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Mortgages & Interest Rates –
Is The Worst Behind Us?
(Interactive Session w/ Hugo Dos Reis)
Mar 27, 2024
@volitionproperties
www.volitionprop.com
● Support local! Order food and drinks and PAY YOUR BILL!
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Housekeeping Items
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Legal Disclaimer
Volition Properties and its members, officers, directors, owners, employees, agents, representatives, suppliers and service providers, provides this presentation for informational purposes only.
This presentation and the information, materials, services, and other content available (“Content”) are subject to the following terms and by participating today you agree to these terms.
● The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained
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or otherwise.
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Who is Volition? We’re Investor Realtors!
● Financial Modeling - Advanced proformas and modeling
● Financial Planning and Advisory - We help our clients use
real estate as an input towards a larger financial plan
● Construction and development - Zoning, laneway suites,
additional dwelling units, property setbacks, etc.
● Data based decision making - We root the values that
plug into our modeling in real data
● Community - Investors helping investors
● We Come From Experience - We’re all investors ourselves
and have sizeable portfolios across various types of real
estate investments. Learn from our successes and
mistakes!
@volitionproperties
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How do you work with Volition?
Client
Guidance
Have a plan
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Realty Community
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The Volition Team
Toronto’s Leading Real Estate Investment Advisory & Realty Firm
Matthew Lee
Founder &
Managing Partner
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Head of Realty
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Alykhan Jinnah
Realty & Leasing Services
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Interior Design
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What are our results?
● Realtor Awards: Chairman Award, President Award, Top Producer Awards 2017, 2018,
2019, 2020, 2021, etc, etc.
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Estate Podcast, Michael Millenear Real Estate Investing Leadership Award nomination, etc,
etc.
● We Practice What We Preach: $32M+ personal holdings in Toronto Real Estate (55+ doors)
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Sales to New Listings Ratio vs Avg Home Price
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Mortgages & Interest Rates – Is The
Worst Behind Us?
(Interactive Session w/ Hugo Dos Reis)
@volitionproperties
www.volitionprop.com
Please welcome: Hugo Dos Reis, Vine Group!
Hugo Dos Reis, mortgage Broker and founding Partner of
one of the largest mortgage brokerages in Canada - Vine
Group. He’s provided financial planning education to
thousands of investors and authored several financial
articles. With a focus on real estate investing and
leveraging his financial planning background, he’s able to
create practical and strategic solutions using a “Blueprint”
approach to navigate the various lending solutions
available to Canadians.
LIC. 13511
MORTGAGE UPDATE SPRING 2024
C H A N G E S I N T H E M O R T G A G E I N D U S T R Y
T H A T A F F E C T R E A L E S T A T E I N V E S T O R S
H U G O D O S R E I S
M O R T G A G E B R O K E R
& F O U N D I N G P A R T N E R
Agenda
Recent BOC Announcement
Interest rate forecasts 2024
Tax season tips
Investor friendly lenders
Reverse mortgages
Blueprint approach to real estate investing
Rates and recommendations
General Q&A Session
BOC Update
Bank rate remains at 5% since July 2023
Next BOC meeting April 10th
Inflation down to 2.80% (February)
