A savvy investor will constantly seek ways to improve the return on their investment.
There are properties that will generate an opportunity to realize a double-digit “cash-on-cash return” (which is the net annual cash flow from the property as a percentage of your down payment).
One innovative way to help improve the rate of return on your investment is to use CMHC insured financing when purchasing a multi-unit rental property.
A CMHC insured product will reduce the required equity contribution which will boost your return on investment. This is best exhibited by the following table example:
The table shows an interest rate differential of 0.75% which a lender may charge for a CMHC insured loan. The rates are typically negotiated between the lender and the borrower and they are dependent upon various factors.
The above table example shows two different common types of return on investment. The first is based upon cash flow over capital invested and the second adds the annual capital repayment of the mortgage to the cash flow.
There are a numerous ways to reach your goal of increasing your income as well as your wealth through investment in real estate. You’ll need to find a strategy that fits your comfort level and needs. Plan a conservative strategy, manage your risks and do all your homework carefully because the rewards can be great.
Finding properties that will help you realize opportunities is the first step in an effective strategy. Often you’ll need the services of a Realtor who works closely with a Property Manager to help identify and realize real estate investment opportunities.
If you’re ready to increase your income and grow your wealth, connect with us to hear about some of the opportunities to invest in real estate. Give us a call at (778) 329-9966 or like our page on Facebook.