Archive for the 'Investing in Real Estate' Category

There is a lot of opportunity available for private investors in real estate. Often, though, we hear about private investors who find it hard to compete with big investment firms who have deep pockets and seemingly endless resources.

There is a way to level the playing field, though: real estate technology.

You need access to technology that not only helps you source deals, but also properly evaluate what a property is worth in order to make effective buying decisions.

Our FREE new eBook will walk you through exactly how to use this technology to source more properties, find opportunities before they’re listed, and be more competitive.

In this eBook, you’ll learn:

  • How to access the same property data large investment firms use.
  • A better way to investigate potential investment areas.
  • About property investment tools that can help you evaluate the property’s financial position quickly and accurately.

By the time you’re done reading, you’ll know exactly how to compete with larger investors with deeper pockets and understand what technology can help you get there.

This eBook is available today for free. Just click here to get started downloading.

GeoWarehouse is your source for property searches and more. All of our data comes from the Province of Ontario Land Registry Information System, meaning that it’s accurate, up-to-date, and available when you need it.

Learn more about how we can assist with your real estate investment business today. Contact John Singh at 416-360-8863 ext. 2557 or email john.singh@teranet.ca.

 

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Have you been working with real estate deals financed using syndicated mortgages? If so, it may be time to re-evaluate.

Syndicated mortgages are investments where a developer finds several private lenders to invest money in a property, instead of getting a loan through a bank.

Syndicated mortgages have been linked to mortgage fraud, including more than 120 people in the Greater Toronto Area who allegedly lost millions during a syndicated mortgage deal in 2017, as reported by the CBC.

In February of 2018, the Financial Services Commission of Ontario (FSCO) issued $1.1 million in fines as part of a settlement with four mortgage brokerage companies involved with syndicated mortgages tied to real estate projects for Fortress Real Developments Inc. and revoked five broker licenses.

The Government of Ontario has created new regulations to hopefully minimize these types of occurrences. As of July 1, 2018, provincial regulatory changes to syndicated mortgage transactions in Ontario are in effect under the Mortgage Brokerages, Lenders, and Administrators Act. Under the new rules, non-qualified syndicated mortgages will have to comply with expanded requirements.

What is a qualified syndicated mortgage?

Let’s first look at what counts as a qualified syndicated mortgage:

  • Negotiated or arranged through a mortgage brokerage.
  • Secures a debt obligation on a property that is used primarily for residential purposes, includes no more than a total of four units, and (if used for both commercial and residential purposes) includes no more than one unit that is used for commercial purposes.
  • At the time the syndicated mortgage is arranged, the amount of debt it secures, together with all other debt secured by mortgages on the property that have priority over, or the same priority as, the syndicated mortgage, does not exceed 90% of the fair market value of the property relating to the mortgage, excluding any value that may be attributed to proposed or pending development of the property.
  • Limited to one debt obligation whose term is the same as the term of the syndicated mortgage.
  • The rate of interest payable under it is equal to the rate of interest payable under the debt obligation.

A syndicated mortgage that secures a debt obligation incurred for the construction or development of property is not qualified.

What’s changing?

As of July 1, 2018, mortgage brokerages dealing with non-qualified syndicated mortgages (anything not complying with the list above) will be required to:

  • Collect and document specific information related to a potential investor’s or lender’s financial circumstances, needs, objectives, risk tolerance, and level of financial and investment experience using a new FSCO form.
  • Undertake and document a suitability assessment, using specific criteria, for each potential investor or lender using a new FSCO form.
  • Collect and document expanded disclosure information using a new FSCO form. This includes information regarding the property appraisal and, in the case where the borrower is not an individual, the borrower’s financial statements.
  • Observe a $60,000 limit on non-qualified syndicated mortgage investments over a 12-month period for investors or lenders who are not part of a ‘designated’ class of investors and lenders. The regulation defines the designated classes of investors and lenders as those that have already met higher income and asset tests.
  • Report written complaints received by the brokerage related to non-qualified syndicated mortgages to FSCO’s Superintendent of Financial Services within 10 business days of receiving the complaint.

What real estate sales professionals can do

If you are aware of a deal being financed with a syndicated mortgage, do your due diligence. Make sure that it’s compliant with the above regulations.

You can also independently verify the property value. For example, our GeoWarehouse tools make it easy to validate that information and more.

View the full text of the new FSCO regulations here: https://www.fsco.gov.on.ca/en/mortgage/Pages/smi-amendments.aspx

With the FSCO cracking down on syndicated mortgages, it’s more important than ever to exercise due diligence. GeoWarehouse can help.

Learn more about how our tools can help detect mortgage fraud. Visit www.geowarehouse.ca.

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Investing in real estate is one of the most popular ways to make money. Despite predictions of market downturns, real estate continues to grow better than many other investments. Real estate can be a key part of an overall investment portfolio and retirement planning strategy for smart investors.

However, building a real estate investment portfolio is not for everyone. In most cases, building a real estate investment portfolio is not for people who are looking for a quick gain. While investing in real estate can be financially rewarding, there are also downsides.

Real estate investing, at its simplest, is where money is made from rents, not real estate value appreciation. There’s always an expectation that property will go up in value, but that doesn’t always happen. The market may bottom out, or owners may have to sell suddenly, losing money on carefully considered investments. Plus, investing in the residential market, such as with a rental property, may mean investors need to be prepared for midnight phone calls from tenants.

This is where you come in as a trusted real estate professional. Working with your clients, you can do the necessary investigative work to help build their real estate investment portfolio.

Investors, developers and property owners remain positive, if cautious, about the outlook for Canada’s real estate market in the year ahead. The rest of Canada faces unique regional challenges, while the lack of supply in Toronto and Vancouver continues to drive high demand. There isn’t a single market where savvy investors can’t find opportunities to invest if they leverage the right technology and do the required research and legwork.

Many investors have a sizeable portion of their overall net worth tied to a hard asset such as owning their own home, or paying off a mortgage. The key thing to remember is that no one asset type should take up more than 50% of any investment portfolio, but what takes up that 50% differs from investor to investor.

Before investing in real estate, clients need to be prepared to undertake extensive background research on the property, the market and potential tenants, as well as to check for any issues relating to the property. Information that you, their real estate sales professional, can provide easily and quickly with the right tools at your fingertips.

Most people want to invest their money so they have something for their retirement to help supplement whatever retirement plan they may have. Do you invest in RRSPs or real estate? Check this out: http://www.moneysense.ca/save/retirement/retirement-planning-real-estate-rrsps/

In fact, some say storage facilities are the new hot investment trend: http://www.macleans.ca/economy/business/canadas-new-real-estate-war/

How are you helping clients looking at investing in real estate in today’s real estate market? Join the conversation @GeoWarehouse.

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