Previous rates: 2.90% in Jan and 3.40% in Dec
3
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TH E G LO BE A N D M A I
L,SO U RCE:STATSCA N
Consum erPri
ce I
ndex
12-
m ont
h per
cent
age change
2017 2018 2019 2020 2021 2022 2023 2024
0
2
4
6
8%
CPI CPIexcl
udi
ng f
ood and ener
gy
BOC Update
Inflation stats:
Groceries up 2.4% (down from 3.40% last year)
Rents up 8.2%
Gas up 4%
Shelter costs up 6.5%
Clothing/Footwear fell 4.4%
BOC Update
BOC Update
Canada GDP Growth:
0.20% growth in Q4 2023
US GDP Growth:
3.20% growth in Q4 2023
BOC Update
Market rate forecast
Tax Season Tips 2024
Self-employed clients - 2-year average
▪ Consider how much income to declare
Rental income
▪ Report rental income earned for each property
Investor-friendly Lenders
Play it like a Chess Game
1 2 3 4 5 6 7 8
MONOLINE
SCOTIA
TD
CIBC
HOME TRUST
1 2 3 4 5 6 7 8 DOORS
CREDIT UNION
NATIONAL BANK
Big bank lenders will typically cap # of properties at 5
▪ NIAT (net income after tax) programs
▪ Net worth programs
▪ Equity programs
▪ Expanded ratios
Investor-friendly Lenders
Common sense lending approach
Allow for higher qualifications
Higher rates
Average 1% lender fee charged
Weaker or bruised credit friendly
BFS friendly (use “stated income” to qualify)
“B” or Alternative Lenders
Self-employed case study:
▪ IT services business with $300K gross
▪ Each applicant can either declare $110K/year of
income on tax return or $50K
“B” or Alternative Lenders
$1,000,000 LOAN AMOUNT
“A” LENDER Alternative Lender
Income Required $220,000 $190,000 (stated)
Monthly Payment $6,073 $6,590
Est. Tax Cost $50,000 $14,000
Interest Cost over 12
months
$60,880 $68,677
Fees $0 $10,000
Cost over 12 months $110,880 $73,590
DIFFERENCE OF $37,290 of savings
“B” or Alternative Lenders
Credit Union
Provincially regulated and can qualify on ACTUAL rate vs stress test on owner-
occupied properties
MORTGAGE AMOUNT Stress Test Credit Union
$250,000 $85,000 $65,000
$500,000 $145,000 $115,000
$750,000 $205,000 $165,000
$1,000,000 $265,000 $205,000
*Excludes rental income
Mortgage Qualifying
Income
Check-in
Access money from your home without
selling or any monthly repayments
Minimum age is 55 years
Access up to 55% of home value
Money is tax-free; no impact to
government pensions
Maintain ownership and control of your
home
Reverse Mortgages
Unlock equity to invest
Tax planning
Purchase vacation or investment
property
Gift down payment
Renovate or add additional living space
Reverse Mortgages Uses
Case study 1 (Income supplement):
✓Home value - $1.5MM
✓No mortgage balance
✓65 years old
✓Max borrowing est. $625K
✓Invested at 8% = $50K/year additional
income
Reverse Mortgages
Reverse Mortgages
Case study 2
(Rental Income Supplement):
✓Home value (pre-reno) - $1.5MM
✓Reno cost (4-plex) - $1MM
✓Post reno value - $2.8MM
✓65 years old
✓Max borrowing est. $1.1MM
✓Rental income surplus - $7,500/mth+
Reverse Mortgages
Reverse Mortgages
Check-in
Financing Blueprint 2024
BEING STRATEGIC WITH
YOUR FINANCING
1-4 PROPERTIES
(SET UP)
Most lenders have a “Global
Limit” of 4-5 rentals
Features:
▪ Preferred pricing
▪ HELOC’s for rentals
▪ Split mortgages
Initial refinance of personal
residence
Blueprint
Strategic Financing
5-10 PROPERTIES
(REBALANCE)
Reduced lender options
Full portfolio should have DCR of
1.10+
Reporting to personal T1
generals
Some big banks (branch
relationship)
Credit unions
“B” lenders
Consider a REFINANCE before
you buy the 5th property
Blueprint
Strategic Financing
10+ PROPERTIES
(SCALE)
Turn your portfolio into a
business
Commercial blanket across
your portfolio
Up to 75% LTV
Up to 25 year amortizations
Commercial rates + fees
DCR (Debt Coverage Ratio)
ideally 1.25+
Blueprint
Strategic Financing
Mortgage Trends & Rates
Variable Rates
PRIME rate is 7.20% (with most lenders)
Average 5-year variable rate is 6.20-6.80% for personal residence
Average 5-year variable is 6.40%-7.20 for rentals
What’s Happening With Mortgage Rates?
