Chris Grimes

There are many strategies that successful Real Estate Investors implement on a daily basis to make anywhere from thousands to millions of dollars per transaction. They always look for the best deal and can often make offers on hundreds of properties before they find the deal that works for them. They will look at the financial return, the property and the vendor who they will be negotiating with before they close on a deal.

Several strategies that they use include Flipping, Buying and Holding, Land Development, Foreclosures, Wholesale, Commercial Properties, Lease Options, Sandwich Lease Options, etc.

But which one is right for you?

Our website www.OttawaMortgageSolutions.com, recently posted an article from the Canadian Real Estate Magazine, stating that Ottawa was a hot place to invest. But what strategy works best here. With the relatively small increases and decreases that occurs in Ottawa market (average growth rate is 7%), we benefit from the stability but won't benefit from the large gains that Calgary, Edmonton, Toronto, Vancouver and now places like Regina have experienced. Knowing the type of market that we have here in Ottawa can help you choose the right type of property to invest in and with which strategy.

Buying and Holding

Buying and Holding may seem like a strong scenario, after all Real Estate never goes down, right? Tell that to the families that are leaving their homes behind, all over the US because their mortgages exceed their property values. However, with the current downturn in the housing market, there will be an opportunity for investors to find very good deals and maximize your Cash on Cash return.

Lease Options

Lease Options and Sandwich Lease Options, can be a great way to generate capital if you are just starting out. Creating a Rent-to-Own model can earn you additional monthly cash flow of $400 to $600. After all, in the Investing Business "Cash Flow is King"!

How to make money with Sandwich Lease Options?

Without investing one cent of your own money, this strategy will allow you to act as a property Broker. Acting as the middle man you can earn positive cash flow on a monthly basis by matching up potential Tenants with Investors. With the proper knowledge of how to write contracts and the specific negotiating skills required to get the best deals, you can easily replace your annual income with as little as 6 transactions per year.

Flipping

Flipping can reap great rewards in the Ottawa Region. By looking for the right property and the right deal you can see an average profit of $35,000. But you need to know what to avoid and the challenges before you buy and dump a lot of money without the positive results.

There are numerous ways that a Flip can become costly. Listed below are the 9 main ones that seem to cause most of the challenges. If you understand them and ensure your own Flip process takes care of each of these (either by ensuring they do not happen, or if they do minimising their effect), then success can still happen. As always setting out clear goals, including financials goals with forecasted returns is pretty key.

1. Buying on emotion

2. Buying at a price too high to support future profit

3. Underestimating remodelling costs

4. Listing and reselling in the quiet months

5. Buying in a low traffic area (lower number of prospective buyers)

6. Buying too far away for easy daily commuting

7. Not fully understanding the market comparables

8. Buying without seeing the property first

9. Not having contingency plans

For more information on any of these strategies, speak to members of your power team (Realtor, Mortgage Agent, Lawyer & Building Inspector).

Have you recently joined the Real Estate Investing market, we'd like to hear about your ups and downs, what worked for you and what didn't. Just post a response below.

