Financing Investment Properties in 2015
Leverage continues to be one of the most powerful tools available to sophisticated global investors, as well as local Canadian real estate investors, offering many advantages including tax breaks, lower risk and maximum growth.
Traditional Bank Purchase Mortgages
The Financial Post notes Canadian banks and high street mortgage companies continue to aggressively compete in order to make loans to individuals, even in the hottest markets, while interest rates are still low. These lenders want to put their money to work and they are pulling out all the stops to make it happen. Those that have great relationships with their own banks might find they can borrow more than they anticipated with great terms. Don’t be shy about negotiating an even better deal and if you aren’t getting any love from the bank you currently use the most, talk to smaller local bank managers and see what they are willing to do if you switch your business to them.
Refinance Existing Properties
Often Canadian property investors might find they can borrow more money faster and with better terms by refinancing what they already own. This makes the current market an incredible time to restructure financing on existing homes and investment property portfolios, as interest rates are so low and are poised to increase in the future.
Real estate values are up in many other areas throughout the country, so many may be able to access and leverage their equity in order to expand their portfolios in 2015.
Those that don’t really want to hamper existing properties with new long term debt or don’t want to miss current opportunities, but are still liquidating other holdings can use bridge loans. These loans can be used to make acquisitions and improvements to new investment properties.
Commercial Mortgage Lenders
Dedicated commercial real estate lenders offer a variety of loan options. Since they specialize in commercial property, these lenders may be able to offer better deals on portfolio loans, multifamily apartments, retail and office buildings. They generally offer purchase, refinance, mini-perm and construction loans.
Private Mortgage Lending
Many wealthy individuals are now interested in loaning their capital to real estate investors. They can’t find the returns elsewhere, but may prefer debt investing to equity. These loans can provide an easy process and appetizing rates.
Partnerships offer an excellent way to find leverage alongside other like-minded Canadian investors. In many ways this can provide safety, higher yields and more diversification than investing alone and trying to self-manage investments.
There are many options for financing Canadian investment properties in 2015. The current low rates and competition between lenders is providing even better deals for investors. Now is a great time to scale and diversify. Just look around for the leverage solution which best checks all the boxes you are looking for and prosper.