3 Year Fixed Rates
Average 3 year
fixed 4.99-5.59%
for personal
residence
Average 3 year
fixed 5.39-6.29%
for rentals
What’s Happening With Mortgage Rates?
• 1-3 year Average Yield
• 5 year Average Yield
5 Year Fixed Rates
Average 5 year
fixed 4.79-5.49%
for personal
residence
Average 5 year
fixed 5.49-5.99%
for rentals
FORECAST
Most bank economists expect the overnight rate to
drop 1.00% by end of 2024
WHAT SHOULD YOU BE DOING?
Consider short-term fixed rates (1-3 years) if risk-
averse
If buying with less than 20% down consider variable
HELOC Financing
Blended variable + short-term fixed rate
VARIABLE OR FIXED?
Thank You.
QUESTIONS?
HUGO DOS REIS
Mortgage Broker & Founding Partner
Vine Group, Lic. 13511
hugo@vinegroup.ca
@volitionproperties
www.volitionprop.com
Take MASSIVE Action…
@volitionproperties
www.volitionprop.com
How Volition Can Help As Advisors?
FREE 30-min
Advisory session
with Matt or Ming
Come prepared with:
Capital available to invest
Mortgage qualification
Current real estate portfolio details
We will help you determine:
Where you are at
Where you want to go
Customized plan to get there
@volitionproperties
www.volitionprop.com
How Volition Can Help As “Regular” Agents?
● Financial Modeling - How much rent can I get for my basement suite?
● Financial Planning and Advisory - If I sell my condo, will there be enough to
retire?
● Construction and development - If I buy this property can I put a laneway
suite in the future?
● Data based decision making - Am I paying too much for this condo?
● Community - I’ve got racoons!
@volitionproperties
www.volitionprop.com
Next Meetup: How to Build Multifamily and Laneway
Suites in Toronto!! (feat. Expert Architect)
Date: Tuesday, Apr 23
Location: NEW LOCATION!
The Kingston House
RSVP: www.meetup.com/Volition
LARGEST REAL ESTATE MEETUP IN TORONTO WITH OVER 4000+ MEMBERS!
@volitionproperties
www.volitionprop.com
Your Next Step… Take MASSIVE ACTION
SCAN TO BOOK A FREE 30-MIN CONSULT WITH VOLITION!
@volitionproperties
www.volitionprop.com
End

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Volition Meetup 2024 03 Mortgages & Interest Rates – Is The Worst Behind Us_ (Interact w_Hugo Dos Reis).pdf

  • 1. @volitionproperties www.volitionprop.com Mortgages & Interest Rates – Is The Worst Behind Us? (Interactive Session w/ Hugo Dos Reis) Mar 27, 2024
  • 2. @volitionproperties www.volitionprop.com ● Support local! Order food and drinks and PAY YOUR BILL! ● Washrooms: Down the stairs to the left ● Cell phones: Put on silent mode and step out if you need to take a call ● Recordings: This presentation is being recorded and slides will be available. ● Make sure you’re on our e-mail list to get the recording! E-mail info@volitionprop.com or use the QR code Housekeeping Items
  • 3. @volitionproperties www.volitionprop.com Legal Disclaimer Volition Properties and its members, officers, directors, owners, employees, agents, representatives, suppliers and service providers, provides this presentation for informational purposes only. This presentation and the information, materials, services, and other content available (“Content”) are subject to the following terms and by participating today you agree to these terms. ● The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained on within the presentation constitutes a solicitation, recommendation, endorsement, or offer by Volition Properties or any third party service provider on a property, for investment or otherwise. ● All Content is information of a general nature and does not address the circumstances of any particular individual or entity. Nothing within the presentation constitutes professional and/or financial advice, nor does any information within the presentation constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other