Idea: what if instead of selling, i rent it out to someone and get a second mortgage for a new place? This is for the future of course. But say 2 years down the road, i have an $275,000 condo with 1/3 to 1/2 principal invested. Will i be able to get a mortgage for an $750,000 condo by putting the $100k+ in principal in the $275k condo up as security? How big of a downpayment would i need to get another 750k? Could i get away with 10%, or would they want like 25%?

3% is standard...you can get 2.5% if you look around.

sure you can sell yourself...but you're limiting the exposure of your property.

you can hire your own certified appraiser and receive a formal report...or many realtors will do a half-ass informal appraisal for free.

quote:

Originally posted by d!abolic Idea: what if instead of selling, i rent it out to someone and get a second mortgage for a new place? This is for the future of course. But say 2 years down the road, i have an $275,000 condo with 1/3 to 1/2 principal invested. Will i be able to get a mortgage for an $750,000 condo by putting the $100k+ in principal in the $275k condo up as security? How big of a downpayment would i need to get another 750k? Could i get away with 10%, or would they want like 25%?

sure, you could rent out to someone else...but will the rent cover your costs (mortgage payment, condo fees and property taxes)? Also, not all banks will use 100% of the rental income to offset those property costs when qualifying you for the mortgage on the 2nd property. CIBC used 50% of rental income, for example.

perhaps unlikely, but what if your tenant fucks you over and stops a payment or two? are you in a position to maintain the payments on both properties for the duration it takes to collect/evict? (this can quite some time to legally do, btw).

you could possibly get a blanket mortgage, which is a single mortgage secured by two or more properties. I don't believe that CMHC allows for blanket mortgages so you would have to have at least 25% combined equity in the properties to make that work (which is often the point of getting a blanket mortgage...to use the combined equity to avoid CMHC fees on the new purchase). The con is that you can't sell one property without having to refinance the mortgage since it's secured by both/all properties.

to secure a 750k mortgage, you'd have to have *quite* the income...major banks won't care that you're putting 100k down...they'll be asking for evidence on how you can afford the 650k mortgage (5k+/month mortgage payment, the $500+/month property taxes, massive condo fees, etc).

I honestly think that if your planning to sell in less than two years, you're betting off renting...no legal fees, no realtor fees, etc. which you would incur twice (when you buy and when you sell)

Wait, why the hell would i pay realtor fees when buying? Doesn't the seller pay?

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Originally posted by d!abolic Wait, why the hell would i pay realtor fees when buying? Doesn't the seller pay?

yes. you are right.

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it'd be a lot harder to sell a condo yourself then it would be to sell a house because a) you wouldn't be able to put up a sign then limiting the amount of potential buyers and b) you would likely get in trouble with either the building or get complaints from neighbours as you would be buzzing in strangers to show the property, and that wouldn't be considered safe.

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i'm pretty sure you need to put 20% downpayment or you're stuck paying Private Mortgage Insurance. 20% can of course be a lot(60 000 on a 300 000 home) but if you're smart enough (or capable) to save a large downpayment, that saves ridiculous amounts of money in the long run.

Using a real estate agent to sell your house/condo may result in a quicker sale, but using a real estate agent reduces the ultimate selling price of your real estate.

Think of it this way. If you are going to sell your condo for $300,000 the real estate agent will make a $9000 commission (3%). However, if you want your real estate agent to look for a better selling price, he will most likely advise you to take the offer now. That is because it's not worth it for him to go through all the work of finding a buyer that might pay $20,000 more, since the commission to him will only be 3% of that or $600.

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well, it is interesting to hear everyone's opinion on this topic. When it comes to getting top doller for your place, an agent, one who cares, should do thier best to get you the absolute top doller for your place. Being listed on MLS does a great service as your place exposed to over 1 million poeple. The more people that see your place, through open houses, mls listing, the more competition, the higher the demand, hopefully resulting in the highest price. The market is very hot right now.

I am a real estate agent and I would be happy to answer any questions or concerns anyone may have. You can email me directly at [email protected]. I work for Sutton Group. Have a nice day.

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i ahve a strong sales back ground since this would be my first retail deal i'll do it for 1.5%

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One day, ebay is going to smoke the real estate market... the middleman will disappear.

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quote:

Originally posted by d!abolic Wait, why the hell would i pay realtor fees when buying? Doesn't the seller pay?

yeah...my bad...the commission on the sale is split between your agent and the vendor's agent...just keep in mind the vendor is likely factoring those commissions into their sale price in a good market

quote:

Originally posted by djbruuen i'm pretty sure you need to put 20% downpayment or you're stuck paying Private Mortgage Insurance. 20% can of course be a lot(60 000 on a 300 000 home) but if you're smart enough (or capable) to save a large downpayment, that saves ridiculous amounts of money in the long run.

25%. anything less than that requires mortgage insurance. The two most banks deal with are CMHC (crown corporation) and, to a lesser extent, Genworth (private insurer). There are private insurers out there and some sub-prime lenders who self-insure (not cheap). Fees are a sliding scale based upon your dp:

http://www.cmhc-schl.gc.ca/en/co/moloin/moloin_005.cfm

(the 65% scenario is NOT required, but a bank has the option to request coverage)


Keep in mind that a realtor has access to sales history on the MLS system, not just listings as the public does (AFAIK), so they may be in a better position than you to negotiate price and conditions based upon sales in your area.

If you highly educate yourself, or have a great hands-on lawyer, you can possibly ditch the realtor...but do you know that:

- 99% of the time your should make your offer conditional upon obtaining financing?
- if it's an older property, possibly also make it conditional upon a home inspection?
- prior to committing to buying a condo, espeically an older one, that your lawyer reviews the condo's financials to ensure that they have an adequate reserve fund and that there are no pending special assessments?
- ensure that any chattels/items you THINK are included with the property are actually written into the purchase agreement? (appliances and lighting being the main ones)

don't fool yourself...yes, realtor commissions are high, but a good realtor will ensure that your price is fair and that you are protected from shady vendors/purchasers by inserting appropriate clauses.

I've seen both buyers and vendors get screwed over pretty bad because they either didn't have a realtor or had a negligent one...