With the most recent Bank of Canada rate hikes, along with the rising gas and food costs, we’ve already started to see an impact on mortgage payments and qualification rates for many.
As rates continue to rise until inflation is relaxed, many investors will face higher rates at renewal, higher monthly payments on variable mortgages and HELOCs, and even higher qualification rates when purchasing. Fortunately, Pineapple is here to help guide you through these changes by presenting solutions and opportunities in a rising rate environment for those looking to invest in real estate this year.
Let’s take a quick look at some of these solutions today.
Have Cash On Hand
Sellers prefer cash offers, and with inventory up, there are many investment options on the market. If you have a cash offer, you will also be in an excellent position to negotiate the price. Many appraisals are coming under value right now, so some sellers will be open to taking a lower price to ensure the deal gets done and on time.
Developers are gearing up again after sitting on the sidelines during the pandemic. With all the uncertainty in the market right now with resales, it’s a great time to buy pre-construction again at the right price.
Consider A Shared Appreciation Mortgage
A shared appreciation mortgage is where the lender will share in a percentage of the appreciation of the home’s value with the borrower. There are more lenders in this space, and one offers a product similar to a reverse mortgage, where there are no monthly mortgage payments so that you can enjoy the entire cash flow and appreciation growth simultaneously.
Buy With Others
Co-ownership and Holdco purchases have become more popular over the last few years as prices soared. Pooling money to purchase and sharing the maintenance costs is an excellent way to get into the rental game sooner and build your portfolio faster.
BRRRR – Buy, Remodel, Rent, Refinance Repeat
Several lenders have specialty products that will help you quickly purchase real estate, add value remodelling, earn income through renting and then refinance the mortgage to purchase a new property to do it all over again. Some offer down payment flexibility with higher rates with the intent to refinance you out into a longer term once you decide whether to rent or sell.
Ready to invest more?
A Pineapple mortgage broker can help you put a solid mortgage investment strategy in place that will securely position you for the future, no matter if the rates are rising or falling. Let’s get started; contact us today.