing this to their IRD calculation and charging you whichever is higher.

There are three ways for IRD penalties to be calculated: Standard, Discounted, or Posted.

Standard Calculation of IRD

With a standard IRD calculation, the lender will find the difference between your current interest rate (2.59%) and the rate they currently offer that is most similar to the remaining term of your existing mortgage. In this case, you have two years left on your mortgage, so they would use their current two year fixed rate. In this example, we’ll assume it is 2.29% (a competitive rate in today’s market).

They will then take the difference (0.30% in this case) and multiply it by the remaining balance of your mortgage, and the time remaining.

This is the calculation:

(2.59% - 2.29%) X $250,000 X (24/12) = $1,500

Here are the definitions of each figure in this calculation:

This is the standard calculation for IRD. Many lenders will use this calculation to remain competitive with others who offer some of the best mortgage rates around.

In this example, the IRD calculation ($1,500) is lower than three months interest ($1,619), so you would be charged the latter ($1,619) to end your mortgage early.

Now we’re going to see how understanding the fine print can save you money.

Some lenders have adjusted their IRD calculation to give themselves much more favourable results. As we’ll see below, this can have a real impact on the cost of any penalty you may have to pay.

Discounted-Rate Calculation of IRD

Several major lenders use this calculation method, and you shouldn’t be fooled by the name.

Lenders will still start with your current rate, but they will compare this with their most similar current rate, MINUS the discount you received on the first rate.

For example, the Big Six Banks’ average rates for five year fixed mortgages is currently 4.64%. Our rate of 2.59% will have come with a discount of 2.05%

So, the lender will take the discount you received on your original rate and apply this discount to the two-year rate used in the IRD calculation.

This small change to the fine print has a significant impact on the financial cost of your penalty. Two-year mortgage rates are discounted at a much lower rate than five-year rates. The discount for a five-year fixed-rate mortgage might be 2.05%, but that of a two year fixed rate would be closed to 0.65%.

As a result, this has a serious impact on the IRD calculation:

(2.59% - 0.79%) X $250,000 X (24/12) = $9,000

Here are the definitions of each figure in this calculation:

Thought that was painful?

Our next example will show just how high penalty fees can go if you don’t understand the IRD calculation used.

Posted-Rate Calculation of IRD

Some other lenders use a posted-rate calculation for their IRD

Using the same rates as our previous examples would generate a similar size of penalty using a posted rate calculation. If the rates are higher (which can go hand in hand with this IRD calculation), the penalties can be far higher.

With this calculation, the lender will take the five-year fixed-rate BEFORE any discount, and calculate this difference between this and the most similar rate they have for the remaining fixed term of your mortgage.

The lender will argue that this is fair as they will use the posted (pre-discount) rate for both the initial rate and that of the most similar term rate they are currently posting. As we’ve already discussed, the problem with this is that lenders offer substantial discounts on five-year terms and drastically smaller discounts for two-year fixed-term mortgages. The result is a more significant difference between the two, and a more significant penalty fee to be paid.

Here is an example of a posted-rate calculation of an IRD penalty:

(4.79% - 2.84%) X $250,000 X (24/12) = $9,750

Here are the definitions of each figure in this calculation:New Paragraph

It’s not surprising that lenders use these tactics as the penalties bring in vast sums of money for them when unsuspecting borrowers decide to engage with lenders directly.

In principle, these penalties are understandable. If a mortgage is broken, costs will be incurred by the lender, and the penalty is designed to ensure that these costs are covered and to reimburse part of their lost earnings.

It isn’t fair that some lenders will use these mortgage breaks to surprise you with extortionate and unexpected penalty costs.

Most people looking for a mortgage have no idea of the significant financial risks they might be taking with lenders based on how their mortgage breaking penalties are calculated. Unfortunately, the lenders who have profited through these penalties are not in a rush to advise consumers of the risks they may be taking.

Though the government acknowledges the public’s frustration and pain because of these unfair practices, they seem to be in no hurry to force lenders to offer a more transparent service to borrowers.

Hopefully, this article will serve to inform you of the pitfalls you may face when looking to take out a mortgage and better understand the small print, which could see your potential future penalty fees increase substantially.

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Assessment Vs. Appraisal

Mon, 08 Feb 2021 22:22:21 GMT

Do You Know What The Difference Is?

The BC Assessment ties into multiple things. Property taxes are somewhat intertwined with that, based on the value of your home .

That's essentially your city's assessment of the value of your home.

The appraisal on the other hand is a lot more current. Banks, lenders, anyone that's giving you financing on a property, they are not going to take your assessment value into consideration because it's not overly relevant in today's market. The appraisal, on the other hand, is a much more detailed report , you typically have to pay for it. There's licensed appraisers that are going to come and see your property to compare it to recent sales that are similar to your property. This is done to justify the current market value of your home.

*Appraisals are much more convenient. They would be considered true value, where those assessments are tied to your property tax.

Your property tax is calculated based on what your assessment is.

If you get a low assessment in July, I'd be happy about that because that likely means your property tax isn't going to go up as much as it could have in some cases. Your property tax could go down, very rare, but it could go down. Those assessments are nothing to get upset about. If anything, you should be happy.

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YVR Real Estate & Mortgage Show Episode 49 - Subject Free Offers

Mon, 01 Feb 2021 18:04:31 GMT

Everything You Need To Know About Subject Free Offers

In this episode, we're here to talk about the hottest trending topic, it seems to rear its head around every year to two years, which is what we call subject-free offers. Any hot real estate marketplace when there's a lot of competition, low supply high demand, this is a very common topic. Today we broke it down for you to understand specifically what the heck is subject free? Why are we doing it? What are some ways to protect yourself and more importantly, is this the right strategy for you?

WHAT'S CAUSING SUBJECT FREE OFFERS IN THE MARKET?

The market is incredible right now. Our first two weeks into January, we've had more new inquiries than we've ever had. There's a lot of people that we've been working with over the last two years that have been kind of sitting on the fence, they're all coming through again. A lot of people are realizing that the market is not taking a tumble down. When a lot of people sit and watch and they start to see that things are moving, they want to get get in on the action. While rates are low, people are trying to take advantage of that as well.

This drives a busy real estate market, which then drives multiple offers, which then drives subject free offers.

People are just coming through their holiday hangovers. They are getting back to work and back to, you know, the real world. Just this year, there wasn't a ton of typical work events/parties and Christmas holidays. People were just kind of stuck around the house. It gives people more time to think and watch real estate when you don't typically do that this time of year.

If you want to think back to 2017 and 2018 in Vancouver, Toronto, and most city centers where there have always been supply issues, It's always about how do you win the offer? What can you do? How can you position yourself for success? There's so much misunderstanding around what is the subject? Why do we use it? What situations do the arise? How do I win an offer? The reality is often it comes down to someone getting advice from the real estate agent. And that just might not always be the best thing to take, right? Let's be honest here. There's a lot of great agents out there. But there's a lot of them who may be uninformed.

SHOULD YOU GO SUBJECT FREE WITH LESS THAN 20% DOWN?

If it's a strata property, as much as there's 50 lenders out there, there's three insurers to work with . If there's something wrong with that strata, and all three insurers catch it in the 1000 strata documents, that it's pretty easy for your realtor to miss or you to mis. There's no way to get financing if you don't have an insurer on board . If you're doing less than 20%, down, you should never be going subject free. Another big part of that is, subject free, typically you're not getting a deal on these homes. You're going over asking price to actually get the property tied up. Insurers can ask for appraisals. So if you go subject free on a property and you go $50,000 over asking price , the insurer could say, wait a minute, we don't really agree with that we need an appraisal . If you don't have a subject in there, and that appraisal comes in low and you only have your 5% down, you're hooped because

you have to make up the difference with your own money.

It's pretty rare that the insurers do ask for appraisals. In this type of market, when people are going up to $100,000 over asking price, it definitely can happen. The down payments are a big factor, because if you have 20%, or a big downpayment, it doesn't really matter if the appraisal comes in a bit low, right? If you have 35%, down, it's not going to make that much of a difference. There's also alternative options, there's different types of financing that we could scramble and put together.

*WHY STRATA MIGHT BE A CONCERN?

Anything to do with strata is always a concern because we know most lenders are looking to review all of those documents that a strata will provide. There could be hundreds of pages there that do need to be reviewed at certain times. Regardless of having a certain downpayment, you may just have such a major issue in those strata documents that no lender wants to move forward with. Do all your due diligence, review these things ahead of time before putting an offer in, but the likelihood of somebody that's uneducated, from a perspective of reading a full stack of strata documents and know what they're looking at, it's very unlikely that you you could do such a thing in that period of time before making an offer. That our fear is anything that involves a strata subject free, regardless of the down payment, is not not an ideal situation by any means.

It doesn't make a lot of sense to move forward by trying to purchase a property where there's any remote question about that.

WHEN WOULD YOU GO FORWARD WITH A SUBJECT-FREE OFFER?

If you do have a substantial downpayment, 35% or something in that neighbourhood, if the appraisal comes in low, so as an example, you pay a million and the appraisal comes in at $950,000 , you have that additional capital to make up to the $50,000, that you're short. So that would be somebody that I would say you are in a position to to go forward with a subject free offer, because you have that bandwidth to basically cover you and a poor situation when it comes to an appraisal.

- REAL LIFE SCENARIO

We've seen it come up in the past where there's different and older types of wiring and plumbing. We saw this happen in 2019. It wasn't disclosed upfront but what happened is eventually the lender found out that this building had knob and tube wiring. Your typical lenders don't like this type of wiring and it was very difficult for the client to obtain insurance. So I can't imagine what would have been like had this client not being able to obtain the insurance that they needed, even temporarily, they wouldn't have been able to get any financing at all. They placed a large deposit of around $75,000. That's 75,000 bucks, you lose. It's gone.

WHY IS A GOOD PRE-APPROVAL IMPORTANT?

Any of our clients that might have a little bit of a wonky income structure or their credits not quite where it needs to be like, you should not be going subject free.

The only clients that we've typically seen go subject free, have a very clean cut application.

They're well qualified , have a good size down payment , and a backup plan . We had a client go subject free six years ago. They wrote on a duplex in Abbotsford, and it wasn't allowed to be a duplex, it was non-conforming and no lenders would touch it not even private lenders. They weren't able to close. You do your due diligence and as much as those clients qualified, that was something that nobody knew. So there's just a lot more to it than just the amount of your down payment.

S elf employed clients are not the easiest clients to get approved. The mainstream lenders, like the big five banks and the triple A lenders that we work with do happen to say no. Having more than 20% allows you to go to lenders, like a private lender, like an alternative lender, because if you don't have at least 20% down, those lenders will not work with you. They just simply are not lenders that you can get a CMHC insured mortgage It's just so important to do that upfront review.

*What's a good down payment when going subject-free?

If you're going subject free and you are going in that direction, the first thing that we do recommend is ideally be in a situation where you have more than 20% down , and I say not 20%, but I say more than 20% down because we have comfort and flexibility because of the appraisal.

*WHAT IS YOUR WORST CASE SCENARIO??

Your worst case scenario is that something pops up and you cannot get financing. What does that look like? Do you have family? Do you have your parents that have a paid off home with a huge line of credit that you could borrow from if you really needed to? Or if you have wonky income and you're going in subject free? Do you have someone that could cosign and step in and help you out if it came to that? Understanding that there is a backup solution, because the worst case is that you lose your deposit and there's a potential lawsuit. That's a terrible, terrible, situation for anyone to go through. Nobody wants to deal with that.

Understand what private lending means. You need to know how those loans are structured, you need to know the costs involved, and know what the monthly budget is going to look like if you have to go that route. It will be more expensive monthly than your traditional mortgage with a bank.

GET AN APPRAISAL AHEAD OF TIME

Timelines are key when you're looking to go subject free on a property.

You should 100% order an appraisal ahead of time . A lot of these issues come up with the appraisal. There's a lot of key areas that we know where to look in regards to seeing red flags, comments in the report, certain things like we mentioned, non conforming issues, structural issues, there's some very, you know, specific areas of a report that we would look at not just value. Economic life is one of the first things that the actual the lender looks at not the value, it's actually the life of the home. That's a big one, we would 100% recommend doing an appraisal upfront, it will cost you anywhere from $300 to $400. You're going to spend $500 plus on a home inspection, no brainer to spend the same amount of money on an appraisal.