Content before making any decisions based on such information or other Content. ● In exchange for participation at this event, you agree not to hold Volition Properties, its affiliates or any third party service provider liable for any possible claim for damages arising from any decision you make based on information or other Content made available to you. ● There are risks associated with investing in real estate involving risk of loss. Loss of principal is possible. Some high risk investments may use leverage, which will accentuate gains & losses. Foreign investing involves special risks, including a greater volatility and political, economic and currency risks and differences in accounting methods. ● Past investment performance is not a guarantee or predictor of future investment performance. OUR EXCLUSIVE REMEDY FOR DISSATISFACTION WITH THE CONTENT OF THE PRESENTATION IS TO STOP YOUR PARTICIPATION. VOLITION PROPERTIES AND ALL ASSOCIATED MEMBERS ARE NOT LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES, UNDER ANY THEORY OF LIABILITY, INCLUDING WITHOUT LIMITATION, DAMAGES FOR LOSS OF PROFITS, USE, DATA, OR LOSS OF OTHER INTANGIBLES. IN PARTICULAR, AND WITHOUT LIMITATION, VOLITION PROPERTIES WILL NOT BE LIABLE FOR DAMAGES OF ANY KIND RESULTING FROM YOUR USE OF OR INABILITY TO USE THE CONTENT OF THIS PRESENTATION
  • 4. @volitionproperties www.volitionprop.com Who is Volition? We’re Investor Realtors! ● Financial Modeling - Advanced proformas and modeling ● Financial Planning and Advisory - We help our clients use real estate as an input towards a larger financial plan ● Construction and development - Zoning, laneway suites, additional dwelling units, property setbacks, etc. ● Data based decision making - We root the values that plug into our modeling in real data ● Community - Investors helping investors ● We Come From Experience - We’re all investors ourselves and have sizeable portfolios across various types of real estate investments. Learn from our successes and mistakes!
  • 5. @volitionproperties www.volitionprop.com How do you work with Volition? Client Guidance Have a plan Advisory Realty Community
  • 6. @volitionproperties www.volitionprop.com The Volition Team Toronto’s Leading Real Estate Investment Advisory & Realty Firm Matthew Lee Founder & Managing Partner Ming Lim Head of Realty Florence Lee Senior Advisor and Realtor Alykhan Jinnah Realty & Leasing Services Alcina Sung Interior Design Wilson Ching Realty & Leasing Services Sally Xu Administrative Assistant JC Robas Transaction Coordinator
  • 7. @volitionproperties www.volitionprop.com What are our results? ● Realtor Awards: Chairman Award, President Award, Top Producer Awards 2017, 2018, 2019, 2020, 2021, etc, etc. ● Industry and Media Accolades: Featured on HGTV, REIN, RISE, Property Profits Real Estate Podcast, Michael Millenear Real Estate Investing Leadership Award nomination, etc, etc. ● We Practice What We Preach: $32M+ personal holdings in Toronto Real Estate (55+ doors)
  • 14. @volitionproperties www.volitionprop.com Sales to New Listings Ratio vs Avg Home Price
  • 21. @volitionproperties www.volitionprop.com Mortgages & Interest Rates – Is The Worst Behind Us? (Interactive Session w/ Hugo Dos Reis)
  • 22. @volitionproperties www.volitionprop.com Please welcome: Hugo Dos Reis, Vine Group! Hugo Dos Reis, mortgage Broker and founding Partner of one of the largest mortgage brokerages in Canada - Vine Group. He’s provided financial planning education to thousands of investors and authored several financial articles. With a focus on real estate investing and leveraging his financial planning background, he’s able to create practical and strategic solutions using a “Blueprint” approach to navigate the various lending solutions available to Canadians.
