looking for opportunities in rental properties

[Rizwan Ahmad]

Hi every one . As an ew member i am just exploring the opportunities in rental single / multi family homes.  working full time HVAC contractor i visit different homes on daily basis. i listened to bigger pocket pod cast many times and finally decide to jump in. i own two rental properties and have experience in fixing and renovating the house. at present i am exploring new deals but money is the major issue that is stopping me to go. the properties that i own already refinanced so no margin left in them. 

any feed back is appreciated

[Sankeethan Ratneswaran]

@Rizwan Ahmad

You didn't give enough information about type of property, loan amount, payments, whether it's cashflow or not etc. 
I'm assuming that you have only used 80% of the equity in your property. When you say your mortgage or heloc is maxed out I'm assuming you mean with the big A lender banks like TD or RBC right. So there is 20% equity in your properties still. 

You can reach out to a Mortgage Broker and ask for a second mortgage to take out the remaining 20% equity. If you go to a mortgage specialist at the bank they won't be able to help you because they only do mortgages directly for the bank they work at. So first step is to inquire and find yourself a good mortgage broker. 

Second mortgages are expensive. They're typically interest only payments and can be 10-13% interest annually. 

For example:

if you have a 500k property then your mortgage or heloc would probably be 400k
You can go to a mortgage broker and they can try and get you a second mortgage for 100k. 
Typically lenders in the Oshawa  will charge a 5% lenders fee and 13% interest. I don't know what they charge right now in this market, you'll have to ask. You also have to pay the Lenders legal fees. The loan term can be 1 to 5 years usually and you can pay it off whenever.

So 5% lender fee on 100k = 5k.
13% interest is 1,083.35 monthly payment for the loan.
Broker fee might be 1% ; $1,000.
Legal fees might be: $2,000

So you'll get $92,000 and you'll have to pay $ 1,083.35 monthly. 

The questions is....
1) what are you going to do with that $92,000?
2) How are you going to afford $ 1,083.35 monthly payments
3) How are you going to repay the 100k

The Answer is...
Open up Google Sheets (Excel) and pretend you're an accountant lol. Start doing some math. Start running scenarios on how you can afford this and pay back the loan and have a cashflowing property. 

It's just math. If the numbers don't work then don't get the loan. Wait for a good Deal, and if you need more money or can't get a mortgage approval then find a good JV Partner.

I hope that answers your question.