http://LeahCoss.ca
Hi, everyone, how are you? It's Leah Coss with the Mortgage Center. I got a call from someone today. She apparently already owns multiple properties. And, she's worried, though, that she's on her limit. So, her question was, "Well, I already own two other properties and they're actually both rentals, I don't even have a home for myself. Can I buy more properties?" She doesn't think that the bank will qualify her.
Now, whether the bank will or will not, I thought this would be a good topic to generally give you the rules of thumb on how owning multiple properties work.
So with multiple properties, each lender, like with everything that I try and reinforce with you guys, every situation that you have, different lenders have different points of view on it. Rental properties is no different. And, in terms of how many properties you can actually own, that, too, is also no different.
So, some lenders will say once you own four properties, it doesn't matter if it's four properties with us or four properties with all different banks, we will not give you another mortgage, if you already have four mortgages in your name or even just four properties in your name.
But, four mortgages is really what concerns them. And, the reason for that is they just simply say that now you're a higher risk because the more properties that you have, obviously you're not living in all of them, and if one of your tenants is gone and you have an empty, vacant condo, basement suite, whatever the case may be, if it's empty for three months, many of you could not withstand that. You'd have to go into foreclosure.
And, it would come to be a domino effect. So, once one went into foreclosure, the other one went into foreclosure and then soon it's just dominoes all the way down the line.
So, the more properties you own, the higher of a risk file you are and therefore, many lenders just say if you want more than four properties, you're going to have to go somewhere else. You're too high of a risk for our portfolio.
Now, not all lenders take this point of view. Some lenders do something where they simply want to know that the income you're bringing in from the properties is more than what's going out. And, they want to see a 1.1 to one ratio. So, if one is going out, they want to see 1.1 coming back at you in rental income and so forth.
And, when they talk about the ratio of what's going out, that's not just mortgage, that's mortgage, that's heat, that's property taxes, strata fees if applicable.
So, that's their point of view.
So, it's hard to prove that on paper, though, unless you're declaring all of your rents, or if the rent you're collecting is a market rent but in order to prove that, we might need to get an appraiser to go in and give the lender a market appraisal for the rent.
So, it can be complicated, but it can be done. You're just going to have to make sure that the rental properties that you buy are good investments, that you have cash flow on them. So, if you're not making cash flow, then you shouldn't really want to buy properties anyways.
But, that's how that works. So yes, the quick answer is you can buy more than one property or even more than four properties. The trouble is is now you're getting into limited lenders that will even look at your file and just a more complicated process. But, it can be done.
Of course, that's just for regular conventional lenders. What about private lenders? Private lenders will always fund a deal if there's enough skin in the game, meaning down payment. So, if you've got enough down, the deal will get done as long as everything else isn't detrimental on the application.
So, if you have any questions about buying more than one property or if you want a game plan, a game plan is huge. If you want to become a real big real estate mogul and own lots and lots of rental properties, or lease to own properties or flipping properties, you need to use a mortgage broker, and I'm not just saying that because I'm a little bias, but because you need to have a game plan, you want to make sure that you're going to the right lenders, that you're not pigeon holing yourself up into a corner so you can't buy anymore.
So, definitely you need a game plan.
If you have any questions about this or you just want to get started today, I guess, give me a call, Leah Coss with the Mortgage Center. I am always happy to help.
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What to Avoid when buying a Rental Propertyby MrAlanKendall7,916 views
@milkman44107 If the free market system would be fair..but its not. Talk with some respect', we dont have to be friends but eh..and the "american dream' is not based, build on capitalism. Your a cold war product kiddo (:..I never said Russia is a good example..neither is the us. 'Social'' is OK..social is when a nurse feeds you in the hospital..do you want to live alone on the planet? 'Socialism' is needed..its the way to install it..without freedom of speech etc is useless indeed.
SiouxSyndicate 1 month ago
Thanks for the video!
milkman44107 1 month ago
@SiouxSyndicate Your just another idiot socialist! Shutup and move to Russia if you don't like the free market system!
milkman44107 1 month ago
We need a land limitation..that can stop also some over consumption.
SiouxSyndicate 1 month ago
Nice Explanation in your video! Cheers!
dofinancialteam 2 months ago
I currently have 5 residential properties and I had no problem qualifying, so you can buy more than 4 properties. The banks will always look at your debt ratio, but there are ways to keep this in check or down. So, if a bank saids no, then go to another bank or broker, but don't give up, keep searching, Some brokers deal directly with rental property owners. GoodLUck
curiousgeorge406 11 months ago