  • 23. LIC. 13511 MORTGAGE UPDATE SPRING 2024 C H A N G E S I N T H E M O R T G A G E I N D U S T R Y T H A T A F F E C T R E A L E S T A T E I N V E S T O R S H U G O D O S R E I S M O R T G A G E B R O K E R & F O U N D I N G P A R T N E R
  • 24. Agenda Recent BOC Announcement Interest rate forecasts 2024 Tax season tips Investor friendly lenders Reverse mortgages Blueprint approach to real estate investing Rates and recommendations General Q&A Session
  • 25. BOC Update Bank rate remains at 5% since July 2023 Next BOC meeting April 10th
  • 26. Inflation down to 2.80% (February) Previous rates: 2.90% in Jan and 3.40% in Dec 3 / 2 7 / 2 4 , 1 2 : 2 7 P M Ca n a d a ’ s i n f l a t i o nr a t e u n e x p e c t e d l y f e l l t o2 . 8 % i nF e b r u a r y . H e r e ’ s w h a t h a p p e n s n e x t - T h e G l o b e a n d M a i l TH E G LO BE A N D M A I L,SO U RCE:STATSCA N Consum erPri ce I ndex 12- m ont h per cent age change 2017 2018 2019 2020 2021 2022 2023 2024 0 2 4 6 8% CPI CPIexcl udi ng f ood and ener gy BOC Update
  • 27. Inflation stats: Groceries up 2.4% (down from 3.40% last year) Rents up 8.2% Gas up 4% Shelter costs up 6.5% Clothing/Footwear fell 4.4% BOC Update
  • 28. BOC Update Canada GDP Growth: 0.20% growth in Q4 2023
  • 29. US GDP Growth: 3.20% growth in Q4 2023 BOC Update
  • 31. Tax Season Tips 2024 Self-employed clients - 2-year average ▪ Consider how much income to declare Rental income ▪ Report rental income earned for each property
  • 33. Play it like a Chess Game 1 2 3 4 5 6 7 8 MONOLINE SCOTIA TD CIBC HOME TRUST 1 2 3 4 5 6 7 8 DOORS CREDIT UNION NATIONAL BANK
  • 34. Big bank lenders will typically cap # of properties at 5 ▪ NIAT (net income after tax) programs ▪ Net worth programs ▪ Equity programs ▪ Expanded ratios Investor-friendly Lenders
  • 35. Common sense lending approach Allow for higher qualifications Higher rates Average 1% lender fee charged Weaker or bruised credit friendly BFS friendly (use “stated income” to qualify) “B” or Alternative Lenders
  • 36. Self-employed case study: ▪ IT services business with $300K gross ▪ Each applicant can either declare $110K/year of income on tax return or $50K “B” or Alternative Lenders
  • 37. $1,000,000 LOAN AMOUNT “A” LENDER Alternative Lender Income Required $220,000 $190,000 (stated) Monthly Payment $6,073 $6,590 Est. Tax Cost $50,000 $14,000 Interest Cost over 12 months $60,880 $68,677 Fees $0 $10,000 Cost over 12 months $110,880 $73,590 DIFFERENCE OF $37,290 of savings “B” or Alternative Lenders
  • 38. Credit Union Provincially regulated and can qualify on ACTUAL rate vs stress test on owner- occupied properties
  • 39. MORTGAGE AMOUNT Stress Test Credit Union $250,000 $85,000 $65,000 $500,000 $145,000 $115,000 $750,000 $205,000 $165,000 $1,000,000 $265,000 $205,000 *Excludes rental income Mortgage Qualifying Income
  • 41. Access money from your home without selling or any monthly repayments Minimum age is 55 years Access up to 55% of home value Money is tax-free; no impact to government pensions Maintain ownership and control of your home Reverse Mortgages
  • 42. Unlock equity to invest Tax planning Purchase vacation or investment property Gift down payment Renovate or add additional living space Reverse Mortgages Uses
