Property Investment Tips

Property Investment Tips

Finding the right investment opportunity can change your financial future. No matter the scenario, there are always solutions, and it’s our job to find you the right one.

Increasing Your Equity

There are several ways to increase the equity in your investment property. You can also utilize strategies to pay down your mortgage faster to increase your equity and overall net worth.

Increased Payments

When you fully understand the cash flow of a property, you may elect to forgo some of the positive cash flow in favour of increasing your mortgage payment. Most mortgage lenders will allow you to increase your mortgage payment up to double the minimum monthly payment. This increase in payment helps to pay down the principal balance, increase equity and reduce the interest paid on your mortgage over time.

Accelerated Payments

Changing your mortgage payments from monthly to accelerated weekly or bi-weekly payments can help you increase your equity by paying down your mortgage balance faster. This not only saves you interest but can reduce the life of your mortgage by up to a year or more!

Pre-Payments

Additionally, your mortgage lender may allow you to pay up to 20% of the original principal balance of your mortgage each year. Using tax savings or refunds, quarterly/annual bonuses or monthly/annual cash flows from your investment property, you can reduce the balance of your mortgage, increasing your equity and net worth.

Mortgage Payment Strategies to Increase the Cash Flow

Interest-Only Payments

Some mortgage products may allow portions of or the entirety of your mortgage payment to be converted into interest-only payments. This strategy allows you to increase the cash flow of a property and its profitability while having the effect of reducing the amount of principal paid down on an investment but allows you to increase the cash flow of a property and increase its profitability.

Example:
Teresa and Kai’s monthly mortgage payment is $3000. With an interest-only payment option, their monthly payment is $2700 which is $300 less than the traditional mortgage payment option.

Skip-A-Payment

Some mortgage products allow you to skip a mortgage payment at predetermined dates. Skipping a mortgage payment allows you to collect a greater portion of your profit or reduce the liability of a vacancy during a payment period. The skipped payment, which includes principal and interest is added to the balance of the loan. Used strategically, this can significantly increase your annual cash flow from an investment property.

Cash Flow Within The Property

• Renting additional parking spaces, renting roof space to billboard and telecom companies

Cash Flow Calculation

Using renovations or zoning changes to convert single-household units to triplex units.

Contact your Pineapple Mortgage Agent or Broker for more information on property investment tips.