Real Estate

Can I afford an investment property?

  • Last Updated:
  • Jun 14th, 2018 11:21 am
[OP]
Deal Addict
Feb 6, 2014
1617 posts
372 upvotes
Brampton

Can I afford an investment property?

Is there a calculator that shows affordability for an investment property? Or I have to go to the bank and check ?
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10 replies
Banned
Feb 23, 2009
1670 posts
1496 upvotes
Oshawa
ambujakshi wrote: Is there a calculator that shows affordability for an investment property? Or I have to go to the bank and check ?
I'm going to go right ahead and say no, you can't and shouldn't afford an investment property.
But yes, go to the bank and check.
Deal Guru
User avatar
Mar 23, 2008
13006 posts
9966 upvotes
Edmonton
I think the first thing to do is work out your budget. How much is the property going to cost you, how much will it bring in each month. There's tons of sites on the web to help figure out what kind of costs you can expect.

C
Member
Aug 16, 2006
212 posts
61 upvotes
You simply have to work the math yourself. Need to understand your current debt to income ratio. If you have a house and a mortgage, can you get HELOC out of it and is that enough for a down payment. Then calculate how much of a down payment you need to get a positive cash flow. In the end, you still need to go to the bank to confirm how much they are willing to lend you.
[OP]
Deal Addict
Feb 6, 2014
1617 posts
372 upvotes
Brampton
I've no other debt other than my mortgage of my primary residence. I see calculators in sites like ratehub that show the affordability for first home purchase, but not the 2nd.

I want to diversify my investments. I know housing market is volatile, just like any other investment, but in the long run, as long as you can buy in the right place(close to transit), it works out good.
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Deal Guru
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Feb 2, 2014
10416 posts
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Toronto
ambujakshi wrote: Is there a calculator that shows affordability for an investment property? Or I have to go to the bank and check ?
The debt-service ratio calc is complicated for an investment property (differs from lender to lender). Talk to a bank or broker...you won't find anything good online.
Kevin Somnauth, CFA
Principal Broker/Owner - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
Deal Guru
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Jun 26, 2005
10096 posts
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Toronto
Do you mean if you will be able to get a mortgage?

Or are you asking other than a mortgage can you afford it. Meaning the typical costs
[OP]
Deal Addict
Feb 6, 2014
1617 posts
372 upvotes
Brampton
rfdrfd wrote: Do you mean if you will be able to get a mortgage?

Or are you asking other than a mortgage can you afford it. Meaning the typical costs
Asking if they will approve my mortgage.
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Nov 17, 2014
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Even if they approve your mortgage based on your income and debts, you still need to make sure that u dont have an unsecured job that may lay u off soon, and that you will not have big unexpected outlays (wife not working, kids, etc). The economy has been good since 2009, and the future is not that certain (NAFTA collapse, rising interest rate, high household debts, etc)
Deal Guru
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Jun 26, 2005
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Toronto
ambujakshi wrote: Asking if they will approve my mortgage.
I say there's only one sure way to find out. Try it.
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Jun 26, 2005
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Toronto
Beefeater wrote: Even if they approve your mortgage based on your income and debts, you still need to make sure that u dont have an unsecured job that may lay u off soon, and that you will not have big unexpected outlays (wife not working, kids, etc). The economy has been good since 2009, and the future is not that certain (NAFTA collapse, rising interest rate, high household debts, etc)
Exactly. Any responsible spouse should do that. Plan for what if you died today, will your family be okay?

On a side note, whenever I hear on the news, a Dad died, leaving behind 3 kids and a wife with debt, while it's super sad, I can't help but wonder why they weren't prepared? If you can't afford it, don't have kids. Not all kids are accidents, maybe the first one.

As a husband, I view one of my main responsibility is to ensure my family is financially sound if I die today.

In this day and age, getting hurt or killed is highly probable. Turn on CP24, someone just died this morning. Sad, but it's real.

Bottom line, have a plan, don't leave your wife and family in trouble that you got into and cannot afford .

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