Chad Moore Calgary Mortgage Broker

Hey Guys!

Below are three simple paths to purchasing additional properties, for various reasons.  

I’ve found buyers, and or current homeowners, do not have a lot of clarity on these paths, so I thought I’d share some knowledge …

1. Rental Properties:

• The minimum down payment is 20% of the purchase price. 
  
• Rents can be used to assist with Mortgage qualifying. 
  
• Buyer can purchase as many rentals as they qualify for. 

2. Second Home Purchases:

• A second home is for the buyer, or immediate family member, to reside in.  For example, you purchase a second home as a vacation property.  Or you purchase a second home for an aging parent to live in. 
  
• Standard minimum down payments apply (I.E., can be less than 20% down payment for a second home purchase). 
  
• Rental income cannot be used to purchase a second home.  The buyer will have to sign a statuary declaration at the lawyers office stating the home will not be rented out. 

3. Leave Behind Rental:

• When purchasing a new primary residence, the current homeowner can leave behind their current home as a rental property. 
  
• Rental income can be used to off-set the carrying cost of the home left behind as a rental.  This frees up more income to be used to debt-service the new purchase. 
  
• Standard minimum down payments apply (I.E., can be less than 20% down payment for the new primary residence home purchase). 

Conclusion:

I hope understanding these Real Estate purchase paths is helpful.  

I’ve had some people think (not you though) …”I’ll purchase a second home with 5% down payment and then rent it out.”  

Or, “I’ll purchase a new home with 5% down payment but won’t move into it and turn that into a rental.”

I do not recommend this.  

Also, when purchasing a second home, or leaving behind a home as a rental, plan for this to happen once (unless you sell the second home, and purchase another second home).  

These programs are intended for their legitimate use—not as a way to subvert Real Estate qualifying rules.  

I’ve helped buyers in all three of these instances which provides people with Real Estate options.  And I’ve had buyers approach me with ill-intent …let’s not go there :-). 

I hope this is helpful as you look out on your Real Estate horizon.  You have options!

Talk soon,

Chad Moore

P.S.

Deck build update.  I’ve demolished my existing deck, which had a built in hot tub from the 90’s.  In that process I stepped on a nail that just about went through my foot.  I limped around for about 4 days.  I have two support beams in, and all new deck framing.  Man was a nervous cutting the posts to height and setting the beams to level!  

Next up is post railings, and then deck stairs.  

P.P.S. 

A section in The Ultimate Home Transition Blueprint—Checklist is about financing options and risk mitigation, as part of home transition planning.

I like to help my clients understand “leave behind rental” and “second home” options.  Knowing if these options are potentially available, helps mitigate risk when deciding the sale-purchase order.  

Download this 30 point checklist, and PDF e-book here!