Exploring revenue property opportunities

Jean-Guy Turcotte

The past few weeks I’ve been ranting and raving that opportunity abounds in this housing market for those that are taking advantage of it as depressed prices, and historically low interest rates are creating opportunities typically only written about in Economics 101.

I’ve usually focused on the opportunities that are available for the classic first time buyers-early to mid twenties to early 30’s- but in the past couple of months, much of my business has still been first time buyers, but of a different sort! First time revenue property buyers!

I’ve got many clients that have bought revenue properties in the past and have many investors that continually buy properties almost every month, but I’ve never seen the amount of first time revenue property investors inquiring like they are now.

When investors are willing to give up their hard earned cash to put down on investment properties these days, then there must be some opportunity out there! These clients are typically in the mid 40’s to mid 50’s, have household income in the $80,000 to $150,000 a year range, have pretty decent net worths and are realizing that they need to diversify their investment portfolio.

With the housing market being essentially on sale with super low interest rates and great pricing, then add to the fact that these properties cash flow like never before, ready investors are inquiring about these types of mortgages almost daily!

There are hundreds of books on the “How to’s” of buying revenue properties and many of them are how to buy in every type of market and I’d advise to read a few of them before you bought one, but in today’s market you can buy a lot of different properties and have them cash flow extremely well quite easily with a huge upside of value in the future!

Here’s an example of a revenue property in Sylvan Lake that my client bought. The house has an “up down suite” which is a bi-level with two separate legal entrances and he needs to spend about $2-3,000 to make it a legal suite as per Sylvan Lake’s guidelines, which is a small investment once you see the figures.

He paid $325,000, put 20% down ($65,000) and I helped him arrange a mortgage for $260,000 at 3.69% with a five-year term (there are even lower rates today!). Since it’s a rental and the tax advantages that come with it, he amortized the property over 35 years, and has a low principal and interest (PI) payment of only $1099.09, along with that we have to add property taxes of $220/month and home owner’s insurance of about $65/month to the total monthly cost that equals $1384.09.

This house came with two renters already living in it – one is paying $1,250/month for the upstairs suite and the renter below is paying $1,000/month-providing the new owner with $866/month in cash flow!

There are many properties in the market today that will provide an investor with the cash flow returns they are seeking, the trick here is to get the right properties with the right renters as now seems to be the right time!

Jean-Guy Turcotte is an Accredited Mortgage Professional with his partners at Regional Mortgage Corporation and can be reached for appointments at 403-343-1125, texted to 403-391-2552 or emailed to jturcotte@regionalmortgage.ca

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