*Sometimes you can do a subject for an inspection, if you're going completely subject free, that is hands down the most risky situation you can be in. We've had some clients that will go subject free subject to the appraisal. They actually asked for two or three days to get an appraisal done. Two or three days to get a home inspection done. So it really just depends on the property and the competition. Sometimes putting a three day subject in there for one thing is not going to get you the house. So you gotta be prepared to deal with that upfront.

GET A HOME INSPECTION AHEAD OF TIME

Another thing that you can get done ahead of time is the home inspection. The inspection itself can help find a lot of the issues we talked about through the show, whether it's the wiring, the plumbing, the foundation, anything like that. Spend the $500 bucks. At the end of the day, spending a few bucks on the appraisal, the home inspection, a good lawyer and working with an incredible mortgage team and real estate agent is going to get you the home, or at least save you from making these massive mistakes. We've had probably three or four phone calls this week from people who have been declined or have not got the financing that they need in the subject removal timeline. Just imagine if these people went subject free and couldn't go ahead and do that. And the reality is it just became came down to the fact that they weren't trusting the right people and they were looking out for it.

*When you go subject free, most sellers won't let you in near their home after until you complete on the property.

We've seen this happen where you actually can't they won't give you access to the home unless you ask for it or put it in the contract. Doing these things upfront or letting them know that hey, I'm going subject free, but I'm going to do that after, it's super important that you know, you have access to that home if you need it.

- REAL LIFE SCENARIO

One client, there's a really good rate at a bank, I told him to go try them to see what happens. Just go have a conversation. He came back to me and told me that on a 10 minute phone call with this bank, they pre-approved him, no documentation, no credit, no nothing. They pre-approved him by multiplying his income by six. That was his mortgage qualification, the farthest thing from a proper pre-approval and they weren't going to look at documentation or do an application . That's how they pre approved him. Different situation was actually a mortgage broker that some clients were having some challenges with, he pre-approved them about two months ago, they've been shopping the entire time, they haven't accepted offer. They do not qualify because he didn't look at the job letters. One of the People's job letters outlines that the income isn't guaranteed. Just tying into how important it is to work with someone that knows how to do this job. Surrounding yourself with a good real estate agent that isn't going to push you into a situation that you shouldn't be in. Your realtor and your banker, your mortgage broker should 100% in a detailed conversation about this before you're ever going subject free. Those are prime examples if those people thought for a second that they could go subject free. Those are lawsuits waiting to happen.

Knowing what a true pre approval is, is so important.

WHY A TRUE PRE-APPROVAL IS IMPORTANT

One thing if you are a buyer or you're a real estate agent, this type of market will define a real estate agent or lender or anybody else, it will define someone because not pushing or making a buyer or borrower feel uncomfortable to go forward with a mortgage or a property during a time like this is so key and so important. The flip side is if you want to buy and you want to get in because you think the market will continue to grow or your family needs a home, then the key for you is working with those professionals who are going to do what they can to make that happen. So do you want to quickly do a once over on what what they should be looking for in a true pre approval.

We are doing a full deep dive underwriting of that file. We're fully underwriting the file internally, meaning we are requesting every single document we know the lender is going to request. There's no last minute, hey, I need this or I need that. We're getting everything up front. We're actually reviewing those documents. We would have spotted issues ahead of time, looking at financial statements of a corporation for a self employed borrower noticing that the company's carrying a loss, you know that individual may be paying themselves a very handsome salary, but the company's got a loss. That's an issue that a lender is not going to want to move forward potentially in that type of situation . I can't stress enough the importance of really looking at these documents thoroughly. Somebody that actually knows what the bank is going to look for and not look for and just understanding how we can mitigate some of these concerns. Knowing how to plan for the next steps when we do start to see some of these issues. That's a big one.

*HAVE FULL TRANSPARENCY WITH YOUR MORTGAGE BROKER

You have to tell us everything because if you don't, you're just digging your own grave. This actually has been happening all the time. So I'm going to use it as an example. It's pretty easy for someone that has been separated, but they're currently single to put single on their mortgage application, right? They can tag themselves as single because they're currently not in a relationship. However, they were actually separated 15 years ago, and they're paying child support, right? An application could come through saying single, we're not asking for a separation agreement. You go try to buy a house subject free and then we see later that you're paying child support payments, and you no longer qualify. So, something as small as that we do so much research, we have conversations we confirm, we double check everything that people tell us to make sure that's correct. Just tying into my point, full transparency, tell us everything and anything and we will help you guys work through it.

DEALING WITH CREDIT

There's one big one that's been coming up quite a bit over the last few months, it's credit. People will have these credit karma accounts or these, you know, these accounts where they can check their credit score and their scores. We pull the credit and we notice, great, you do have a great credit score. What happened in 2019, when you miss nine payments on your credit card, you know, it hasn't affected your credit score, yet, but something happened during that period of time. It seems crazy, but you missed nine payments in a row on your credit card, you got a great credit score still, but a lender may still say no because of that. Having the credit report looked at thoroughly is something that an individual consumer just can't do. You don't get the same information from these Credit Karma accounts and these other personal credit accounts. Doing a deep dive into that and us understanding your credit and the story that it tells is super important.

The YVR REMO SHOW premieres a new episode every Tuesday! You can catch new episodes on YouTube, Spotify Podcasts, Apple Podcasts, and anywhere else podcast streaming is available!

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Bank of Canada Update: What's Happening With Variable Rates?

Wed, 20 Jan 2021 20:18:07 GMT

What's Happening With Variable Rates?

The Bank of Canada made another change today!

Let's talk about what the Bank of Canada change means, what's happening with interest rates right now, and where are the opportunities going forward in the marketplace?

What does that mean to you?

The bank announced that with the quantitative easing program continuing to work, the interest rate is staying the same.

The key rate today is at a 0.25%. Quantitative easing is a program that's allowing us to keep interest rates low.

There are some predictions that second quarter will hit the economy harder than anticipated , we're going to continue to see that program continue to keep interest rates low for at least the next six months. That program is specifically for fixed rates.

What about variable rates?

Outlook on variable rates are good. Right now, we're anticipating no recovery until at least 2023. This means, if you're in a variable rate right now, enjoy it! There are opportunities that you could refinance your current variable for a lower rate. Talk to us if you're wondering about that.

If you're in a fixed rate, and it's above 2.69%, talk to us because you're spending too much money right now! There's a very good chance we can get you into a lower interest rate product.

If you're wondering anything else about the Bank of Canada, what's happening, or what to expect, just reach out to myself or the team here at Thrive , and we will be happy to take care of you.

Have great day and we'll talk to you soon!

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Mortgage Rates Are On 🔥 & This Is What's Moving In Real Estate!?

Mon, 27 Jul 2020 18:20:25 GMT

The market is HOT right now, so we're going to break down the 3 things you need to know going into the summer real estate market.

At a glimpse they are

#1 - Interest Rates

#2 - What's going on with CMHC

#3 - What's happening with market statistics

Let's start by jumping into interest rates. They are lower than they have ever been and the government is telling us it is going to stay low! it's currently 1% lower than it was a year ago right now. We're looking to save you $50-$75 for every $100,000 you are borrowing. That means more money in your pocket or you can borrow more money.

Let's move on to what's going on with CMHC. July 1st was intended to be a very important date for all Canadian borrowers looking to purchase a home with less than 20% down. The reason being was because CMHC made some significant changes to their guidelines which would negatively impact how much we can qualify for. The good news is that we have two other major insurers in our country, Canada Guaranty and Genworth. Both of these insurers decided to not follow these changes. Because of that decision we've seen little to no impact from these changes altogether.

Getting into some stats, we find ourselves in a very busy real estate market. in the Fraser Valley alone we are already up 800 sales, in July, from last year and we're only 20 days in. As you can see, it's a very hot market which means high values, short subject removal periods, and multiple offers. It's never been more important to be prepared going into the real estate market and a potential purchase.

If you have any questions about financing or are looking to get into the market, give us a call and we'll be happy to help.

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CAN I PUT 5% DOWN?

Mon, 27 Jul 2020 18:18:54 GMT

Can I put 5% down? Do I have to be a first-time buyer? What are the rules? What are the restrictions?

Let’s over some key factors.

To put down 5% it must be your first home, home for you, or a second home for a family member. It’s not meant to be for rental. You don’t actually need to be a first time buyer to put down 5%.

The purchase price must be under $500,000. Any purchase prices from $500,000 - $1,000,000 you can put down 5% of the first 500 which is $25,000 and then you put down 10% of the amount up to $999,999. As an example, if you’re buying a property at $700,000 that would be $25,000, which is 5% of the first 500, and then an additional $20,000 ( 10% of the $200,000 ) which is $45,000.

So again, 5% down is for anyone whether it’s your first or second home as long as you qualify.

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3 WAYS TO MAKE MONEY IN REAL ESTATE

Mon, 27 Jul 2020 18:17:40 GMT

There are 3 common ways to make money when it comes to real estate investing. Of course, there are a lot more than that but here are the 3 common things we look for in a real estate investment.

1. Cash Flow

This is the most common one but also the hardest to find you live in a major city. The reason for that is because property prices are higher but it’s still possible. Cash flow is the difference in amount of money you’re earning in rent vs. The amount of expenditures on that property. So, for example, if you have a mortgage payment, property insurance, strata fees, or property taxes, that would come out from the amount of money you earned from rent.

2. Appreciation

This one is the wild card and can’t really be banked on. Typically speaking, if you are in the Vancouver area, it’s safe to say that we can use a minimum appreciation of 2.5% year over year. This is you making money just by the property value going up.

3. Principal Reduction

Just by having someone renting out your property and paying down your mortgage, you’re going to have principal reduction. This is them paying it off for you, which is nice.

BONUS: Sweat Equity

This is where you go in and increase the value of the property by making changes, maybe even improving the kitchen or putting on some paint.

Those are 3 plus one bonus way of how to make money in real estate. If you would like to learn about other ways feel free to reach out!

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USE RENTAL INCOME TO BUY ANOTHER HOME

Mon, 27 Jul 2020 18:15:46 GMT

Are you wondering about another strategy to buy your second property?

Here’s example of how to do that with less than 20% down.

A lot of our clients have owned a piece of real estate and seen it go up in value for a period of time. We can take the equity out of your primary residence and all you actually need is 5% or 5 % of the first $500,000 and 10% to purchase that second property.

You can actually purchase your next property with less than 20% down, assuming you are moving into it. The easiest way to achieve this is to turn your primary property into a rental.

We could use the estimated rental income and that of course will help us pay for the existing mortgage. Then we only have to qualify you to a new property. If your new property has a rental suite and can provide additional rental income to help get you into that property.

That’s just one example of how you can buy a property with less than 20% down for your second property.

If you would like to learn other ways feel free to contact us!

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YVR REMO Show Episode 20 - Keys To High Performance w/ DJ DENNER (Real Estate Expert Interview)

Tue, 07 Jul 2020 18:21:37 GMT

We are at 20 episodes! What better way to celebrate than to welcome our friend DJ Denner to the show!

DJ is a luxury real estate agent who operates mainly in West Vancouver, BC. This interview was conducted a few months back when we first hit quarantine.

How has the quarantine break been for DJ?

DJ explains how he likes to take advantages of situations and see them as opportunities. Quarantine has been a moment where he has been able to improve on all aspects of his life both personal and professional. Many people push themselves to the point of burnout but it's more beneficial to set goals and write them down. Only then can you really see what's going on.

Has any changed regarding client contact?

Nothing has changed with current clients as DJ and his team regularly contact them to see if they need any assistance. DJ makes an effort to reach out to 3-5 clients per day. This is done to maintain a good relationship because as he states, "The key to success is that a relationship doesn't start until a deal is done." That is when your clients starts to care.

How did your business change during quarantine?

New clients are now met with a set of new questions. These questions are based around social distancing guidelines. For example at showings, only 2 principal decision makers are allowed on site. VR walkthroughs have always been utilized but now they are more prevalent than ever. With VR tours you can not only see the rooms but you can look up and down and move freely with a set of goggles. With foreign buyers, who are already accustomed to this technology, this method has proved to be the most beneficial. With that being the case, homebuying is still a very emotional experience. VR does help eliminate non-serious buyers. Most people will use the tech to get an idea before the physically make their way to the property.

