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Updated about 3 years ago,
How to keep buying when financing dries up?
My mortgage broker has told me that I won’t qualify for any more mortgages because my debt servicing costs have exceeded 40% of my income. In reality my rental income covers almost all my costs, but the banks only count 50% of my rental income (to account for vacancies, tenants that don’t pay, changes in the market), so according to their calculations I’m extremely cash flow negative.
I’ve got about $2M in mortgages, $1.5M in equity, a household income of $200k, and $90k in rental income.
This is extremely frustrating because I’ve got $200k sitting in the bank and tons of equity, but I can’t get financing or refinance the equity out. I don’t want to just buy properties in cash if I can avoid it because I want to lever my returns with debt.
I see guys in my city with portfolios twice the size of mine and there’s just no way they’ve got day jobs pulling in $400k or more to support their huge portfolios. Is there something I’m missing about financing?
I’m in Toronto, Canada. Thank you.