We're Buying Our First Rental Property

we've been wanting to buy real estate for a long time now it's gone from a high level Vision to a long-term goal to now an actual tangible goal and this is the year that we start the process now to give you some background on us we currently live in downtown Toronto we've been actually renting and living in the same apartment for the last 5 and 1 half years and we love it here and we would happily stay in Toronto for the long term if it was affordable but Toronto is a very expensive place to live and if you're wondering just how expensive expensive is when I say it to give you some numbers here a detached home in the city of Toronto so actually downtown the average price is about $1.6 million and even if you're looking for a condo it's still over $700,000 now even if you expand to What's called the GTA the greater Toronto area not just downtown the price of an detached home is still an average of 1.4 million and the average price of a condo is $680,000 so not a big decrease still very expensive to live downtown or even just in the surrounding areas of Toronto now because we aren't quite ready to move out of Toronto yet but we also don't want to spend all of our money trying trying to buy a place for us to live in here our plan for now is to start with an investment property that we can buy and rent out then eventually we'll use the equity that we build in that home to buy a house for us to live in in the future so that's the plan that we're starting out with but we're going to be taking you guys all along this entire Journey so if and when things change you'll hear about it along the way now I want to start by covering the steps that we've started to take so far the first thing that we did was educate ourselves on the process of buying a home there's a lot involved in the process and when you're a first-time home buyer like us it's a whole new world that we didn't want to be going into blindly we actually ended up finding out about an amazing free resource for this from True North mortgage it's a firsttime home buyers guide that we that me and Steph wish we knew about back when we first started our education process last year but we'll have Steph talk more about that in a minute then we looked into our financial situation there's specific numbers that you'll want to know that are important in the home buying process and we wanted to have all of them ready to go and in front of us finally we looked into how to go about the mortgage approval process this is a big First Step that determines how much house you can actually afford before you officially start looking in future videos we'll cover other steps steps that will be coming up but for this video we want to give you a little bit more insight into what we've done so far and what we've learned so far so for step one educating ourselves on the home buying process we reached out to our friend Cristiana who we've actually had on the channel before and she took us through everything that we would need to know in the home buying process as first-time home buyers so we did a 1-hour call with her where she walked us through like the high level process and answered a whole bunch of our questions one thing that I found really useful was seeing what types of professionals you'll see at different stages of the process like when do you go to a realtor versus a mortgage broker versus a lawyer and then from there we actually had a baseline level of information and from there we could actually do our own individual research now we're going to be taking you guys through all of these different steps and actually sharing the behind the scenes with you as we go through them ourselves in real time but for now we wanted to share a resource with you guys that goes over everything that we're mentioning in detail and in a really easy to understand way now we've worked with tun North mortgage before in the past when buying a home was definitely more of a distant goal for us so we're really excited to be able to work with them again now that we're actually finally making it happen their goal is for provide better mortgage rates for Canadians and they help make the process easier which is definitely what we're looking for they also have a lot of great tools and resources on their site as well including their new first-time home buyer guide which is perfect cuz that's exactly what we were looking for to guide us it's really easy to understand and Visually appealing which I love and there's all the different information that you need there's tips and checklists and like Dennis mentioned before they also outline how and when you're going to use these different experts like mortgage brokers Realtors and lawyers I also have my laptop so I can show you guys really quickly what the guide actually looks like so here it is right now you can see first time home buyer guide you can see there's many pages in this but what I like is each page is really easy and simple the first one is like a road map of the home buying Journey we're kind of in these stages here right at the beginning as you'll see as we walk through in this video but we can kind of see what the full road map looks to the house at the end like I said before table of contents they cover everything in here every single page itself is really easy to understand and they break it down for you there's different resources throughout it too right like the mortgage payment calculator is here they even have monthly budget templates which is awesome there's so many things involved in buying your first home that you don't even think about so they have it all in here your income it really starts from the beginning here's some of the checklists I really like how it looks too I said that before but it really is visually appealing and super easy to understand which I love if you want to grab a copy of this guide for yourself we'll have a link in the description box below and a clickable link on screen for you here it's free it's easy to download so go grab yourself a copy and thanks to turn north mortgage for working with us on this video and also for creating tools like this that make an intimidating process a lot easier to handle okay so once we felt like we had a good understanding of the home buying process it was on to step two looking into our financial situation now when you buy a home most people get a mortgage on that home which means that a financial institution is lending you money to purchase it and then you pay that