What make a luxury experience?

"Luxury is not a price tag, rather a level of service." If you think to hotels, the

nicer, and often pricier, options will also add an elevated level of customer service. DJ applies this same strategy as he likes to go above an beyond for those looking for the luxury experience.

Together with realtor Nick Neacsu, DJ runs a team of agents under the name The Deacsu Denner Group. This team consists or realtors DJ, Nick, Kris Lazaruk, Jack Liu, and Chris Langlois. They are led by executive assistant Madison Holman. Through the pandemic, the team held great trust with each other. They all have the same level of care for their clients. You need to have empathy to be good at what you do. You have to also have a high level of energy and optimism.

How do you determine pricing for multi-million dollar homes?

Originally from Pitt Meadows , DJ moved to West Vancouver to embark on his real estate career. He became obsessed with learning the market. The houses in West Vancouver have varying prices. Neighbouring properties can have very different listing prices. The evaluation process comes down to 1 part stat and 1 part gut. DJ takes the prices of similar houses and also considers the clients goals in his process. In the end you need to know your market. If you dedicate time to your craft it becomes easy.

DJ's real estate career began in 2011 on September 5. Angell Hasman had given him a month and a half free of rent while we got established. DJ knew he had to perform and after settling in and setting up his vision board, he was able to achieve his goal of two listings that November. His first property sold was for 3.6 million that same month.

DJ has always felt the sense of responsibility to help people. You can't fake passion. The one thing that has changed is his level of focus and professionalism. He loves to look at his future self to see how he can improve.

"Wealth amplifies who you already are"

Be the most knowledgeable professional in your area. Be yourself and don't let the business change you.

If you enjoyed the podcast subscribe to the YouTube channel for weekly episodes!

Tune into any streaming platform such as Spotify, Apple Podcasts, or YouTube next Tuesday for episode 21!

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YVR REMO SHOW Episode 17 - 6 Ways To Invest In Real Estate In 10 Years

Thu, 25 Jun 2020 18:25:16 GMT

James Garbutt of Garbutt & Dumas Real Estate in New Westminster, BC joins us for this episode of the YVR REMO Show! He shares with us some of his journey's in investing, highlighting the wins and the losses as well as what he's learned from each situation. Without further delay, let's dive into his story!

THE BEGINNING

James attending Simon Fraser University in Burnaby, BC. While there, he would start a painting business on the side to help support himself. While most students were studying for exam week, James was door knocking finding prospective new clients for his business. The process of going door to door and facing possible rejection while managing a team helped prepare James for a future in the real estate profession. After working hard for his first two summers, he was able to save enough for his first down payment. The first property that James purchased was a condo for $196,000 which over time would go up in value to about $300,000. That was the first win.

"The first year of painting was more powerful than my business school degree."

The third summer painting would help him get his second deposit. The fourth and fifth summer amounted to a deposit on the second condo he would purchase. By the time the fifth summer arrived, it was time for James to make his first downpayment.

WHAT GAVE JAMES THE INCENTIVE TO BUY HIS FIRST HOME?

It was goal orientated. He knew at age 19 that real estate was a good investment. He also had nothing to lose. As a kid he would admire the houses in his neighbourhood but he never imagined that he would become a realtor because all the advertisements he saw at the time were cheesy. More on that later.

WAS THERE EVER ANY CONCERN OVER THE FINANCIAL ASPECT OF THESE PROPERTIES?

Until james had kids, he would never shy away from risk. Early on in his investing, he had the benefit of having his mom on as a co-signer. He knew he could have easily made $100,000 a year form painting houses but strived for more.

HOW LONG BEFORE HE TOOK THE STEP TO BECOME A REAL ESTATE AGENT?

After years of labour jobs from painting to lumber, he realized it wasn't for him. The main thing was shedding the cheesy stigma he held for realtors. He needed to have an open mind. Being an avid MLS browser, he decided to take the leap.

"If i'm going to work hard, whynot work for myself."

James went through the realtor course in about a month and wrote the exam a month later. He started selling in March of 2008 and sold 15 houses that year! It took 3 months to get a deal and 6 months to see his first paycheque. By labour day, James was sitting at 6 deals. His whole intent was to find deals for buyers. in 2009, when the market returned to normal, he continued his methods of finding buyers. Back then Facebook was still the main form of social media and helped greatly. 2009, his first full calendar year, he had reached an amazing 52 deals!

HOW DID HE GET PAST THE CHEESY ADVERTISING?

Now he agrees that it's important to put your face on a flyer. It was a feeling that he needed to get used to because farming is a big part of the business today.

15 DEALS IN A FIRST YEAR SELLING IS A LOT, HOW DID DOOR-KNOCKING CONFIDENCE COME INTO PLAY TO HELP ACHIEVE THIS NUMBER?

When you knock on 20 doors as a tradesman, one will say yes. Customer service was appreciated where in real estate it is expected. The aspect it helped with was the ability to fail. In real estate, fishing leads doesn't last forever.

FIRST DEAL STORY

James went into a for sale by owner who was, at first, reluctant to give the listing to him right away. He offered to write up the contract if they found a buyer or atleast help them through the process . The seller found a buyer two weeks later and took James up on the offer. The buyer flaked out of the deal and did not remove subjects. It was then that James got the listing and sold it one month later. He has always felt that it goes miles to help people out of courtesy.

AT WHAT POINT IN YOUR CAREER DID YOU TAKE ON YOUR NEXT TYPE OF INVESTMENT?

By the time James had started selling, he was already 3 condos deep. By nature, he was a builder and recognized the added value to land. In early 2010 he had purchased a lot in the Moody Park area. He built a house for $330,000. There were many lessons from this build. He was hit with a 2 month absence from the builder, realized the main floor had 8ft ceilings, and the design was very plain. What did he learn? He learned how to qualify a builder, access the cost, and not to obsess over details.

From there he purchased a house built in 1812 located in Queen's Park. The house had been in a state of falling apart. The location was great and the lot was 8,200 square feet. Building a new house right away wasn't possible because of finances so James decided to wait. In that time, the city of New Westminster placed a heritage protection on that neighbourhood. This posed many problems, one being the garage. 100 years ago garages were detached and the heritage protection would ensure it stayed that way. He had already submitted his first design application with new design guidelines. Still sitting on that home, he's now looking for a heritage revitalization agreement. Even though he has it rented there's still a loss of $2,000/month. There's 44 trees that surround the property, adding to the difficulty of selling. Deposits on the trees alone are $65,000. The house doesn't have all of the original assets so it can be replicated but that involves rezoning and consultants. This is about a two year process. Its the only way to get two homes out of one. it also adds density to the neighbourhood. What he's learned is when the city does something for the right intent, about 600 homes get affected in different ways.

WHAT ADVICE WOULD YOU GIVE FOR SOMEONE FACING THIS TYPE OF PROPERTY CHALLENGE?

It comes down to what type of builder or investor you will be. If you are a builder, you can't have holdups like a rezone or tree's getting in the way. It's the city you are willing to work in. Burnaby, Coquitlam, or Langley are examples of cities that may be a little easier to build in. New West and Vancouver are not as easy of a market. If you are building on the side, you don't compete on cost but rather become more speculative. The slow process can mean more headaches. If you want to build something cost sensitive, the moment you get your plans you add value to the lot.

WHAT ARE SOME OTHER INVESTMENT STORIES?

The USA economy wasn't doing well in 2014 and buying housing became extremely affordable. James paired up with a partner and bought 4 houses in Atlanta, Georgia. This proved to be his biggest loss to date. The houses were government subsidized making them look very good on paper. The rent was covering itself but the issue came with the high turnover rate of tenants. The neighbourhoods where these houses were located were very low income. When a majority of these tenants would move out, they would strip the houses making them unlivable. Despite the easy cash flow, the repairs were becoming costly and eventually they sold the properties for half of the purchase price. They had only owned these houses for 2-3 years before cutting their losses.

Another venture he had was Predator Ridge in Vernon, BC. This was in 2016. He wanted a property to escape from the city. He fell in love with a cottage but it was 50% down for a resort property so he instead purchased a larger house for 20% down with the intention to rent it through AirBnB. The income from rentals would bring in about $4,000/week . Even though the bylaws allowed rentals, the neighbours hated this. 24 of the 26 units were owner occupied. One summer of rentals was enough for a vote to change the bylaws. Now the bylaw states that rentals must be a minimum of 6 months teaching James of the hassle of owning a second property as a vacation home.

There's a draw to making a vacation easy. Once you start doing the math, put an hourly rate on your time and redo those financials. If you don't travel consistently, give it a second thought.

WHAT DO YOU SEE FOR THE FUTURE?

In the last 2-3 years James has set the financial bar higher. If he can get a 10% conservatively, the property has to look better than it did before in the past. Markets are liquid but properties are not and a return is very important. Properties in Whistler, for example, aren't liquid but properties near a skytrain are. Anything that involves rezoning and approval is not liquid. You need ability to access cash and capital from the property. Looking at himself as a long-term growing real estate investor, he can't chase the low stuff anymore. He didn't beat the market but complicated the path to where he is today and learned valuable lessons along the way.

James feels that coming off of a 2016 peak and a 2020 pandemic, there will be and uptick. The next 1-3 years secure what you hold to carry. In 2022 we may see a run.

You can visit James Garbutt page at

https://jamesgarbutt.com/

He has a podcast of his own so give it a listen and see you next week!

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YVR REMO Show Episode 18 - Should you Take a 1.99% Fixed Rate?

Thu, 25 Jun 2020 18:23:53 GMT

Over the last few days we've been hearing quite a bit about this 1.99% fixed rate. It's the lowest advertised rate we've seen in Canadian history. There are other things to consider and solutions when it comes to this. Is it right for you? What should you be looking at?

What's happening is typical for spring market behaviour. It's arriving late this year because of COVID-19. HSBC was the one who stole the attention this year by announcing a 1.99% fixed rate.

99% of the time the best rate is not the best product. Additional costs and restrictions often come with these type of low rates mortgages which is what we will break down today.

WHY MAY THIS PRODUCT NOT BE YOUR BEST BET?

Every lender has a very similar product to this at almost the same rate or just above. It's what's attached to the product that matters.

The biggest pitfall to the rate may be the penalty. If you take a 5 year fixed mortgage, the average Canadian breaks their mortgage every 3 and a half years. If you have a fixed rate of 3.30% and want to move into a 2.20% variable, your penalty is $23,000. That type of restriction will prevent you from those savings.

Even with HSBC, a lot of people do not qualify for this product. This is for a high ratio, you pay for the mortgage, type of product. If you are putting down 20% or doing a 30-year amortized loan, you likely will not qualify.

There's one restriction to these type of products and it's a bonafide sales clause. This means you can't change lenders with that same property. You have to sell the home to get out of this restriction and pay the penalty.

example:

Let's compare the 1.99% rate with one listed at 2.13% for a loan amount of $400,000. The difference comes out to $27/month. The total interest over the course of 5 years is $2,600.

We predict that we are not at the rock bottom for interest rates. With a fixed rate, if you lock in, you are paying for the comfort. Interest rates technically should be in the 1.00% range today. There is a buffer that could diminish, economy given. Historically, rates should be at 1.60%-1.75%.

If our clients do take a variable rate, there is a maximum penalty of 3 months of interest.

FULL FEATURE MORTGAGE

If we assumed we had a 2.13% fixed rate and fast forward to year 2 of a 5 year term , we would have 3 years left. If you decide to break the mortgage, how is the rate calculated? They would look at what the current 3 year fixed is. There's 3 years left in the term so this is what they are comparing it to. Today's 3 year fixed is 2.39%. You would actually pay a 3-month interest penalty because the 3-year fixed rate is higher. In this case it would function like a variable and pay that 3-month interest.

PRODUCT EXAMPLE

There is three different kinds of fixed rate mortgages

Standard
Posted
Discounted

If you are going fixed, you want the standard method. Almost all banks use the discounted or posted method. using HSBC's method on the above example, we are looking at a much higher penalty. $23,000 of cancellation fee could stop you from being able to refinance. These are all assumptions and we can't predict your exact penalty but these rough numbers give you a very good idea as to what you may face.

