You want to invest in buying rental property, but just aren’t sure how to proceed. Multi-unit residential mortgages give you a double advantage. You can be your own landlord (if you want) and have income to spare.
Ontario’s real estate market is tight. Renters all over the province are looking for affordable housing options. Getting into the game by buying rental property could give you an asset that appreciates significantly over time.
Multi-unit residential mortgages are the investor’s choice for buying rental property over five units. Axess Law’s Ontario real estate lawyers finalize your purchase.
How to Buy a Rental Property in Ontario
Now that you’ve decided to be a property owner, let’s get financing. Banks, credit unions and private lenders all offer multi-unit residential mortgages for buying rental property.
Getting a home appraisal to figure out your new home’s worth.
Be prepared to show your lender:
- the “rent roll” vs operating expenses — how much rent you do or will receive compared to property management, tax and utility expenses.
- debt service coverage — how you will cover the mortgage expenses.
- your and the building’s financial history.
- the property’s condition, such as appraisal reports, property inspections or environmental assessments.
Tip: Expect higher interest rates and potentially shorter terms when you use private lenders in Ontario.
CMHC’s rental construction financing initiative offers up to 100% financing for building or buying rental property that costs $1 million or more. Federal multi-unit residential mortgages give you preferred interest rates and renewal options. Lower your rents to make units more affordable and you may qualify for extra incentives.
Lower Premiums, Longer Amortizations
CMHC premiums for rental construction are lower than regular high ratio mortgages. That reduces your initial outlay. Because your loan can be amortized for up to 40 years, monthly payments are lower too.
Refinance Existing Projects
Refinance existing first or second mortgages or pari passu financing, where multiple lenders have equal claim to assets you put up to obtain a loan. No need to continue paying high interest rates to private lenders when you can take advantage of CMHC high ratio financing.
Axess Law has real estate lawyers (Toronto, Greater Toronto Area and Ottawa) when you want to close a deal on buying a multi-unit rental property in Ontario or build your own.
Questions to ask real estate lawyers.
CMHC Niche Mortgages for Buying Rental Property
So your “niche” rental property doesn’t fit CMHC’s rental construction financing initiative. You may qualify for other government financing.
What’s Niche Housing
- Retirement, student or single room only units may qualify for a CMHC high ratio mortgage for up to 95% of the cost.
- Down payments vary by project size.
- Mortgage loan insurance protects lenders from potential defaults by purchasers buying rental property or building new units.
- You can refinance the purchase, construction, repair, improvement or “greening” of existing rental projects.
- Or CMHC niche funding lets you pay out short-term construction loans from other lenders.
- Equity take-out mortgages or payments to other equity holders like investors are excluded. Money you borrowed from a mortgage lender or investors based on the equity in your project must be repaid from your own assets.
Can you borrow the down payment?
Buying Rental Property for Small Investors
Just starting out as a landlord? Make it easier on yourself by getting a CMHC income property mortgage for small investors. You can live in or rent the entire property.
Canadian citizens, permanent residents, newcomers and self-employed workers are welcome to apply. Mortgage a family home, duplex, triplex or fourplex and Axess Law can close your purchase or refinancing deal.
Buying rental property for first-time buyers or experienced landlords.
Get It in Writing
Whether you’re buying a multi-unit rental property or building your own, get all the terms and conditions in writing.
Unforeseen hazards like a fire that damages a property before you take possession or unexpected increases in the cost of labour and materials can drastically affect upfront costs and move-in dates.
Get a fire insurance binder for a property purchase.
A comprehensive agreement of purchase and sale or construction contract includes all the finer points, like:
- who pays building or contractor’s insurance
- how subcontractors are paid
- when you take possession or final delivery of a rental property you build
- if contracted prices are “per unit” or paid in lump sums
- when construction advances are due
- late payment penalties
- and do you lose your deposit if financing falls through
Why You Need a Lawyer
Buying rental property in Ontario can get complicated. An Axess Law real estate lawyer (Ontario only) can review your agreement of purchase and sale or pre-construction contract before you commit to a major, long-term investment.
Hire a real estate lawyer (Toronto or Ontario).
Signing a contract of any kind binds you legally to repayment terms you may not fully understand, like taking out a construction advance loan. Many standard offer to purchase contracts leave out clauses that can protect your legal and financial interests.
Our lawyers can add in property inspections or walk-throughs that catch visibly obvious (patent) defects or hidden foundation and not-built-to-code issues that are costly to remedy or repair.
Delays caused by construction liens or financing obstacles are negotiated with the seller’s lawyer. We keep your purchase going forward wherever possible by amending closing dates or terms and conditions in the agreement of purchase and sale.
Make an amendment to agreements of purchase and sale.
If you have to cancel for valid legal reasons, like a property’s condition doesn’t meet your expectations, our licensed legal professionals request your buyer’s deposit back. When sellers demand compensation, we refer you to trusted legal partners for advice on filing a legal action or going to Small Claims Court.
Real estate deposit rules (Ontario 2021) you should know about.
Flat Fee Legal Services You Can Appreciate
Access lawyers for less in Greater Toronto Area, Ottawa, or anywhere in Ontario when you buy, sell, or transfer property. Axess Law’s flat fee real estate lawyers are affordable, and our rates are all inclusive (excluding taxes, disbursements, and third-party charges). Axess Law offers you only the legal services you absolutely need. Your final invoice includes no surprises or hidden charges. Your itemized statement of adjustments is explained when we deliver it, and we answer any questions you have about it.
Real Estate Lawyers in the GTA and Ottawa
Access lawyers in person 7 days a week at any of our Greater Toronto Area or Ottawa law offices. Make day or evening appointments, whatever fits your schedule best. Axess Law makes closing real estate transactions easy and affordable.
Book Online or By Phone
Make appointments quickly by using our online booking form. Pick days and times convenient for you or call our 647-479-0118 lawyer line for Axess Law real estate lawyers near you. Phone toll-free any time to 877-552-9377.
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