I wanted to write about buying rental properties as it is getting more difficult each year to buy them.
This will focus on clients who have less than 4 or 5 rental properties
To start, most banks will only allow you to own up to 4 or 5 rental properties plus your owner occupied property. Doesn’t matter if the properties are with a different bank or not.
If you have a mortgage under your personal name, it will now show up on your Equifax or TransUnion credit bureau even if you cosigned whereas previous to 2015 that was not the case.
In the case of buying a rental property a mortgage broker can be very valuable as they have access to 30+ lenders if needed in order to fit the exact situation.
Rules some banks have when buying a rental property
- Some will only finance a rental property up to 65% of the appraised value
- Many will charge a higher interest rate for lending on a rental property
- Most will have a conservative income they will allow from the rental you are buying
- Some will have conservative calculations for income from your other rental properties
As a broker we will have lenders who all around have more favourable rules in answer to the rules most banks have I have outlined above.
We have lenders that will give their best rates, that will finance up to 80% of appraised value, will allow a favourable income from your other rentals and lastly a favourable income from the subject you are buying.
Long story short, when you are buying a rental property a broker can be very valuable in helping build your rental property portfolio so that the banks will continue to finance you.
Hope this helps. If you have any questions, please contact me.