If you are selling and buying another property, there's portability clauses if you have a full feature mortgage. If you didn't take the low rate product, you have the ability to port your mortgage to another property to avoid that penalty. We tell clients not to bank on that because there are some scenarios where you can't port. For example, when you add people to the mortgage, you can't port. Some lenders don't finance remediated grow-ops.

There are a lot of low interest rate options available and when we see it advertised, it's marketing and media buzz. Take a car advertisement for example. You see a price on TV and when you get there the price goes up. In the end it's a product designed to make money. If you're bank can't explain the terms of the penalty, you have a problem.

Tune into any streaming platform such as Spotify, Apple Podcasts, or YouTube next Tuesday for episode 19!

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WHAT'S THE DIFFERENCE BETWEEN A MORTGAGE BROKER VS. A BANK?

Wed, 24 Jun 2020 19:02:33 GMT

Have you ever wondered what the difference is between a mortgage broker vs a bank?

First and foremost, we work with all of the banks. We also work with credit unions, monoline lenders, and private lenders. Most importantly, we work for you!

Although people at the banks are great and treat you well, they don't have anything other than the strategy that makes sense for them. Their goal, as a company, is to earn money.

If we've been able to save you money through a strategy, interest rate, product, or buying more properties, then we've accomplished your goal with your family.

KEY ADVANTAGES OF USING A MORTGAGE BROKER

We don't work for any one institution. We simply for work for you.
There are many lenders that you can't access on your own, through an online source, or through an institution.
Licensing and expertise. We have to go through independent licensing to keep our licensing up and all we do is mortgages. We don't do TSFA's, credit cards, or anything else.

Another key consideration is that we treat our clients independently. You are not a number to us and we don't try to sell you on products you don't need.

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YVR REMO SHOW Episode 16 - How Will The CMHC Guideline Changes Affect the Housing Market?

Wed, 24 Jun 2020 19:01:00 GMT

We are back after a one week hiatus for episode 16!

CMHC has dropped a bomb on us that will change, what might be, the lending market over the next little while. They predicted that we will see a housing price drop and recently made an announcement that tells us they will do everything they can to make that a reality.

WHAT WAS THAT ANNOUNCEMENT?

On June 5th, CMHC announced changes to guidelines regarding insured mortgages. This included reducing the debt to income ratio, changing what down payment options are available, and credit score requirements. We'll jump more into this further down.

WHAT IS MORTGAGE INSURANCE?

Mortgage insurance is insurance for the lender. Essentially, this protects the lender if they have to take you into foreclosure and take the property back. CMHC or any other insurer will cover these costs of loss for the lender. These are for mortgages for less than 20% down. A bank might look at, for example, a million dollar property with 5% down and see it as too big of a risk. If there was a decline of 10% in the real estate market it wouldn't allow much breathing room. The borrower pays a CMHC premium which ranges from 2.8%-4% of the mortgage amount and gets added onto the mortgage. This is an aspect many people often look past. This insurance allows Canadians to own homes safely and securely. It's extremely profitable as there's less than . 25% of people who do default on their mortgage payments.

IS CMHC THE ONLY INSURER?

CMHC is government held. We have two other insurers who have come into fruition since CMHC. One of those is Genworth. What's the difference between them? There's different types of programs and risk portfolios that CMHC may not insure that the others will. For example, when buying a strata property, a bank will want to go with Genworth because they will review all of the strata documentation upfront where CMHC will put that work onto the bank to take care of.

Genworth offers solutions for those who are self-employed when buying with less than 20% down. The bank may be on board but they still need to get approval from the insurer who has the final say.

CMHC brought about the stress test towards the end of 2016 and other insurers were mandated to utilize it. We saw the inability to insure refinances and rentals over longer amortization periods.

WHAT ARE THE NEW CHANGES TO CMHC?

Downpayment - There was a way to use borrowed down payment but that has been stripped away by CMHC.
Credit - Before you could have a credit score below 600-620. There is now a minimum requirement of 680 for a single borrower. This change will have a higher impact than the others.
Debt To Income Ratio - If you're qualified for a mortgage application and buying with less than 20% down, you can use up to 39% of your income to cover the cost of housing (strata fees, taxes, & heat). This will be reduced to 35%.
Total Debt - It used to be 40% of your income which is now changed to 42%. This amounts to a 14% decrease in borrowing power.

Most lenders don't get to choose their insurer. If a client gets declined, our guess is it will flip over to the next option. We could see a bank liking this new guideline and therefore adopting it.

HOW LONG WILL THIS LAST?

CMHC itself is a government entity and, if they choose, this could be a permanent change. They have already guaranteed a 12-month period for the changes to maintain. One of the biggest goals they have for doing this is to stop demand. This could mean good news for investors as these changes may cause more renters due to less people buying.

WHO WILL BE AFFECTED?

Anyone putting down 20% or more will not be impacted by this. People who own a good amount of equity will also be safe as refinancing is not affected by these changes. Investors are a third group that won't suffer the effects from this. We could see a lot of co-signers and parental help transpire in the near future with these changes. Real estate is proven as a solid way to build wealth and people will find a way. Anyone can put down less than 20% but you just need to deal with the insurance fee. We see a lot of people buy a vacation home this way.

These changes will take place on July 1. If you are buying and are hoping to avoid them, you need to be fully approved before that date. Knowing what you're qualification is will be prudent. The qualification rate has dropped. It has gone from 5.19% to 5.04% and ultimately to 4.94%. Be prepared and get in touch with your broker if you have any questions at all.

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WHAT TO DO WITH YOUR TAX BILL IN 2020?

Mon, 15 Jun 2020 14:59:49 GMT

Your property property tax bill came in and you're wondering WHAT DO I DO?!?

What grants do i take?

Where is the money?

We're here to break it all down for you!

The first thing to do is make sure you read that property tax bill thoroughly. There are usually grants showing on that bill which are very easy to understand. Most homeowners qualify for the first grant, which is actually living on the property. There is a second and third which involves going to the website and following the instructions. Following that, you can actually go straight to city hall in order to claim your grant from there.

You may be paying your property taxes with your lender. If that's the case, it's very easy. You can find out how much you have carried with your lender in something called a property tax account. This can be located online or by going direct to the lender via phone call. Usually there is enough or more than enough in that property tax account that your lender is going to pay that on your behalf on July 2nd which is the deadline.

There is the ability to defer your property taxes. If you are over the age of 55, or fall into a few other considerations, you may defer your property taxes. Our recommendation is that you consult with the city to see whether this decision makes sense for you.

If you have any other questions about property taxes, make sure you read that bill or talk to the city directly. If you have any other questions about mortgages, reach out to us!

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CAN I REFINANCE MID-TERM?

Mon, 08 Jun 2020 14:58:55 GMT

The biggest question we have been getting is "Can I refinance or restructure my mortgage mid-term?"

YES YOU CAN!!

Here at Thrive, we look after your mortgage for the life of your term. One of the oppurtunities we find is that interest rates and the market changes and adapts. We see this as an oppurtunity to save our clients money!

IS THERE A PENALTY FOR REFINANCING?

We will help you find this and whether or not it makes sense to pay that in your current situation.

DOES REFINANCING MAKE SENSE IF I'M LOOKING TO CHANGE MY PAYMENTS OR REPAY MY MORTGAGE FASTER OR SLOWER?

That is another thing that, as your mortgage broker, we will look into.

THREE YEARS INTO MY TERM, CAN I TAKE MONEY OUT OF MY PROPERTY?

The answer to that question is yes.

There's a lot of reasons you may want to refinance mid-term. If you are working with us, we will reach out frequently to present those oppurtunities.

If you want us to help optmize your situation, reach out to us!

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CELEBRATING 1 YEAR OF THRIVE!

Mon, 01 Jun 2020 15:00:46 GMT

Has it already been one year?!

June is a special month for us as it marks the one year anniversary for Thrive Mortgage!

We'd like to thank everyone that has made this year special for us. We pride ourselves on going above and beyond to help you get that home of your dreams!

Big things are coming in the future and we would love you to be there alongside us for that journey!

How to Reach US! ��

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YVR REMO Show Episode 15 - WHAT's HAPPENING WITH OUR ECONOMY w/ special guest DR. SHERRY COOPER

Thu, 28 May 2020 15:01:55 GMT

This is a very special episode for us. We welcome Dr. Sherry Cooper to the YVR REMO SHOW!

Sherry comes with a history of being the chief economist for BMO, has written many books, led the way for women in the economic space, and today she is the chief economist for Dominion Lending Centres.

Today we discuss what's happening in real estate, interest rates, and the overall economy during the COVID crisis and what she expects to happen.

Let's start by jumping into her backstory.

Sherry was born and raised in Baltimore, MD. She didn't decide on a career in economics until deciding to take an economics classes in university. She fell in love with the phycological and mathematical aspects of the topic. Sherry then continued her education to pursue a PhD. Upon completion, she went to work in Washington. She came to Canada with her then Canadian-born husband who had been offered a job in Toronto. Not sue about the move, Sherry decided to try living in Canada for a year and has never returned since.

Fast forward to day.

Have you experienced anything similar to this pandemic in the past?

When toronto was hit by SARS, it intrigued Sherry as to what the implications were going to be on the economy. She had met a number of public health professionals who said it was a matter of time before we would have a pandemic on our hands. There were those who thought H5N1 would become this talked about pandemic. At that time, she wrote a report outlining what effects such an occurrence would have on the economy. She knew it would require a major lockdown. Once things blew up in China, Sherry wondered if COVID-19 could be the big one, and it wasn't until March that the World Health Organization announced the lockdown, but all the signs were there beforehand.

What is the biggest thing from an economist standpoint that we can learn from this?

We are very unprepared for this type of event. Government public health officials announced the seriousness of the disease but the general public ignored most concerns. What we need to do going forward is have a dedicated department to look at potential disease outbreaks. Everyone in Canada has access to health care, so our country is more prepared than others. The loss of jobs, especially in the USA, is impacting those greatly who are unable to get proper health care.

What are your views on what the government and the Bank of Canada are doing and do you think it's working as well it could be?

At the beginning of March we saw a 150 basis point rate cut, proving how serious this pandemic has become. When that happened, Sherry was certain that it was not the usual recession. The government has responded and continues to increase assistance.

Do you foresee dramatic income tax increases to recoup money over the next several years?

The good news is interest rates are extremely low at this time. The cost of borrowing money by the federal government is very low. The Bank of Canada is buying government bonds, so in essence, they are financing all of this government spending. This is ok for the period over which the economy needs to regain its potential growth. Ultimately down the road what happens? Right now we're increasing the supply of money to provide enough liquidity to those that need to borrow in order to maintain throughout this disruption. Normally it would be considered inflationary but it's opposite because it's a medically induced coma. It's a government forced shutdown that has nothing to do with the economy. In time, the Bank of Canada will let its balance sheet shrink again, and as the economy comes back, we'll see the debt diminish. It will probably take years to get back to where we were at the end of 2019. Sherry predicts that it will take 3 years but we don't really know because of the virus and the timeline of a possible vaccine.

Are we entering a form of recession for the foreseeable future?

In the second quarter, the GDP numbers will be hugely negative just by virtue of fact that everything is shut down. The GDP growth in the second quarter could be minus 40%. Even the Bank of Canada says it could be -15 to -40. With luck, well see positive growth after. There will be alot of, what economists call, creative destruction. This is when there will be some winners and some losers. We've already seen big winners through this pandemic such as zoom video podcasts. A lot of the businesses that benefit from removed connectivity are doing well. New companies will evolve as success stories from the shifting economy. Not all people will have jobs to go back to or will find new jobs. If you are working for a company that continues to pay you from home, then nothing has really has changed for you. Those who see change are professionals such as dentists or those in the service industry. There's only a certain window that small businesses can function without revenue coming in. Some of the government programs are helping with the allowance or incentives to keep employees on payrolls. The sooner we can get back out to do our jobs and create economic growth, the easier it will be to return to a growing economy. One concern is opening up too quickly means there could be a surge in COVID-19 cases. This would result in hospitals getting overwhelmed again. In provinces like Ontario, where we see larger population, this continues to be a concern.