Who makes up your Power Team? We suggest selecting a Mortgage Agent, Realtor® , Home Inspector, Real Estate Lawyer and Insurance Broker. Surrounding yourself with a Power Team is important whether you are purchasing your first home or buying your 10th investment property. They can easily manage the real estate transaction quickly and efficiently. If you select the right Team, you can enjoy the process, by being well-informed without any time consuming complications. Let’s take a look at how you can select your Power Team. Selecting your Mortgage Agent When it comes to making a major decision like financing your new home, mortgage agents are qualified professionals who can help you sort through the maze of different options and features available in today’s mortgage marketplace. They compare different lenders, do all the paperwork, and negotiate the best rate on your behalf so you don’t have to. The Mortgage Group was created as a progressive and professional team that is committed to offering only the highest quality professional service to our clients, realtor's and associates in related fields. No two clients are the same, and therefore each and every Mortgage approval we develop is customized to suit the wants and needs of you, the client. Our success can only be realized through our client's complete satisfaction. Consumers are fast realizing that it's convenient to have a professional to represent their interests in the sourcing and negotiation of mortgage financing terms and interest rates. With a wide range of options now available to the consumer, most have little time to efficiently browse the market let alone figure out the complexity of each lender's products. The Mortgage Group as a broker utilizes our experience and knowledge to consistently secure the most attractive financing terms for our clients. We have been, and always will be guided by our client’s goals, and our strong desire to meet and exceed their expectations. The highest compliment a satisfied client could give us is a personal referral to one of their family, friends or colleagues. We would be delighted to partner with you as you embark on your exciting mortgage financing journey. Selecting your REALTOR® When a home is put on the market, the vendor (seller) is generally responsible for any real estate commissions associated with the sale. Therefore, there are many advantages to you in seeking the assistance of a qualified Realtor® who has experience in the area you are house hunting. A good realtor will make the home-buying process easier, helping you avoid common pitfalls and making sure you get the best value for your money. It is important to do your home work when selecting a Realtor®. Certain agents will sound great by their great promotions or large signs, however ensure they are interested in giving great service - as defined by you the client. As you search for an appropriate agent here are eight questions you should ask before you sign a buyers agreement. • Are they a listing or showing agent? – Sometimes agents are too busy and will have their assistants or colleagues take you around to showings • Length of time in the industry? – Experienced agents should be more familiar with certain location characteristics, where newer agent can be very motivated and energetic to help you get the property you deserve • Do you work part-time or full-time? – Some agents have more than one career and cannot devote all their time to assisting their clients • How can we keep in touch? – Are they accessible with the latest technology, via internet, texting, phone, email, and messaging – they should be adaptable to your choice of communication • History of previous transactions? – Ask for references • Special offers they are promoting? – Can you save money on your transaction (i.e. free home inspection) • Are they part of a team or are they individual? – Individuals can be motivated to work with you individually where teams can provide a wealth of knowledge as more than one person can be working for you • Neighbourhood expertise? – Understanding of schools, new developments, public transportation, major traffic routes, close by amenities and local tax rates A good Realtor® stays up to date about local schools, tax rates, public transportation, and community programs in each neighbourhood which they service. Whichever Realtor® you decide to choose, and there are lots – 2500 in Ottawa alone, they are required by law to be licensed and certified by the Canadian Real Estate Association – CREA and are heavily regulated in Ontario by the Real Estate Council of Ontario – RECO. Signing a Buyers Contract Once you have selected your agent you will be required to sign a buyer’s contract. Typically you will be bound to the contract indicating that you will only work with that particular real estate team/brokerage. However, you can ask your chosen Realtor® what exit clauses are available to you if you find that you are not getting the service you require. A good buyer agent, once you are under contract, should sit down with you and identify everything that you would like in your new home. Use the wish list and be open with your Realtor®. The more information you can give them, the more accurate and detailed their searches can be for you. Let them know what you have been approved for, your must haves and wants, and your location preferences. Your Realtor® in turn will begin to send up-to-date information to you through email, forward listings that match your requests and send monthly newsletters that indicate market trends and conditions. How Home Inspectors work for you? Selecting your Home Inspector A property inspection includes a check of the roof, foundation, insulation, beams, gutters, bricks, siding, and caulking of the building you are considering buying. The plumbing, heating and electrical systems should all be tested and fully examined. Not only do inspectors catch things you may have missed, but they also provide a detailed, written inspection report which includes an estimated cost for specific repairs and maintenance if applicable. The offer you make to the vendor should always be conditional on a satisfactory inspection. If you discover any serious defects you should renegotiate your offer or suspend negotiations altogether by withdrawing your offer. Lawyer Responsibilities Selecting your Real Estate Lawyer Hiring a lawyer is the best way to ensure that your legal interests are being protected when you buy your new home. Your lawyer will review any documentation you need to sign, and perform the necessary searches to clear title from the seller so that the property can be duly registered in your name. A few days before closing, you will visit your lawyer’s office to sign the closing documents. The lawyer collects the mortgage funds from your lender, and together with your certified cheque for the remaining balance, disburses the funds to all relevant parties. At this point, you become the legal owner of the property and usually within a few days you get the keys to your new house - the possession date. Selecting your Insurance Broker An insurance agent or broker can provide you with all your insurance needs, including property insurance and life and disability protection. Lenders insist you purchase fire insurance because your property is their collateral or security for the money they lent you. Property insurance covers the replacement cost of your home, and premiums vary depending on your coverage amounts, deductibles, and the value of your home. Life and disability insurance is offered by most lenders, but unlike fire insurance coverage, you are not required to purchase it. It may be easy and convenient to do so, but often it’s more expensive and less flexible than it could be. If you are a nonsmoker with no history of health ailments, private insurance coverage thru an insurance broker is less expensive, and offers better coverage for you and your loved ones. If you would like more information on selecting a Power Team or if you would like to recommend agents you have used in the past please post a comment.

