Rental Property Overload

Rental-Property-Mortgage With today’s new rental programs it’s tempting, and much easier, to accumulate income properties quickly.  That sometimes has a downside though, as this Globe & Mail piece illustrates. 

Picking up rental properties with zero down can seem like easy money.  Unless you have adequate cash reserves, however, it’s a roll of the dice.  What happens if you’re overleveraged and barely covering carrying costs, and then the furnace dies, or you have uninsured water damage, or you get a prolonged vacancy?

Worse yet, what happens if property values decline, your personal finances deteriorate, and you’re in a negative amortization scenario (i.e. you owe more than the rental is worth)? 

Tools like CMHC’s new 100% financing program are a boon to prudent investors.  Unless you plan for the worst, however, overexposure to rental real estate can be your undoing.

Talk to a mortgage planner openly about your ability to carry multiple properties.  A good planner will help you create contingency plans if your real estate investments don’t pan out.

More Stories
canadian mortgages
Majority of Canadian Buyers Borrowing Their Maximum Approved Mortgage
Copy link