What are your thoughts on the activity in the real estate market right now?

If it were not for COVID-19 we would have had the strongest spring season in a very long time, possibly historically. There is still pent up demand. These people will have to do it in a different way and many realtors have said they are innovating new ways of presenting their properties. One method being utilized has been virtual tours. For the realtor it's a way to focus the clients attention and show them specifically what you want them to see.

Do you think we will notice a change in the market as the 6 month mark hits?

Eventually mortgage deferrals will come to an end and the payments will become a bit higher than they were before. For those who still cannot go back to work, it brings concerns. Will these people default and have their accounts go into delinquency? The banks and lenders don't want to own these homes. They want to give people the space they need to recuperate.

Would you agree that housing, from a financial standpoint, is as safe as it ever has been to invest?

Land and real estate is finite. It has always been a great investment regardless of ups and downs. Whether or not this is the time to rush out and invest, that is a different story which depends on an individual's particular circumstance. If you are buying as an investment you will most likely be renting. Finding renters during this time, for example, could be hard. This pandemic has also affected immigration. Many foreign students were accepted for this coming fall semester but haven't been able to get a visa because embassies have been shut down. Situations like this is an example that could affect the rental demand. The cost of carrying an investment property can be higher. Mortgage rates are almost at record lows. The Bank of Canada is not going to raise interest rates in 2020 or 2021. Interest rates will remain low.

The Bank of Canada has reduced the buffer that the banks have to hold to have greater availability to provide credit. They have also become the buyer of last resort for financial assets so markets remain liquid. This is so money and credit would be available. One of the reasons that lead to the great depression is because the central banks did not do this.

Why did the banks increase their interest rates during quarantine?

When the Bank of Canada cut interest rates, the market reaction was that things were terrible. Risk premium widened tremendously. The corporate yield widened and the cost to borrow by businesses increased. There was a deer in the headlights type paralysis. The Bank of Canada took prime rate down and mortgage rates started to edge down again. Right now both variable rates and fixed rates are both very near all time lows. We haven't seen bank earnings yet since this pandemic has started and will see them at the end of May. The last ten days of May we will see each of the banks announce their earnings and we have to expect they will be down. The will also announce non-performing loans. Banks have to hold reserves against them. There is a reason bank stock prices have come down 20-30%. We could see some volatility.

Are bank deposits lower than they were pre-covid?

Not for the large banks. In some respects, the Bank of Canada's buying securities that money flows into bank deposits to offset withdrawals. The smaller lenders that don't have a deposit base to rely on that, have been helped by CMHC and the Bank of Canada, who are buying mortgages to provide liquidity for all the lenders.

Do you think cmhc will stop purchasing mortgages?

CMHC has been profitable, returning millions of dollars each year to taxpayers. If they stop, it would mean they wouldn't have those revenues. They are apart of the mechanism to support liquidy in the economy not to dampen it.

Do you think we will see things become tighter or more difficult as things move forward?

The way underwriting standards are more difficult is for those people who have lost their jobs. Many people will be on EI and won't be able to get a mortgage.

Do you anticipate policies changing to assist first-time buyers?

Banks have finally taken down their posted rates. this week when the Bank of Canada announces the 5 year conventional yield, its likely to be 4.94% instead of 5.04%. Economists can make all the forecasts in the world but it's the buyer that determines the economic activity for now. As we've seen already, there may be a second wave for COVID, but not everywhere. Each province will have a different situation.

If we see a second wave, do you think we're better or worse off and what suggestions do you have for business owners?

We are better prepared now for a second wave than the first one. Even though parts of the country is opening up, the precautionary methods are stockpiling. The vaccine world is streamlining to find something to prevent this. In Canada, where we are much more compliant to the government and we will be sensitive to social distancing.

We enjoyed having Sherry on our podcast this week.

visit www.sherrycooper.com to check out Sherry's articles or to contact her.

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YVR REMO Show Show EP. 14 - Make 17% ROI Cashflow without doing any work! w/ EPIC ALLIANCE

Thu, 21 May 2020 15:03:07 GMT

Welcome back to Episode 14 of the YVR Real Estate & Mortgage Show!

This week we welcome Rochelle Laflamme and Alisa Thompson from EPIC ALLIANCE. Joining us all the way from Saskatoon, we'll be having a conversation about making money by flipping properties in a creative way.

Where Did EPIC ALLIANCE Begin?

Rochelle and Alisa are electricians who were both taking a course in Prince Albert. They were asked to speak to inmates at Pinegrove penitentiary about non-traditional work . This is where they initially met. After meeting, Alisa had helped Rochelle build out her basement suite. It was during this 7-month friendship they discovered the Rich Dad, Poor Dad real estate investing courses. Learning that real estate was both something they could accomplish, they began their journey together. Alisa and Rochelle took 8 out of the 11 courses offered and kept their focus on the residential side of real state. Courses included creative finance, wholesaling, rent to own, lease options, asset protection, and more. Investing into your future is important. Fast-forwarding to their first transaction, it paid all of their education back. This was their first sign that this new career had great potential for income. Their first property was a remodel on a property that had two suites. Another course they embarked on was Fortune Builder's. This course helped complete their knowledge to allow them to reach where they are today. After achieving success, they decided to leave their jobs as electricians in the past and go full-time EPIC ALLIANCE!

What Is The Hassle-Free Landlord Program and Why Does It Work In Saskatchewan?

EPIC looks at markets that are cash-flow rich over appreciation. This is the opposite of Vancouver which is traditionally cash-flow poor and appreciation heavy. EPIC has an aim to invest in residential properties with long-term buy, rent, holds for cash-flow. At the end of the day, even if the market were to go down, your property values will eventually go up. It will only benefit you to have cash flow along the way. This strategy has been working great for the area of Saskatoon.

Where Are Your Most Common Investors From And How Are They Finding You?

Most investors they encounter have been coming from Vancouver and Toronto. A lot of the time, for people to be able to afford to live in those large cities, they are going to be making six-figures or more. They also generally have a property that they have owned for a long time. These two factors result in them having a lot of equity in their home. EPIC helps these investors tap into that equity and figure out how to take that good debt to make them more money with the power of leveraging. Your money should be working just as hard as you are. A lot of people come to EPIC because they don't have to live in the same province to buy a property with guaranteed tenants and peace of mind.

Why Hasn't The Recent Quarantine Been Affecting Your Market?

There are various reasons. One of the biggest is that a lot of the investors EPIC already has realized that the funds they had in stocks dramatically started reducing. They saw EPIC as a reliable source and stuck with them. While the news was reporting situations like landlords not receiving rent, EPIC remained consistent on getting their investors paid.

Where Do You Find Your Tenants And What Does Future Hold For This?

A large variety of EPIC tenants are on social assistance and are on zero alliance with the economy . Throughout this quarantine , they have only seen two tenants that could not pay their rent. There is a trade-off with social assistance meaning heavy maintenance on properties and extra care given. The benefit is that the rent comes from the government which means steady and reliable income.

What Is The Process For Working With EPIC ALLIANCE?

Initially you will be in touch with one of their sales assistants. There will be three or four qualifying questions. These questions are used to determine what their level of equity is, their goals, and whether or not they should have a discovery session phone call. On that phone call with Rochelle, EPIC will have a blueprint on how to get to their financial goals faster.

What Is The Standard Time Requirement For An Agreement With You?

The Hassle-Free Landlord Program is a two-year deal. At the end of two years the investor is given three options.

Renew and continue with the agreement for as long as they want.
Sell the property back to EPIC for a locked-in purchase price.
If there is appreciation, they could buy us out of the contract by reimbursing us for all money that EPIC has put into the property.

You invest in the property without giving us any money. You put your 20% down and pay for the closing costs. You will earn a 15% annual rate of return and get to decide when you want that 20% downpayment back. During the course of ownership, we take care of all fees to maintain and attend to that property.

How Does Guaranteed Rent Work And When Would An Investor See Their First Rental Cheque?

EPIC becomes the guaranteed tenant on a 24-month lease . Every month when they are given the rent to their investor, it will cover the mortgage payment, property taxes, plus their cash flow. EPIC pays that at the first of every month. In the contract EPIC states, they are the ones in charge of anything that can or will go wrong with the property. It also gives them control because they have to sublet to their possible tenants. The tenants only see EPIC as their landlord. On the first day of possession, rent will hit the investor's account.

What Is The Biggest Risk For An Investor?

EPIC has been around for 7 years. The risk is trusting EPIC to be your guaranteed tenant for two years. If something were to happen to Rochelle or Alisa, it's in the contract that if no payment has been on the first of the month, after 15 days the contracts dissolve. You get the property back right away and can choose to sell or carry on with the current tenants.

What Is The Typical Type Of Investor You See?

EPIC works with everybody. The typical investor is someone who is time challenged and wants to be a passive real estate investor. About 75% of EPIC's portfolio is repeat clients. This high return rate is because of how well their program works for generating cash flow.

What Are Some Reasons People Don't Take Advantage Of This Program?

Number one reason would be fear. The case most of the time in Saskatchewan is people have their properties paid off and don't see the value in using their equity to make them cash flow. Taking out 50% from their paid off home could mean having one house at retirement to four or five. That is the power of leveraging.

How Can You Reach EPIC Alliance?

Go to their website

www.epicallianceinc.com

To book a discovery session or to get on their monthly newsletter. You can call them directly on their cellphone at

306-717-7848 or 306-717-3351

Thanks for checking out Episode 14! Come back next Tuesday for Episode 15!

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DO I NEED TO BE PAST PROBATION TO GET A MORTGAGE?

Wed, 20 May 2020 15:09:24 GMT

Welcome back to Myths with the Mortgage Pug where we take your questions and concerns and break them down!

Today we tackle the question, "Must I be past probation to get a mortgage?"

The answer is NO, but there are a lot of guidelines around this question.

Example:

Someone is leaving one line of work for a similar but better opportunity. In this situation, we would just need to show their previous job or income.

Situations where this could be an issue?

If you are moving into a completely different industry we may need to see you get past probation. An example of this would be if a plumber were to switch career paths and become a hairstylist.

The common answer is no, you don't need to be past probation.

If you have any more questions about this topic, or want us to assess your situation, reach out to us!

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YVR Real Estate & Mortgage Show EP. 13 - Real Estate & Achieving Goals w/ special guest EDDIE LACK

Wed, 20 May 2020 15:08:11 GMT

We are excited about this week's episode!

Our next guest has a very unique background as he comes from a career in pro hockey playing in the NHL! More specifically he played as a goalie for our very own Vancouver Canucks! He has recently made the change to real estate and he's here to share his goals, thoughts on the Scottsdale market, and what the future holds for him.

Eddie played in the NHL for 5 years with the Vancouver, Carolina, Calgary, & New Jersey. When playing pro hockey, moving city to city is apart of the job. Coming from Sweden, Eddie enjoyed being able to live in different cities across Canada & the USA. It helped him become able to make new friends and adapt to new situations.

He has been in the real estate industry for about one year now. The interest has always been there for him in this line of work. Back in Sweden, his family has been doing it and has a few hotels that they operate.

While playing in the NHL, Eddie got the opportunity to play in Arizona and fell in love with the state. The warm weather attracted him as opposed to other major cities. Los Angeles had too much traffic and Florida had the possibility of hurricanes. Based on these factors as well as housing prices, Eddie and his family choose to make the move to Scottsdale. While playing for the Calgary Flames, he would be traded to the New Jersey Devils. Instead of moving all of his stuff to New Jersey, which would have been a temporary living situation, he decided to purchase a house in Scottsdale (over FaceTime!) and begun settling in.

Buying digitally two years ago didn't defer Eddie from making the purchase. He felt very comfortable with the transaction. Self-dubbed spontaneous, he believes it's always helpful to have your next goal in mind. It felt like the right choice to make the move.

Eddie already owned investment properties in Sweden but being in the USA, he wanted something closer that he could manage. He initially studied the rental market there. A year in, COVID-19 has slowed things down but those in Arizona seem to be doing ok.

One type of mindset Eddie lives by is that you can't be scared of an opportunity. If you never jump you will fall anyways. Any type of learning that is out there, even bad information, is there for us to learn from those mistakes. He also tries not to get caught up in decision fatigue which is having too many options and not making a choice.

