Co-Living Financing for Multi-unit Rentals

Co-living looks fun — maybe buying a multi-unit rental property would be a pretty good investment after all.

The best part is: CMHC, Canada’s primary high ratio mortgage insurer, offers niche mortgages for multi-unit rentals. They’re called niche mortgages for a reason. Not everyone is cut out for the co-living adventure.

Whether you’re a joint tenant with inheritance rights, or strictly a tenant-in-common renter, co-living is an experiment in compromise. You get your own room, plus shared kitchen, laundry, and living space. Now just how do you finance it?

  • Pool your resources and buy a house together
  • Form a corporation and own shares (equal or not)
  • Rent from someone you know who owns a home.

Buying an investment property in Ontario. 

Is it a Multi-family or Multi-tenant Home?

Multi-family investment or multi-tenant housing — what’s the difference? Right now, you’re maybe thinking: multi-family investing, isn’t that like those noisy monster houses full of renters? It can be. But it can also be a joint investment with family, friends, or silent (and some not so) investors. 

How do I start multi-family investing and co-living, you ask?  

Co-own a Home and Mortgage 

Ever wondered what living like The Golden Girls, but with property rights, would be like? Instead of just sharing a home, co-owning lets you and other singles or families share a home and mortgage. Share a mortgage when you buy a co-living multi-family home. 

Preserving your financial interests can be complicated, but co-owning gives you company, someone to share the house and yard work, and often, a less expensive way to own a home. See this guide to co-owning a multi-unit rental investment. 

Multi-family Investing for Profit

Plan to buy and hold a multi-family home for awhile, or economize by living in part and renting out the rest? You take the upstairs, your co-habitants get the walk-out basement, and you form a corporation to divvy up the shares?

Buying a multi-family home is a good investment. You could get a bargain if homeowners and investors bail out over high interest rates. Most properly cared for properties increase in value over time. 

Naturally, legal and tax advice are recommended before you and your co-habitants take on buying a multi-family investment property. You may need a private mortgage, or ask your regular lender about CMHC niche mortgages for multi-unit rental properties. 

Rent from a Homeowning Friend

Of course, you could just rent from a friend or acquaintance, like Blanche Devereaux (Rue McClanahan) from The Golden Girls. That takes all the risk out of home buying, but none of the challenge or fun out of co-living. Think twice about the risks of syndicated mortgage financing for multi-unit rentals

Buying a Multi-unit Rental Property

Here’s what to look for if you’re the Blanche Devereaux solo home buyer in this co-living arrangement:

  • high rental demand from workers or students
  • low purchase prices vs rent potential
  • mismanaged multi-tenant rentals selling under value
  • absentee owners anxious to sell
  • older multi-family rentals that could be upgraded (more rent for you)
  • and multi-family investments close to transit, roadways, shopping, or entertainment. 

Choosing the right real estate agent for investment properties.  

Pricing a Multi-unit Property

How you price a multi-unit property depends on the mortgage, interest rates, fair market value of comparable multi-tenant rentals, and market demand. 

Hire a professional property appraiser for an estimate of a multi-tenant rentals’ value in today’s market. Any property rentals management firm can give you a sense of what your units will rent for, or you can Google online to find out what other landlords are charging. 

Forget the 2% rule in higher priced neighbourhoods (multiplying the purchase price by 2% to get the return on investment rate), and go with local rental rates.   

Why You Need a Real Estate Lawyer

Axess Law reviews your offers to purchase for clauses that could leave you paying more than you had planned, or cause significant delays when you buy a new or resale home. 

What a mortgage lawyer does.  

Your multi-unit income property is a major investment. We ensure your contract includes a professional home inspection, and advise you what to do next if your inspector finds minor repairs that need completing, or structural problems that could cost you thousands. Axess Law negotiates with the seller’s lawyers over who pays for repairs, or tells you if you can cancel without incurring substantial penalties.

Questions you ask our real estate lawyers. 

Multi-unit property buyers are at risk of losing the deal if the seller continues to accept offers after a conditional agreement of purchase and sale is signed. Axess Law looks for escape clauses in your agreement of purchase and sale that may disadvantage you if the seller is still accepting multiple offers when you think the deal is done. Qualify for a private mortgage.  

Finding mortgage financing for multi-unit rentals can take awhile. If you’re feeling pressured to close a real estate transaction before you have the financing you prefer, ask your Axess Law real estate lawyer for assistance. We can liaise with the seller’s lawyer to ask for amendments that could extend when you have to complete the purchase.

Transfer titles quickly and cheaply.

Buying multi-unit rental properties with others can complicate title to a property. Axess Law adds a spouse to title, or includes a friend, family member, or other investor for a modest title transfer lawyer fee. Our professional legal team searches title to the property for construction liens, financial claims, or easements and rights of way, then transfers title, making you and your associates the legal owners.

Virtual Closings for Your Convenience

Closing real estate transactions is easier with Axess Law’s virtual real estate lawyer services. Trust in our remote video conferencing services for secure, confidential real estate transactions. You can sign the closing documents and mortgage papers from any compatible home computer, laptop, tablet, or mobile device, without leaving your home or office. We witness your signature, and email you a copy for your records. How to close real estate sales remotely.  

Affordable Real Estate Lawyers, Anywhere You Are 

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. 

Find a real estate lawyer near you. 

Find Affordable Lawyers for Property Investments

Dial us today for appointments to buy or sell multi-unit properties. Call our 647-479-0118 lawyer line or dial toll free to 1-877-402-4277 to schedule remote or in person appointments. Or use our easy online booking form. Axess Law has Greater Toronto Area and Ottawa locations with onsite parking, and easy transit access near you.