Required + Recommended readings for Canadian RE

[Paolo Pascual]

Hi All,

I am from Toronto and I guess a total newbie. Started to read and listen to BP 4 years ago but now I am back after 3 years MIA. Back to listening to the podcast and re-started on the site and forums.

I was wondering if people can suggest required readings and recommended readings for Canadians.

Also, I am reading through RE in Canada and RE in Ontario sub-forums… any other recommendations for sub-forums I should read or follow?

I just want to give an example: I bought a property in Welland before for 20% downpayment, I asked the guy preparing my mortgage application if I can do smaller DP but he says no the bank would not let me because it is a rental property (someone is already renting it there and I took over) He also taught me to use my personal line of credit (the process I know you guys are more aware of than me)...long story short, I want to learn more about the mortgage rules and RE strategies in Canada such as when I can use lower than 20% DP, when I can use my personal line of credit, and refinancing, etc.

Thanks and thanks to everyone who have been answering my questions.

Paolo

[Julie Toh]

@Paolo Pascual Welcome back to BP. 

I recommend Patrick Francey's resources for foundational lessons in real estate investing in Canada. 

Regarding mortgages...If you had wanted to put down less than 20% for your Welland rental property, your contract had best contain a 'Vacant Possession' clause.

Why? 

Mortgage lenders will not concern themselves with your best intentions; it is not about what will be - it is purely about what is.

And if the property is tenanted at the time of possession, then you are effectively applying for a rental mortgage. This means a minimum 20% down payment, higher interest rates, and far more stringent qualifying criteria.

My client: "But wait, we only have 5% down and we plan to give notice and move in 60 days after we take possession."

There is virtually no lender that will approve this under any circumstances, and this has to do with the changes made by our federal government. The lender wants to trust you, the lender wants to help you, the lender wants to approve you, but the new government guidelines eliminate lenders' ability to be flexible. Lenders must answer to Big Brother, and Big Brother is very rigid.

Vacant Possession - demand it.

My client (same one): "But wait, we're buying the property as a rental anyways, so it's a good thing that it already has a tenant...right?"

No, an existing tenant is rarely a good thing. Consider the following:

• How is their lease written?
• Does it protect you?
• Are rents reflective of current market rents?
• Is there a provision for annual rent increases?
• Your costs will be increasing every year, cover yourself.
• What is your duty for notice to evict the tenant?
• Why is the seller refusing to give a simple notice?

Don't risk inheriting the seller's errors and/or headaches.

Whether your new purchase is meant to be owner occupied or an investment property, demand vacant possession or walk away.

My two cents.