Looking at the numbers and getting good advice, it helped him overcome his doubts about the Airbnb platform. He got licensed right after getting that first rental property and currently does commercial real estate.

Why are so many people moving to Scottsdale?

Eddie has some insights on this question. First, the city is young. It's beautiful like Palm Springs but there is a much younger and hungry vibe whereas cities like Palm Springs are relaxed and slow-moving. Second, tying into the first reason, there is more nightlife than most cities. He considers Scottsdale to be a mini Las Vegas. Third, for those nature lovers, the city has plenty of natural beauty and not to mention some of the most amazing places to golf.

How many people are moving to Scottsdale?

Roughly 200 people a day are moving from California. Homes in the old town of the city are attracting the most attention. There are a lot of lifestyle factors that determine are purchased. A lot of pro sports teams travel to Arizona for their spring training camps. When these teams arrive we see spikes in those areas.

Some homes in Scottsdale can make up to $10,000-$20,000/month in rental income during busy times! This usually occurs in April-May. The rest of the year we see rental income values of $2,000-$5,000 which is very good considering house prices range from $400,000-$500,000.

For Eddie, mindset is key. Take one step at a time. One thing he did to help him with his success is starting a goal book. On one side he writes his goals, his past, and what he sees as his future. On the other side, he keeps a daily schedule. It's a reminder of what he's fighting for. For properties, he will write dollar amounts in what he is trying to achieve. Right now, he's aiming at $1,000,000 a year in passive income.

Where does he see his future?

Eddie hopes to start a team within the next 6 months. In order to do that he believes it's important to build your own values first that are sustainable.

Lesson From Eddie Lack:

When Eddie started in the real estate industry it was easy to introduce himself because of his celebrity. Saying you were a former NHL goalie made introductions easy but no matter what your background is, go with it. Embrace your career. Your past may be who you were but not who you are today. That confidence will go very far in anything that you do. Remember, you aren't selling homes, you are selling advice and experience.

Are you interested in investing in Scottsdale, Arizona?

Give Eddie a call!

He's on social media as well!

The best way to reach him is as follows;

eddie@kennethjamesrealty.com

@eddielackrealestateagent

How to Reach US! ��

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YVR REMO Show Episode 12 - Pre Sale

Fri, 08 May 2020 15:11:25 GMT

We're back for episode 12!

Today we talk about presale properties and investments. We talk about everything from owner occupied properties, key considerations, and what happens with payments and GST. This episode is packed with information.

WHAT IS A PRESALE?

Essentially , this is a property that's in it's pre-construction stage. In most cases, the house is not yet built. What's the difference between a presale and a new build? A new build has a physical house already made. With a presale, sometimes the land hasn't even been cleared yet.

WHY DO PEOPLE BUY PRESALE?

There is great potential for appreciation with a presale. Because you're typically waiting 18-24 months, there's time for the value to go up by the time its ready to move in. We generally see a 2% increase every year. 5% down to secure it makes a good return on downpayment alone. Another reason is when you can't qualify right now but have an 18 month runway to build that. Owning a second property, you may not be prepared now, but a presale allows you sufficient time, in most cases, to get your finances in order.

example: We have a client who's been laid off but has no doubt he will be back to work. He bought a pre sale as an opportunity to invest now.

Buying a presale, you also have more options for interior finishing. This allows you to create the house to your liking. This can include style of cabinets or carpet vs flooring. This also plays into investing as certain style prove more valuable in resale.

There is a lot of planning that goes into buying a presale property. You need to make sure you close on the property or face the risk of losing your deposit.

At Thrive, we do a full on approval to make sure you will qualify. If you do qualify, you need to keep that top of mind within the next 12-24 months. Things to avoid include switching to a personal business as a form of income, financing a new vehicle, or missing credit card payments. You need to actively communicate with your mortgage broker during this waiting process. We can run the numbers to make sure any decision you make will work. Most lenders wont give an approval outside of 124 days from completion. There are a few that do 18-24 motnhs approvals. With most lenders, you wont be able to lock in final interest rate until 124 days out. Another important note is to not remove subjects until you've had a thorough plan made with a mortgage broker.

While waiting for a presale to finish completion, guidelines may change and property values can decline. What happens if you review your file with a bank and in two years the guidelines change and no longer allow rental income? What are your options? Should you use your home equity? We recommend always looking at using you existing property. This can help you cover the difference in the new property.

When appraisals come in lower than what you bought it for, the banks will take the lower of the purchase price and the appraised value. If purchase is $450,000 and appraised is $500,000 then you will need to come up with the extra $50,000. You have to cover the difference. If you're required to put down a 20% downpayment, you will be putting 20% on $450,000 and making difference up with cash. Its a scenario people need to think about because nobody knows what will happen. If you can position as an owner occupied property, you can put as little as 5-10% down. If it's an investment, you will need the 20% down.

Thrive can help you work through some of the unique programs that are available to cover these costs right through the mortgage.

BUYING SIGHT UNSEEN

Buying sight unseen doesn't always mean that's what you are getting. Some aspects may change such as the layout. This is something to be prepared for. Delays can also occur. The warranty factor is a good consideration as construction quality at times can be rushed. Poor construction is something you can protect yourself from. Condo construction is very different from townhomes. Most builder's either construct one or the other. It's good to make sure the builder has built this type of product before. Even with a warranty you don't want people to come in to fix one deficiency after another.

Another important piece to note is that some contracts have the ability to delay up to 10 years. You should thoroughly read the contract in order to catch something like that. It's there to protect the builder but is still something you need to watch out for. A lot of the neighbourhoods where you are buying will change. Pay attention to what will happen in that area. A presale are a long-term investment, so it's wise to make sure everything is in order.

BENEFITS

Nobody has ever lived in this property. Theres no dents, it's fresh, and there's brand new appliances. All this can be very appealing when reselling. Buying something brand new theres very low maintenance. Even though you have a warranty, most likely you wont need to use it and if you do, you have piece of mind it will be solved. When the property value goes up, people bank on that. Its a long-term play.

GST

You pay GST on top of the purchase price. Most times when you buy a pre-construction property, when you put down your deposit, thats not based on total purchase price. Thats based on price before negotiated GST. Once complete, your final mortgage and downpayment will be based on price including GST. The value has to support the purchase price plus GST. There's a lot of confusion around property transfer tax rebate. If you are a first-time home buyer and the purchase price is under $750,000, you are eligible to have zero property transfer tax. If buying as a first property, it has to be owner occupied.

NET GST REBATE

New homebuyers can apply for a rebate up to 36% of tax if purchase price is $350,000 or less. There is another partial rebate available for between $350,000-$450,000. This rebate is something you want to double check with your lawyer and accountant. If buying for yourself, you're eligible to waive property transfer tax when compared to owner occupied that is a resale. This applies to values up to $750,000 with a sliding scale.

SHOULD YOU USE A REALTOR FOR A PRESALE?

YES, you should use a realtor. Not just any realtor, use one with experience with development properties. When you are buying you don't pay the realtor a dime. They're working for you but get paid from the sales side. Their knowledge could get you a better suggestion on an investing. A property sales center will only tell you that their property is the one to go with. Realtors know their way around the contracts. A lot of pitfalls can be mitigated by working with a professional who knows these types of properties. They should be working with you up until closing.

Also, subscribe to our YouTube Channel! We release episodes every Friday! We are also available on all major podcast streaming platforms such as Spotify, Apple Podcasts, and Google Podcasts!

How to Reach US! ��

Call 604.398.5575 or Email us!

More Questions or READY to get started!?

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YVR REMO Show Episode 2 is here!

Mon, 04 May 2020 15:28:15 GMT

We're back with Episode 2 of our new podcast the YVR REMO Show! This week's topic is about going from a townhouse to house for $50, BONUS: How the coronavirus affects your mortgage.

This episode features something new! Our show is now sponsored by Farm Country Brewing in Langley City! You may remember this brewery from a recent video we shared where we visited them and tried some of their amazing beers.

Back to the podcast!

The Coronavirus

The last few weeks have been interesting with real estate. The coronavirus is affecting mortgage interest rates . Yes, you heard that right. You might be asking how?

There's fear about the Chinese economy because of this virus. Manufacturing is at an all-time low , travel is being restricted , and tourism has slowed down which is dropping the economy in China. People are pulling out of stocks and putting their money into bonds . When the bond market gets flooded it brings the prices down . Bond rates are a secure investment. How is this relative to mortgage interest rates? If the bond markets are dropping, it will bring 5-year interest rates down as well. This creates a good reason to go for the variable interest rate because if the rates drop, you have the opportunity to lock-in .

Multiple Offers & Going Subject Free

Listings are at an all-time low right now and prices are starting to come back up. Buyer activity is through the roof.

Multiple offers are when there are multiple bidders on your home. Seeing a shift into a seller's market, we have some secrets to going subject free . First is always get an inspection at a showing. Bring an appraiser and inspector . Pre-approval letters are key , but this depends on where they come from. A bank can give you a letter, but make sure they have all the required documents in order to review your credit. You want to make sure you can be qualified after you make a subject free offer. You can go subject free in a shorter time span with some of these aspects taken care of ahead of time.

It can be risky going subject free, as appraisals generally get done after an offer has been made. We can fully qualify you but the lender needs to approve that property as well.

How Can You Upsize Your Home?

The number one type of product on the market right now is the single-family detached home . A lot of people making the move to detached homes were looking for properties with basement suites .

Example:

A client had purchased a townhouse in the Langley area in 2015. They have a $350,000 mortgage remaining on a property worth $550,000 . We ran a scenario comparing keeping this townhouse vs. buying a single-family home in Abbotsford. What we found is that it only cost $50 to maintain the Abbotsford property. How is this possible? Let's break down some numbers. Let's assume this townhouse sold for $550,000 . If you factor in strata fees of $300/month and property tax of $125/month. Combined with the mortgage, payment comes to just over $2,000/month . There's no rental income to help out, they are out of pocket for that $2,000 . Upon selling and factoring in real estate fees , legal costs , and the remaining balance owed to the lender, they walk away with about $175,000 . These same people bought a single-family home in Abbotsford for $850,000 . Their 20% downpayment is about $170,000 . The mortgage amount becomes $680,000 . Because the downpayment amount was 20% we were able to do a 30-year amortization which is the longest mortgage you can obtain. On the townhouse, they put down 5% and were restricted to 25 years . The monthly payment on the new property is $2,850 . This is where you can factor in rental income, which in this case was $1,100 a month bringing the monthly mortgage payment down to $1,750 . This amount is only $50 more than what they paid for their langley townhouse! Some banks such as TD will use 50% of that rental income to help you qualify. Credit unions will use up to 90% .

Using a 2.5% appreciation rate, the townhouse is estimated to be worth $622,00 in 5 years . The detached home in Abbotsford, using that same appreciation rate, will be worth $961,000 . The detached home went up in a bigger amount because of the higher purchase price.

To simplify this all, you can lower or keep your cost of living relatively the same while significantly seeing a bigger increase for your net wealth .

Key Points in Upsizing:

1) If you have enough equity , you can sell your house which will give you your downpayment and closing costs to cover the new purchase .

2) You can escape strata and get a detached home for anywhere from $50 to $100 a month.

3) Detached markets are known to appreciate stronger than a strata market would, creating more long-term wealth .

The YVR REMO Show airs every two weeks. Stay tuned to our YouTube channel above for new episodes. If you have any questions please contact us as we'd be happy to answer them for you!

MYTHS WITH THE MORTGAGE PUG: Do You Need 20% Down To Buy?

Mon, 04 May 2020 15:26:39 GMT

In today's video, we introduce a new series of videos titled ' Myths With The Mortgage Pug ' where we break down specific myths that we are commonly asked.

We address the question, " How Come I Can't Buy With Less Than 20% Down? "

The answer to that question is simple, it is NO , you don't need 20% down to purchase.

There is a few common things we hear when it comes to putting 20% down. The first is " I'm purchasing my second property, I need to put 20% down. " This is not the case, when it comes to buying a second property or a vacation home, you do not need to put 20% down.

We also hear " I need to be a first-time buyer to put less than 20% down. " This is also untrue . In fact, if you are keeping your current home for rentals and buying a second home, you can put less than 20% down.