mortgage down over time the amount of money that you're lent by the financial institution is based on your financial situation and the confidence they have and your ability to pay back the money that you owe now we're in a bit of a unique situation because we're self-employed we do have an corporated business that we're the employees of so we're still employed and we do still have t4s but because me and Steph are the sole owners of the business that employs us it does impact how our financial situation is viewed by lenders so we wanted to understand exactly what our current financial situation was and what we would likely be pre-approved for before diving into the official process first we looked into our current credit scores and in Canada you can actually get a free credit report from the credit bureaus at least once per year and we used Equifax to check our scores then the rest of the information that we really wanted to look into was related to our business and personal income it's really your most recent two years of business financials and personal income that are important but at the time we hadn't actually even yet hit a full two years of being in business now to be more specific about what we needed it was our t1s and notice of Assessments for our most recent two years the T1 is the tax return that you or your accountant fills out and submits to CRA and it typically summarizes your income all the taxes you paid your credits deductions and more your notice of assessment on the other hand is a summary document that you receive from CRA after they've reviewed your return it usually shows a date that your return was assessed whether or not you have an amount owing a refund and more what we learned during this information gathering process is that one of the most important numbers was our income when we quit our corporate jobs back in 2021 we became self-employed we took a pay cut so our incomes went down we specifically went from making 7 to $75,000 each in 2021 to making $3 to $35,000 each in 2022 on paper AKA according to our tax documents what this meant was that despite the fact that we had a business that was making money it had only been in business for a year so the lenders didn't really care for those numbers and on top of that because of our big pay cut it limited us it limited the types of lenders that we had access to and how much money they were willing to provide to explain that a little bit more there are two types of lenders that are relevant to us in this situation and that's a lenders and B- lenders A- lenders are typically traditional financial institutions like big Banks and certain Credit Unions be lenders are another option that provide funding for people who don't qualify for mortgages with the A- lender or for people who don't qualify for a big enough mortgage or for their specific situation with an A- lender based on everything that Dennis just covered we realized that because of our limited self-employment income structure we likely weren't going to be approved for as much as we would want to so we actually put a pause on the process for a while and that's why we haven't shared a video on this topic till now but we just finished wrapping up our second fiscal year financials and we also increased our take-home pay for the majority of 2023 so we end and again this year too so we ended up going from $236 a month to now $4,000 4 59.91 a month each so the combination of those two things should help us be approved for a higher amount now so the last thing that we started to look into now that we're jumping back into things is how to go about the mortgage pre-approval process now we might do a video all about this step showing us getting all of our information together sharing how much we get preapproved for looking through our different options based on what we're pre-approved for but for now we're just starting to look into how we would go about that when it comes to the general process the first question that you have to ask yourself is where are you right now when it comes to buying a house house what are your thoughts are you casually thinking about buying a home or are you serious about the process and actually planning on buying something within the next 6 months to a year the answer to that question will let you know whether or not to do a pre-qualification or pre-approval a pre-qualification is an estimate of how much house you can afford to buy based on how your finances are looking right now and which mortgage amount you'll potentially be approved for it's in no way binding and it's great if you're early in your home buying journey and gives you a chance to adjust things if you need to a pre-approval on the other hand provides a more accurate picture of what you can afford at that time and it takes into account your true financial situation by asking you to provide more detailed information than a pre-qualification would it's also usually an essential step in buying a home and what's great about it is that it makes a faster closing time on your mortgage application because you've already been approved and cleared by A lender now when it comes to finding the mortgage itself you can either work directly with the lender or you can use a mortgage broker of course now like we mentioned before we're going to be getting more into this in a future video but at this stage our next step is that we're actually going to be moving forward with the pre-approval process and see what we're going to be approved for now that we've actually adjusted our financial situation we hope that you guys are excited for us to take you along on this journey with us we're really excited and can't wait to see what happens next and thank you again to True North mortgage for working with us on this video and remember to check out their firsttime home buyers guide after this and we'll be back with new videos in this new series soon

Channel: Steph & Den

Views: 14,776

Keywords: Steph & Den, Buying Our First Rental Property, Buying A Rental Property, Buying An Investment Property, Buying Our First Home, Buying Our First House, First Time Home Buyer, First Time Home Buyer Process, Home Buying Process, Buying Real Estate, Real Estate, Investment Property, Rental Property, Mortgage Pre-Approval, Mortgage Preapproval, Mortgage Preapproval Process, Can I Get Pre-Approved For A Home, Can I Get Pre-Approved For A Mortgage, Getting Pre-Approved For Mortgage

Id: NiaqvK178Ho

Length: 9min 18sec (558 seconds)

Published: Sun Feb 04 2024