Qualifying for financing on 2nd property

[Wayne]

H There,

I bit the bullet and spent all year last year pursuing my real estate licence. Due to this I had little income last year and as a result, my NOA (notice of assessment) for 2008 is low. I was pre qualified with my bank/broker last year based on my 2006/07 NOA`s for about a $500K mortgage. Now that I must rely on my 2008/09 NOA`s, my income now as an average is a lot lower.

I have the 10% downpayment in cash for the real estate I want to purchase (about $400K)
I have impeccable credit.
I have about $170K in build equity in my primary residence.

This new investment will be my new primary residence and I would then rent out my current primary residence.

My questions are:

1) How does one get around this type of financing situation ? What are my options ?
2) Will I get taxed with capital gains if I decide to sell my current primary residence vs renting it out ?


Thanks,

Wayne

 

[Thomas Beyer]

QUOTE (Wayne @ Jul 19 2009, 03:21 PM) 1) How does one get around this type of financing situation ? What are my options ?
one

increases the income, or
buys a smaller house, or
brings on a JV partner, or
pays more for a sub-prime mortgage, or
buys a house in AB with an assumable mortgage !

QUOTE (Wayne @ Jul 19 2009, 03:21 PM) 2) Will I get taxed with capital gains if I decide to sell my current primary residence vs renting it out ?

no .. only if you keep 2 .. and then sell one .. you have to designate one property as the primary residence ..

 

[Wayne]

QUOTE (thomasbeyer2000 @ Jul 19 2009, 04:50 PM) one

increases the income, or
buys a smaller house, or
brings on a JV partner, or
pays more for a sub-prime mortgage, or
buys a house in AB with an assumable mortgage !



no .. only if you keep 2 .. and then sell one .. you have to designate one property as the primary residence ..


Thanks Thomas,

What about other scenarios such as a co-signer, vender type financing or putting down 25% vs 10% ?

To understand: Capital gains only applies if I sell the 1st house ? What if I buy the new house as primary residence, and dont sell the 1st house for a few months after the purchase ? Will I still be subject to capital gains ? Not sure I totally understand yet.


Thanks,

Wayne

 

[GarthChapman]

Wayne, your own income is not as important in buying a revenue property as it is when buying your home, as long as the property debt services itself with a good positive cash-flowl Don`t assume you won`t qualify with your new lower income. Have your Mortgage broker determine for you if you can go ahead with your next rental property purchase now.

 

[kboughen]

QUOTE (Wayne @ Jul 19 2009, 08:54 PM) What about other scenarios such as a co-signer, vender type financing or putting down 25% vs 10% ?
Hi Wayne, a co-signer and a larger down payment are both possible solutions for you to get approved on the next purchase. The details in your Sophisticated Investor Binder will allow Your Mortgage Broker to calculate and prepare some detailed solutions for you. If you plan on purchasing additional rental property after this purchase, make sure your Broker knows, as it will impact how this purchase is structured.

 

[invst4profit]

You will pay capitol gains on any property that is not your primary residence at time of sale.
Individuals are permitted to have only one primary residence at any given time.

 

[Thomas Beyer]

QUOTE (Wayne @ Jul 19 2009, 06:54 PM) What about other scenarios such as a co-signer, vender type financing or putting down 25% vs 10% ?

indeed !

Also: Rental properties may qualify "by themselves" due to income .. so get an experienecd mortgage broker on your team !

QUOTE (Wayne @ Jul 19 2009, 06:54 PM) To understand: Capital gains only applies if I sell the 1st house ? What if I buy the new house as primary residence, and dont sell the 1st house for a few months after the purchase ? Will I still be subject to capital gains ? Not sure I totally understand yet.
You can designate only one house as your primary residence, namely the one you live in. You will have to pay taxes on the 2nd only.

If you move from the original primary residence to your 2nd house, get an appraisal at time of move, then the taxable gain is calculated only from the time it became an investment property.

 

[Wayne]

Thanks for the great advice guys !




Wayne

 

[Wayne]

I Forgot to mention that I`ve been working with Rob McDonald of Invis, who I found on this site.

I read on this site at some point that "You cant ask a dumb question", so this is why I ask a lot of questions from people I respect who have been there/done that.



Thanks again,

Wayne