Call or email us if you have any more questions!

How to Reach US! ��

Call 604.398.5575 or Email us!

More Questions or READY to get started!? Just Ask US > Click Here to set up a call or EMAIL us

FINANCING OPTIONS For Business Owners

Mon, 04 May 2020 15:13:50 GMT

Do you run a business?

Are you self-employed or contracted?

Have you been in business for less than 2 years?

If you've answered yes to any of these questions you may also be wonder "How can I still get qualified for a mortgage?"

We have good news for you, we have options! We specialize in helping business owners get financing.

A lot of banks or institutions are looking for low-risk borrowers. This is determined by the money you claim on your taxes. What if you don't claim all your money because of write-offs or expenses? What if you've been in business for less than 2 years but earn enough to pay your bills? Some institutions will consider your invoices and bank statements over the last 6-18 months.

What if you're corporately paid? In these situations, you may be paid but don't take all that money personally. We do have lenders that will take into consideration your corporate income. We also have options for commercial financing to leverage your money to purchase or consolidate debts.

If you are self-employed, your number one resource should be reaching out to an experienced mortgage broker like ourselves. We can look at all sorts of different solutions to help you get financed!

How to Reach US! ��

Call 604.398.5575 or Email us!

More Questions or READY to get started!?

Just Ask US > Click Here to set up a call or EMAIL us

YVR REMO Show EP. 9 - Building Wealth With Real Estate W/ Kossi Stobbs

Sat, 02 May 2020 15:17:23 GMT

Another remote zoom podcast! Today we bring to you episode 9 of our YVR REMO Show with special guest Kosi Stobbs.

Kosi, also known as The Property Owl, is a business owner and has built his wealth from real estate. He has a unique business mindset and provides us today with a great amount of knowledge. Let's dig into his story!

Kosi's journey started with his first property. He saved up money while working at Burger King for $4.50/hr! He was able to save $200/month. Upon graduating from university, he had $8,000 saved up. As a first-time homebuyer, he was able to put down 5% on his first home purchase. This first property was a run-down townhouse. He started calling many realtors and asked one question, " I want to own ten properties by the time I'm 30, can you help me?" His goal was to find someone with experience. Diving into his first unit, he followed his realtor's advice. Two years later it was worth $200,000. He went from saving $200 a month to five years getting that to $8,000 and eventually saving $65,000. This was enough for him to invest into a property.

A side hustle is easy to do but harder to stick with. Kosi's mindset is always set on how he can get forward in his investment endeavors.

Kosi's parents bought a home shortly after coming to Canada and proceeded to upgrade until they had their dream property. They owned their last property outright for $500,000 . This is generally what the traditional person does. If they had changed their strategy they could have made more. This could have been done by instead of selling the first property, refinancing and buying a second. They could have rented the first and made the extra income. At retirement age, they could have been renting two properties and living in a third. You could possibly have three properties growing at 5%.

His strategy is built to handle downturns, you have to anticipate it. The amount of cash he keeps with each property is to prepare for this. It's usually around six months of operating expenses. It can also account for vacancy rates in the area. You never know when you will need to pay for an empty unit or repairs as a landlord. Real estate appreciates but the components depreciate. Do you have enough money to keep up with maintaining the property?

Example: Let's say you have $80,000 available to invest in real estate. Run the numbers then quadruple them. If you need $5,000 push that to $20,000. Instead of putting $80,000 down, put down $60,000 , and buy something smaller. You can now put that $20,000 down in contingency. That $20,000 gets put in the bank and only used on that property. Your rates on return will be lower but your sleep at night will be better knowing you have everything taken care of.

It's easy to do well for a short time in this industry but the key is longevitiy. Make sure you are buying the right cash flow properties , take into account the risks , and choose the right time to buy . Upcycle s, downtimes , and flat markets are all great times to buy if you apply a different strategy for each. From a business perspective, operating businesses need to focus on sustaining that business. The time we are in right now can be difficult as a business owner or landlord. When the markets hot, you may find one or two properties out of 100 that may work. You want to avoid bidding wars in order to get a good deal. In a down market, you can get more aggressive with prices and terms. You cant find more availability because there are people that have no choice but to sell.

Kosi uses a money triangle. The foundation is making sure you have a plan and the right level of knowledge. You need to be established and have your finances in order. Thes second level is what you're doing to make money with consistent and predictable income . At that stage, you can start to invest. In a down market, he puts a higher percentage down in reserve. This is because even if you don't get a tenant for 2 years you will be ok. This is a long term investment. If buying, you should acquire good properties that work and will benefit you in the long run. Stick to your plan and its hard to not be successful.

There's never a wrong time to buy an investment property if you have a plan and everything in place.

The best place to find Kosi is Instagram. His tag is @thepropertyowl. Make sure to check him out and engage with his posts which always teach and educate on his ways of investing and building wealth

Also, subscribe to our YouTube Channel ! We release episodes every Friday! We are also available on all major podcast streaming platforms such as Spotify, Apple Podcasts, and Google Podcasts!

How to Reach US! ��

Call 604.398.5575 or Email us!

More Questions or READY to get started!?

Just Ask US > Click Here to set up a call or EMAIL us

YVR REMO Show EP. 10 - The Oil Crisis and Mortgages.

Sat, 02 May 2020 15:12:40 GMT

Episode 10 is here!

It's been about 4 weeks since quarantine has started so partners Alex, Dean, and, Deryk had to get together for a podcast. We recap the state of events from the beginning of the coronavirus lockdown until today.

Lets start off with some interesting news. The price of oil is dropping! At a time where the COVID Crisis starts to level off, we see what is perceived to be the oil crisis. Oil is at -$37/barrel. Oil and energy is a huge sector in Canada, especially in Alberta. On the mortgage side, it could eventually influence the Bank of Canada to drop by another quarter percent which will affect the variable rates and line of credit. Like we said this will hit harder in Alberta. With oil going free, jobs may be in jeopardy. This is the lowest oil has ever been in our history. There is nothing to compare it to so impact is hard to gauge. If prime comes down, there could be more mortgage applications meaning more risk for lenders.

Mortgage lending has changed. One of the biggest changes we've seen has been in the verification process with an employee. Verbal verification is typically standard, however, we've found that process to be more in-depth . We've noticed lenders are looking for proof over 3 months of bank statements to verify if tenants are making payments, whether they have taxes filed, and other forms of verification. We used to get certain exceptions but we've seen a more thorough evaluation to make sure the buyer can afford the mortgage. If you're trying to get into the market, be prepared for a more strict process.

At the beginning of the year, well into March, the market was busy. When COVID came about it proved to be a mental shock and slowed things down. The loan to value for our self-employed clients has seen a downpayment from 20-25%. Private lenders have been making a big comeback and then withing a few weeks we saw our maximum loan to value as high as 80%. We saw that dip down to 60%. There's a number of reasons for that such as people pulling their money out from investments. There has been concern over property values. It's inevitable that property values will drop. If someone can't afford their house, they may access they're equity or sell below market value. Once one home sells below market value, the rest of the house nearby becomes affected. Unless you have a plan in the next few years to sell your house, do it now, It is a good time because property value is still fairly high. Everything will come back, so there's no need to worry if you are not planning to sell for another 3-5 years.

In the beginning, for about 5 business days, we saw rates drop fairly low. This creates an influx of mortgage applications. Credit unions needed to slow things down because they are not funded like the banks are. They also needed to access risk because of what's happening in the markets. Taking these big steps is about security for institutions.

We saw the variable rate discount go from prime -1 and even greater at some points. We've seen some of the banks come back since. Why did it go down and up so suddenly? Mostly, it was a shock to the system. The amount of refinances people were trying to do was huge for that 5 day period. We had a very busy spring market so a lot of those offers from February and March have needed to get fulfilled. The banks adjusted rates upwards to stop the business for a period of time. Cost of funds for lenders has also increased quite a bit. The way that banks and credit unions lend out money is partially based on the number of funds that they have on deposit. They lend against this money. When the stock markets fell down , people started to pull cash out. The banks have less liquidity and pay more for money on deposit. Some of the bank's stock prices have also fallen by 40%. Risk also plays a factor since default and unemployment are huge right now.

Where we're at today is most lenders have figured out a solution in deferrals. What if you don't want to defer and pay more interest? We got a little creative here at Thrive Mortgage. We're offering something called the ' Equity Relief Plan'. We take all of your payments and itemize that in a list or budget. We provide that as a way of understanding where you stand and whether you need to defer your payment and how it will affect you. Making smart decisions is key at this time. Deferrals are there for a reason but there is a cost to it. It is definitely better than missing a mortgage payment.

To summarize, a lot of things have changed but everything is the same. Now is the time to focus on your finances and figure out where you are and how to proceed.

We are here to help with that so reach out and we can help you understand what your next steps should be!

Also, subscribe to our YouTube Channel ! We release episodes every Friday! We are also available on all major podcast streaming platforms such as Spotify, Apple Podcasts, and Google Podcasts!

How to Reach US! ��

Call 604.398.5575 or Email us!

More Questions or READY to get started!?

Just Ask US > Click Here to set up a call or EMAIL us

YVR REMO Show EP. 11 - 15 COMMON MORTGAGE MYTHS

Fri, 01 May 2020 15:16:18 GMT

This week's podcast we go over 15 of the most common myths we hear when it comes to mortgages. At one point some of these myths may have been true but with regulation changes and an evolving market some things have changed. Let's get to it!

1. I CAN'T BUY WITH LESS THAN 20% DOWN

This is not true. You can buy a property with putting less than 20% down. There are a few occasions where this would apply. They include buying a property worth over $1,000,000 or an investment property.

2. I MUST BE A FIRST-TIME BUYER TO PUT DOWN LESS THAN 20%

This is also not true. If you qualify, you can buy a second home for less than 20% down. This second property must be a vacation home. You could also achieve this by renting your current home and moving to the second property.

3. YOU CAN'T HAVE TWO PROPERTIES WITH LESS THAN 20% DOWN

Tying into #2, as long as you rent the current property, you can put less than 20% down on the second. You can use the rental income to help you qualify for that second home.

4. YOU HAVE TO HAVE TWO YEARS OF TAX FILINGS TO GET APPROVED IF YOU ARE SELF-EMPLOYED.

This is false. In the past we have helped clients who have only been in business for 6 months by using an alternative lender. It's case by case.

example: We helped a client who worked for a software company for 9 years. He just became a contractor for that said company and is now running the income through his personal business. He had only been in business for 5 months and we were still able to help him. He still makes the same amount of money and works with the same company and we were able to show that.

5. YOU CAN'T GET A MORTGAGE ON BARE LAND

You can get a mortgage on bare land. The qualification process is the same. If unserviced, you typically need 50% down. If you are planning to build a house on the property you can get away with as little as 25% down. Servicing includes water, power, sewer, or anything you would need to build a house.

6. DEPOSIT IS THE SAME AS THE DOWNPAYMENT

What is a deposit? This is what you place when you have a seller who has accepted and wants to move forward. The deposit helps form the downpayment. A deposit gets held in a real estate trust account and is then wired to the lawyer. When you meet the lawyer, you bring the remainder in the form of a bank draft. They use that plus mortgage money to buy a property. What commonly happens when someone is selling and buying a home is we offer a deposit loan against the equity of your property.

7. YOU CAN WALK AWAY FROM A PROPERTY WITHOUT REPERCUSSIONS

You can walk away but there will be repercussions. If you walk away you'll likely lose the deposit. This could range from $15,000-$100,000. In the sellers shoes, if the market has dropped after closing, you can enforce that legally to get the difference back. If you are planning to purchase you should plan on closing on that deal. Its best to get a pre-approval and figure out your situation now.

8. YOU MUST BE PAST PROBATION TO GET A MORTGAGE

You don't need to be past probation but there are a lot of variables here. How long is your probation? Do you have a co-signer? What type of property are you buying? Whats your experience? Do you have credit? Whats your downpayment? We have gotten mortgages for people who haven't started their jobs yet. This applies if you're taking a raise and going for a jump up in a similar line of work. A lot of lenders will still consider your application in this situation. One option we can use it taking two year average of your previous income. If you're switching professions there is more risk. Lenders will want to see if you maintain in that new field. You could talk to your employer to see if they would waive probation in order to help.

