All Forum Posts by: Filipe Matos

yes, the 4.5% fee hurts, but if you plan to have a lot of profit from other properties on that year and the next, you deduct that fee on taxes. I am not sure how its spread, if one year or several. Yes, It works well for the long term and in terms of cash flow. I am here to buy and keep properties and live of rents with not much cash available, so CMHC helps a lot.

My investment in apartment building will only work if I get CMHC at 15% down. Reason why is because I no longer want to use my own money, I want to set it aside and relax a bit and play the no money down game. I will try to get private financing at 10% interest for the downpayment.

I will deduct all private money Interest, CMHC fee and mortgage interest on taxes, so I will probably never pay too much taxes.

My own money and the cash flow I get from the triplexes can be used if I really need it, for an emergency. You have to be very careful when you get into a high stakes of high debt and owning a bigger apartment building. That will force me to really find the property that cash flows or breaks even after all this crazy financing. I plan to renovate, so in the end the plan is to increase rents and help paying debt.

I am still not sure if all this is possible, but hey, I will research and try...

Filipe

Hi Dave, for some reason I get amazing rates at BMO 2.7% 2 yrs term , and now RBC has amazing rates for 6 plexes - 2.7% variable.

BMO has a product that allows you to buy a mixed use building that is used as residential at a blended residential/commercial rate, 3% closed for 2 years, I think this is an amazing deal.

I have a broker, but I am finding myself saving a lot of money on broker fees and ending up having better rates: RBC at 2.7% for a 6 plex?

I think if you build a very good relationship with the branch managers/bank you may end up having the same good deals , with banks that do not work with Brokers like BMO and RBC.

Yes, I am also looking at CMHC for bigger buildings with 15% down. A lot of brokers and agents tell me 15% CMHC is difficult, but it might be bulshit since they ay want bad deals to still sell and not fail on CMHC financing. If the property numbers work,CMHC will approve it.

Is the guy you are talking about a former CMHC employee that now buys big apartment buildings as main business?

I receive his newletter every month.

His contacts:

Pierre-Paul Turgeon

President : Matterhorn Investing

Founder : Multi-Family Blueprint

e : [email protected]

w : www.multifamilyblueprint.com

Filipe

Thank you Michael, RBC does residential mortgage up to 6 plex. I just talked with in the last 2 days. The only thing I am still confused about is if the downpayment is 20 or 25%. Today they told me 25%, but it used to be 20%.

The mortgage rate for this mortgage is residential, between 2.5 to 3.7%

I will be probably looking at 6 Plex in rough shape with higher cap rate since I like to renovate instead of paying for others renovations.

thanks for the tip about cambridge, I actually saw a nice 5 plex for 400K, with something I really like: 2 bedroom apartments.

thsnk you

Filipe

Hi Hernani, I hope my mini tiny house in Tavira is worth more than what I paid for 10 years ago.

in Lisbon suburbs, houses are now worth less than 10 years ago....

I see prices going down every year. going down....going down....

Filipe

Don't tell me the HD ones you are talking about are the 99$ ones :) I just saw your pictures, I like it :)

I wonder if the Doors are made of MDF, they seem to be of good quality.

I thought about them, but still need go for IKEA -Adel white- since I need it in white and I did not like the white ones at HD.

Last year I got Rona cabinets on clearance , maple doors, dark brown for 99$ a piece, that was a good deal.

Filipe

I think Home Depot starter kitchens are also melamine.

In Toronto I have seen million dollar houses with IKEA cabinets that look better than 200K houses with brand new solid kitchens. I am not saying its the best way to do it, but sometimes you get more bang for your buck by investing in style/design than on building quality.

Filipe

Hi Dave, I only used IKEA until now. How does euro style HD compares with IKEA in price? what about quality/looks?

It seems you have to do a custom order at HD, is that right? how long it takes to get the cabinets?

thank you

Filipe

Hi all,

I just started my research about apartment buildings in Ontario and already got a few surprises....

.7+ Apartment Buildings:

It seems it's very hard to get 15% CMHC financing since they will use a different cape rate than current market. In the end we may have to come up with 20% minimum downpayment and pay the CMHC commission.

A broker told me to get CMHC financing, we have to find a building where the income covers 125% of the costs including mortgage costs.

Most buildings are sold off market, meaning, they will never come on MLS... and... the Buyer will have to be the one paying the agent commission, 5% commission!! auch.....

6- Plexes

RBC offers residential mortages at 80% LTV, so I am considering start with a 6 plex to learn the ropes and later on maybe try a 10Plex.

My funds are very limited , so I might have to stay under 500K purchase price.

According to my calculations, a 10 Plex with 15% down would give me better returns than a 6 plex with 20%, but if CMHC financing is hard to get, I might have to stick with a 6 Plex.

Do you guys know of anything else I should be aware of? I have experience with 3/4 plexes, but none with bigger buildings.

If anyone has knowledge of any building for sale between 4-6 units up to 500K and from 7 to 12 Units up to 750K, on a 1hr drive radius from Toronto,, please let me know. My limit is really 1 - 2hr drive so I can "micromanage" the building.

thank you

Filipe

I think Variable Rate mortgages can be closed (you pay penalties, lower interest rate) or open (no penalties, higher interest rate).

Filipe

I have been having bad experiences with refinancing.

This is what happened to me:

When prices went up like crazy between 2009 and 2011, I decided to pull equity out of the property, by refinancing. The bank where I had the mortgage would not refinance it since they changed some of the rules, so I had to look for another bank. Got a new mortgage at 80%LTV but had to pay a penalty of thousands of dollars (tax deductable). I did extra renos on this property and tried to refinance again 1 year later with the same bank, but they only wanted to refinance up to 70/75%, AND the appraisal came lower than market value. So I spent money and it was barely worth it

The appraisals here seem to come at fair market value when you want to buy/sell, but if you want to refinance at the same bank, they come low because its common knowledge to appraisal companies that Banks do not like to refinance in order to keep their risk low.

Bought another property at 80% LTV, same thing. Spent 125K , tried to refinance an year later, the bank only wanted to refinance at 70%, plus appraisal came in my opinion 50K below fair market value. Spent 125K, only got 50K on the refinancing. 75K stuck on the property... not fun...

I believe the way to play with refinancing is to get an open mortgage or a closed mortgage for 1 year, and after renos/appreciation refinance with another bank. This way you might get fair market value on the appraisal at 80% LTV, and do not need to pay any penalty, I believe open mortgages have higher rates, so we have to look at all the options.

Nowdays I try to figure out what I want to do in advance so I can plan and chose the right mortgage term/conditions.

Filipe