Working in the restaurant industry or the hospitality industry as a whole often as its challenges when you are applying for any type of financing, let alone a mortgage. Getting approved for a mortgage can be difficult with being able to prove your ‘tip’ income. In some cases this can make up more than 50% of what you take home. Home Trust has developed a mortgage specifically for the hospitality industry. The mortgage will allow you to claim up to double your reported income. This understanding can often mean the difference between a qualified applicant and a decline from your normal major financial institution. Are you in the hospitality industry? Have you been declined by your bank? We’d like to hear your story. Post your comments below.

If you are self-employed or receive 100% commission, getting a mortgage can be challenging. If you have gone into your bank, and have not been in business for 3 years, there is a good chance that your bank has turned you away. Discouraged and frustrated perhaps your search ended there, but wait, there are still options for you! Did you know CMHC, AIG United Guarantee and Genworth all have default insurance products that will allow you to get approved with less than 2 years of business history providing you have at least 2 years of work experience in that field. They will allow you to get the mortgage you deserve without having to show income confirmation. The biggest challenge any business owner or commissioned individual has is proving their income. The tax-break benefits the government allow, often discriminates by reducing your total income. The Self-Employed Simplified program addresses this issue and opens the door to home buying for many more individuals. See Tables Below Traditional Self-Employed Program Length in Business Income Documentation Down Payment CMHC Fee 3 years 3 years of Notice of Assessments Minimum 5% Up to 4.25% 3 years of Financial Statements All traditional sources T1 Form for previous tax year T4 personal tax assessment (Income can be grossed up by 15% providing your income has increased year over year) Simplified Self-Employed Program Length in Business Income Documentation Down Payment CMHC Fee At least 1 day Not Required Minimum 5% Up to 6.00% Own Resources (Income is stated and must be reasonable for the type of business) Note: Some conditions apply; we recommend you speak to your Mortgage Agent for more information. We would happy to hear about your experiences on this important subject. Just add your comment below to benefit others!

With the mortgage market becoming more competitive, as the broker business grows and more mortgage insurers are coming to the table, there are more products available than ever before. How do you make a decision on what’s the best rate, the best product and who’s the lender that will offer it to you? First it depends on why you need the financing? Are you buying your First Home? Buying a Vacation Property? Refinancing for Debt Consolidation or Renovations, or are you Buying a Rental Property? Once you have decided why you need mortgage financing, we recommend you speak to your Mortgage Agent. A Mortgage Agent can break down the over 300 products and over 40 lenders that offer them. Long gone are the days that you should accept walking into your bank and agreeing to their standard 5 year mortgage at a bank posted rate. It will typically have a standard 15% pre-payment and a 15% payment increase. Did you know The Mortgage Group can normally save you at least 1.4% off the posted rate? Did you know the industry standard for a standard mortgage now, should include a 20% pre-payment and a 20% payment increase. Mortgage Agents specialize in mortgage products and they are typically FREE in most cases. With access to so many products, whether you have lived in the Ottawa area for years or are looking for your first mortgage, you should look beyond your banks ‘typical’ mortgage. Have you used a Mortgage Brokerage? Was your experience a good one? Let us know by posting a comment (see below).