9. DOING A CREDIT CHECK WITH DRASTICALLY HURT YOUR CREDIT.

Credit scores start at 300 and go to 900. The average we see is high 600 or low 700.

Pulling credit wont drastically affect your credit negatively. The more established your credit is, the less it affects your score by us doing a check. If you have zero credit you may see a small hit. For example, if you're going to buy a car and you go to multiple dealerships in a day to do credit checks, that may be a flag for a lender looking at all those credit denials.

10. THE LOWEST RATE IS THE MOST IMPORTANT FACTOR WHEN GETTING A MORTGAGE

The lowest rate is not always the cheapest solution. we try to understand our clients long term goals. We try to achieve the lowest total cost and the rate is just one of those factors that play into that. We try to figure out everyones personal situation to find you the best product. If you are buying a property to sell in one year, your bank may not recommend a variable rate. They will suggest the cheaper five year fixed rate. Taking that product may trigger a massive penalty when selling early. Have a flexible product in the event you know you are moving. All products are not alike and you are most likely getting what you pay for.

11. YOUR INTEREST RATE WILL BE BETTER IF YOU PUT DOWN A LARGER DOWNPAYMENT

If you put down 5% you will get a better interest rate. If you put down 20%, you will see a slightly higher interest rate. When you hit 20% there is no mortgage insurance premium. That premium ranges from 2.5-4%. CMHC is insurance for the lender in case you miss a mortgage payment.

12. IF I PUT DOWN A LARGER DOWNPAYMENT I WILL QUALIFY EASIER FOR A MORTGAGE

That is not the truth. You still need to qualify based on your income for the amount being mortgaged. Mortgage qualification is based on income. If you do have a large amount down, you can easily get a mortgage but it may not be with a traditional bank.

13. A CO-SIGNER WILL HELP MY APPLICATION

Your co-signer will be looked at just like the others on the mortgage. We look at their income and debt and if those aspects are not good it could actually hurt your application. They need to have enough income to service their own debts as well as enough to help service yours.

14. DO YOU PAY FOR THE SERVICES FOR A MORTGAGE BROKER

No. We are paid by the banks and lenders and this is built into their total cost. Our services have no cost to you. When do you pay for a mortgage broker? These are situations when we're working with alternative lending source or a private institution where they don't cover our cost. There are never surprise fees, its always talked about in advance. We have seen over 90% of clients not pay a fee. If you're working with a real estate agent to buy a property, they are paid by the selling party.

15. I WON'T QUALIFY FOR A MORTGAGE BECAUSE MY PREVIOUS YEAR'S INCOME WAS LOW

example: We had a client who travelled for 6 months last year. They were hesitant because their 2019 t4 was low. We just look at your current income source. If we can prove you have full time work, it will help your case with the lender. If your past years income was low we just need the story. Where does it matter? If you have a variable type of income such as commission based work. If you are self employed this could also affect your application. The vast majority of the time we can get past that.

There you have it! the 15 most common mortgage myths!

Watch the full episode from the link above and make sure to subscribe for future episodes! It's also available on all podcast streaming platforms.

The YVR REMO Show premieres a new episode every Friday!

How to Reach US! ��

Call 604.398.5575 or Email us!

More Questions or READY to get started!?

Just Ask US > Click Here to set up a call or EMAIL us

YVR REMO Show Ep. 08 - COVID-19 and Real Estate Law w/ special guest Tony Spagnuolo

Wed, 15 Apr 2020 15:19:11 GMT

We have been getting a ton of questions about the legal part of buying, selling, or refinancing right now.

Today we chat with Tony Spagnuolo of Spagnuolo Company of Real Estate Lawyers . He'll be here to answer all of these specific questions for us today.

How Has The Pandemic Affected Tony Business?

Mid-March there was fear that deals wouldn't be able to fund and keys wouldn't be able to change over. There was a lot of panic the first few weeks about that. Realtors were trying to add clauses to contracts to deal with the closure of the LTSA (Land title and Service Authority), lawyers, and rotary offices. That went away a week and a half ago when the provincial government released a list of essential businesses. Lawyers, realtors, notaries, and moving companies have been listed as essential. Now we're getting questions about whether financing or appraisal will be ok. There's also the stress of actually getting to see a lawyer in person and what does that look like? Spagnuolo Company has about a third of their staff working from home. By the time this article airs, that number will be up to two-thirds.

Are Virtual Signings Possible On The Legal Side? What Are The Restrictions and What Do We Know?

The LTSA has now allowed for remote signing of documents through Zoom or Skype . It does present some challenges. One is, the has to be in Canada and we need to see ID in advance. Lenders don't seem to be fully on board yet. Lender's have still been insisting on in person meeting but they are starting to switch towards remote.

Does this create more documentation?:

Document amount hasn't increase but we do see more challenges regarding the logistical side of documentation. Tony has to be able to email the documents to the client, they need to be able to print and sign them, and then scan it back to us. The other alternative is have a courier take these documents to and from the client. This addition to the process can cause delay. Spagnuolo Company is still allowing clients to stop by the office at this moment.

Do you think that virtual/remote signings will be carried forward after the pandemic?

The pandemic will look at how everyone does their business. With video signings the potential for fraud increases. if someone commits real estate fraud , the amount of money potentially lost will be great. Remote signings are considered high risk files.

What Are Some Myths Circulating Involving The Legal Side Of Real Estate During This Pandemic?

The buyer deciding to walk away from their deposit, essentially backing out of the deal.

If a buyer decides not to close, they will lose their deposit. They could also be on the hook for further damages. That seller has a duty to mitigate. There's carrying costs, extra mortgage payments, and a drop in price. The buyer could easily be on the hook for these extra costs. Tony has talked to about 20 potential buyers wanting to back out of their deal. Facing the possibility of facing these extra costs, every one of those buyer's had decided to close. This law is in place for any real estate contract, not just during this time.

Have You Seen Any Purchases Not Complete Or Run Into Issues Due To Quarantine?

There were a lot of clients overseas who were coming back to sign their mortgage documents, commitment letters, and disclosure statements. Travel restriction has made that impossible to accomplish. Spagnuolo Company has already extended roughly five to ten files for another three to four weeks. The other side is working with their lender to try and get those documents to an exemption for remote signing. We're seeing difficulty for a lot of pre-approvals where they are not able to come back to sign those mortgage documents. Although we can remote sign the land title documents, a lot of lenders are not allowing the remote signing of the commitment letter and disclosure statements.

Are There Other Legal Ramifications For A Buyer Backing Out Of A Deal?

Assuming it's a clean contract with no loopholes, the buyer will be on the hook for any damages suffered by the seller. The seller has to mitigate. This means they have to act reasonably by trying to act quickly and get the property back on the market.

We've seen realtors putting in different types of clauses to protect against extensions of completion. Will these hold up? What are the potential issues coming from this?

These are called forced majeure clauses. Contracts affected by an act of god such as an earthquake. Those aren't in the standard contract of purchase of sale used by realtors. Tony has been recommending not to put these clauses in. Every case is different. A realtor should always get legal advice whether it's worth it or not to include these.

Tenants Rights

You may have clients who've entered a contract for purchase of sale and they want to move in. The property may currently have a tenant residing at the property. The tenant may have given a standard two-month notice to vacate. At this moment, the provincial government does not want this to happen. Those notices may no longer be valid. Any tenant given notice after March 30th, has no effect. Anything given before that date, while that eviction notice is valid, the residential tendency branch will not issue possession. There is no one to enforce that eviction notice even though it's a valid. If the tenants wish not to move out, you're stuck.

We're encouraging realtors to communicate with the seller and tenants as much as you can.

The best ways to reach Tony:

www.bcrealestatelawyers.com

facebook.com/spagnuololaw

Watch the full episode from the link above and make sure to subscribe for future episodes!

The YVR REMO Show premieres a new episode every Friday!

How to Reach US! ��

Call 604.398.5575 or Email us!

More Questions or READY to get started!?

Just Ask US > Click Here to set up a call or EMAIL us

YVR REMO Show EP. 07 - INVESTING w/ Special Guest Derek Peever

Tue, 07 Apr 2020 15:20:37 GMT

It's here! Episode 7 of the YVR REMO Show!

Yes, we are still going strong in quarantine and will continue to release episodes through virtual meetings at home!

Today we're joined by our good friend Derek Peever , director of Peeverconn . Derek is an experienced and established investor and visits us today to share his knowledge of investing , his history, and where he's at today during the economic change.

Peeverconn group of companies is a real estate based investing organization. In the beginning, Peeverconn dealt with unfurnished rentals and lease to owns. They moved towards furnished suites. Peeverconn now specializes in furnished and equipped accommodations for corporate rentals, insurance claims, and also inbetweeners which is someone who has sold their home but not yet purchased their next property. Starting off small with renovations and holds, specifically with a condo in Agassiz for around the figure of $65,000, these investments were joint ventures for Derek. Today Derek is sitting at around 125 units!

Today we're looking at three different things. There's the resale market , the rental marke t, and the corporate rental market . They're all behaving a little differently during this quarantine that we find ourselves in. Derek has been experiencing early cancellations and move-outs. 2019 was a very slow year through regular cycles.

Calgary has been soft on the rental side but it has become a great buying opportunity. The best times to invest are often in the hardest times to make money. We feel like Calgary has the biggest growth potential . We're seeing properties in Calgary for $425,000 compared with the same type of properties in Langley at which are nearly $300,000 more in the purchase price. You can find townhouses in Calgary starting as low as $250,000.

The Fraser Valley has some incredible options as well. There looks to be an over-supply coming of condos and townhouses. Units are selling a couple of points below key pricing. Derek suggested a 'jewel in the crown' strategy. This is when the market is soft, make sure your suite has features the other units do not. This could range from being on the top floor or have a gated yard. This gives you an advantage over other sellers in a building.

Derek finds his clients mainly from online sources and word of mouth. Reviews are a key factor in filling units. The focus right now is on full occupancy. At the time of boxing day 2019, Derek had 66 vacant occupancies across Canada. Today he has 18. This comes from a variety of reasons including government workers who must now leave their jobs and come home.

Derek finds today a great opportunity to invest. He started in 2006 during the boom. That's a bad time to be a beginner because you assume it will always be that. The best time is during a buyer's market because it's named after you. Looking at Abbotsford would be a great decision. A good strategy would be to go into the various developers that are sitting on unsold units and try to put together a buyer's group. This will give buying power. You can offer then full price good terms. These terms can include GST, extra parking, extra storage , or a credit towards transfer tax. The next buyer will see that they let four units go at full price, they won't see all those terms. You want to buy at two stages. The first is when they're trying to get their construction financing and desperate to get 50% sold. The second is when the units are ready and not moving. We call this second stage standing inventor y which is what we are currently seeing take place in Calgary.

Here at Thrive, we suggest you buy to hold. Withstand the storm. You're either in wealth creation mode or wealth preservation mode.

Follow the link above to watch the full episode! It has great advice and stories to help you with your investing j ourney!

How to Reach US! ��

Call 604.398.5575 or Email us!

Sat, 27 Jul 2002 18:16:39 GMT

What's the best payment type?

You may be wondering about which payment type is the best. Is it Bi-Weekly? Monthly? Weekly? Accelerated?

Typically, most mortgages are set up to pay monthly. That would be 12 payments per year.

Bi-weekly vs. Monthly payment?

We take your 12 payments over the course of the year, so one monthly payment x 12, and we divide that by 26 (26 bi-weekly payments.)

Do you pay off your mortgage faster with bi-weekly payments?

There’s a yes and a no answer to that. Some lenders do what’s called an accelerated bi-weekly payment. That is where we take the 50% of your monthly payment and then we times that by 26. You end up paying the equivalent to one additional months payment towards the principal loan, therefore reducing your loan amount.

If you were paying off your mortgage and you went from monthly to accelerated bi-weekly, and it was going to take 25 years to pay off, this would knock off approximately 2 1/2 years from your mortgage.

There’s other types of payments; weekly, semi-monthly, and so forth. The most common way, to make it very easy to reduce your interest is that accelerated option. However, when you’re picking a payment type, make sure to pick a payment that matches and fits your budget in your specific situation.

How to Reach US! ��

Call 604.398.5575 or Email us!

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