  • 43. Case study 1 (Income supplement): ✓Home value - $1.5MM ✓No mortgage balance ✓65 years old ✓Max borrowing est. $625K ✓Invested at 8% = $50K/year additional income Reverse Mortgages
  • 45. Case study 2 (Rental Income Supplement): ✓Home value (pre-reno) - $1.5MM ✓Reno cost (4-plex) - $1MM ✓Post reno value - $2.8MM ✓65 years old ✓Max borrowing est. $1.1MM ✓Rental income surplus - $7,500/mth+ Reverse Mortgages
  • 48. Financing Blueprint 2024 BEING STRATEGIC WITH YOUR FINANCING
  • 49. 1-4 PROPERTIES (SET UP) Most lenders have a “Global Limit” of 4-5 rentals Features: ▪ Preferred pricing ▪ HELOC’s for rentals ▪ Split mortgages Initial refinance of personal residence Blueprint Strategic Financing
  • 50. 5-10 PROPERTIES (REBALANCE) Reduced lender options Full portfolio should have DCR of 1.10+ Reporting to personal T1 generals Some big banks (branch relationship) Credit unions “B” lenders Consider a REFINANCE before you buy the 5th property Blueprint Strategic Financing
  • 51. 10+ PROPERTIES (SCALE) Turn your portfolio into a business Commercial blanket across your portfolio Up to 75% LTV Up to 25 year amortizations Commercial rates + fees DCR (Debt Coverage Ratio) ideally 1.25+ Blueprint Strategic Financing
  • 53. Variable Rates PRIME rate is 7.20% (with most lenders) Average 5-year variable rate is 6.20-6.80% for personal residence Average 5-year variable is 6.40%-7.20 for rentals What’s Happening With Mortgage Rates?
  • 54. 3 Year Fixed Rates Average 3 year fixed 4.99-5.59% for personal residence Average 3 year fixed 5.39-6.29% for rentals What’s Happening With Mortgage Rates? • 1-3 year Average Yield • 5 year Average Yield 5 Year Fixed Rates Average 5 year fixed 4.79-5.49% for personal residence Average 5 year fixed 5.49-5.99% for rentals
  • 55. FORECAST Most bank economists expect the overnight rate to drop 1.00% by end of 2024 WHAT SHOULD YOU BE DOING? Consider short-term fixed rates (1-3 years) if risk- averse If buying with less than 20% down consider variable HELOC Financing Blended variable + short-term fixed rate VARIABLE OR FIXED?
  • 56. Thank You. QUESTIONS? HUGO DOS REIS Mortgage Broker & Founding Partner Vine Group, Lic. 13511 hugo@vinegroup.ca
  • 58. @volitionproperties www.volitionprop.com How Volition Can Help As Advisors? FREE 30-min Advisory session with Matt or Ming Come prepared with: Capital available to invest Mortgage qualification Current real estate portfolio details We will help you determine: Where you are at Where you want to go Customized plan to get there
  • 59. @volitionproperties www.volitionprop.com How Volition Can Help As “Regular” Agents? ● Financial Modeling - How much rent can I get for my basement suite? ● Financial Planning and Advisory - If I sell my condo, will there be enough to retire? ● Construction and development - If I buy this property can I put a laneway suite in the future? ● Data based decision making - Am I paying too much for this condo? ● Community - I’ve got racoons!
  • 60. @volitionproperties www.volitionprop.com Next Meetup: How to Build Multifamily and Laneway Suites in Toronto!! (feat. Expert Architect) Date: Tuesday, Apr 23 Location: NEW LOCATION! The Kingston House RSVP: www.meetup.com/Volition LARGEST REAL ESTATE MEETUP IN TORONTO WITH OVER 4000+ MEMBERS!
  • 61. @volitionproperties www.volitionprop.com Your Next Step… Take MASSIVE ACTION SCAN TO BOOK A FREE 30-MIN CONSULT WITH VOLITION!