Income property [size=1]tiny[/size] thread

[Tik-Tok]

I know this question has been asked before, but I can't find it and I know mortgage rules have changed since then anyways. I know I should ask a professional, but I'm lazy and don't want to waste a professionals time unless they volunteer time to be wasted by reading this thread.

Say I want to buy another house to live in and turn my current home into a rental. With a guaranteed tenant in my current house, as my parents as they want to move back to Calgary but don't want to purchase a home. General numbers here are approximate only to get an idea of whether or not a bank would mortgage this.

Current house value $450,000
Current Mortgage $225,000
Zero other debt

Other house value $450,000
Renovations needed $100,000

Household income $150,000 annually
Guaranteed rental income from parents $25,000 annually, if this were all approved by mortgage lender.

The only options I can think of is

A) Open a HELOC to use as a down payment on second house, and pay for some of the renovations
B) Parents "give" down payment money to us to use, and we HELOC the full renovations

Do either of these work with the new mortgage rules, and is there another option I'm not aware of?

[jwslam]

So you've already decided on what house? Since you have determined that you'll need 100k improvements...
You can put renos into the mortgage if you find exact quotes and I think it's limited to something like 10% of purchase price

https://www.mortgagearchitects.ca/le...ments-mortgage

If your parents have income, can you just have them mortgage the new place and just live in reverse?

[Tik-Tok]

It's across the street from me. Twice the property size, exact same house size/layout, but doesn't have the renovations we've done to ours.

[ercchry]

Probably gonna have a hell of a time using rental income if it’s family... better to use market rents/realtor nonsense “I think you could get this much” letter, as you are converting it to a rental they do not expect a lease in place

For new house, with market rents (probably want a monoline that will use 80% offset w/a rental worksheet... Scotia is good for condos as they do a 50% offset and only calculate the mtg, not any other expense... like fees) you’ll probably be good, as long as you don’t find out your partner has a secret gambling habit and owes $50k in unsecured debt, it happens

You could do min down payment on the new place, 5% for under $500k... then keep as much cash as you can for renos and borrow against the existing property for the balance, as long as you aren’t planning to refi after the renos, this probably is the best route. Yea you pay for insurance... but you get a better rate, and you keep that better rate at renewal, so after 5yr of the mortgage it’s a wash... means more loaned money locked into a fixed term with low rate and less at a higher rate on the heloc

Broker for sure... bank rep gets lost when they can’t use their calculator and crayons to qualify a loan (aka, ya got too many moving parts!)

Backup plan (you shouldn’t need it, but it’s good info for those with slumlord aspirations): you get a private on existing house, you do a “flip program” $10k deposit private on the new one, you complete the work, appraise it, refi to an alt loan that will used appraised value within a year of purchase if there is proof of work done since purchase... payout all the private money, then after a year refi to an A lender

[Tik-Tok]

Fuck am I tempted, and I don't even know if it's going up for sale, lol. They've taken 3 dump bins of furniture and shit away the last week though.