Understanding Equity Leverage

 

Real estate investment has long been regarded as a relatively safe instrument compared to the volatile commodity and stock markets.  In particular, the Ottawa real estate market is supported by a large federal government workforce and has seen steady annual equity increases of over 3%.  Knowing where, when, and how to buy- making money with other people’s money.  This is the concept of equity leverage.  When buying an investment property, putting a higher down payment is not always the best choice.  A lower down payment might generate a greater rate of return.

The following example illustrates this concept:

Assume a $300,000 house with rental income of $1600 a month.

With 20% down payment ($60,000), 3% interest, and 25 years amortization, monthly mortgage will be about $1,140.  Annual net income will be $5,520 with a return on investment of 9.2% ($5,520/$60,000)

With a 5% down payment ($15,500), 3% interest, 25 years amortization, and CMHC insurance, monthly mortgage will be about $1400.  Annual net income will only be about $2,400.  But return on investment will be over 15% ($2,400/$15,500).

Our team of knowledgeable and experienced experts will ensure that your real investment makes financial and economic sense.  We evaluate, plan and execute.


 

Short Term – Flips

Short term real estate investment generally means flipping houses – buy low and sell high.  We have all seen the reality TV shows – Flip This House, Flipping Vegas, Flipping Boston.  Flips this, flip that.  But how is it actually done?  Our experts in real estate flipping have the insight and experience to help you find a profitable project.  After we find the suitable property, our job does isn’t finished.  We will provide advice on design and provide remodelling tips that will generate the maximum return based on current market trends and consumer preferences. We will also connect you with high quality contractors who will complete the necessary work in a timely manner and at very reasonable cost.  Once the remodeling is complete, we will formulate a marketing plan to sell the property at the highest possible price.

 


Long Term – Rentals

Looking for something more long term with real estate investment?  Rental properties are the source for steady, passive revenue streams.  Whether you’re a veteran landlord or just starting to explore the limitless potential of rental properties, our team of real estate investment professional will help you find the property with the highest return for your situation.

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If you would like to work with us to become a real estate investor, please complete the contact form below and we will be in touch!