Cashflow vs. Equity-- Good idea to use more leverage?

[EvanOkanagan]

Hi guys,

I think this is a great article for those just starting out in Real Estate investing. Gives a good contrast between the focus of building the most equity vs a "cashflow first" strategy.

Cash Flow v. Equity: Which Helps Investors in the Long Run?

 

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[JAJT]

Thanks, this was some great info.

Quick question though - is this article suggesting it might be better to take on the CMHC insurance fees in favor of paying as little as possible? Or would hitting that 20-25% and not a penny more be a generally better idea whenever possible?

I've done a bit of reading so far and everything seems to be pointing at putting 20% down in most of the examples, presumable to avoid the CMHC cost.

 

[EvanOkanagan]

Thanks, this was some great info.

Quick question though - is this article suggesting it might be better to take on the CMHC insurance fees in favor of paying as little as possible? Or would hitting that 20-25% and not a penny more be a generally better idea whenever possible?

I've done a bit of reading so far and everything seems to be pointing at putting 20% down in most of the examples, presumable to avoid the CMHC cost.

Great point.

I agree 100% that if you can put down 20% (minimum to avoid CMHC fees in Canada--which are now as much as 4%!), definitely do it. Not only do you avoid paying that premium, but it also will increase your cashflow considerably, as you can typically spread the term from a 25 year amortization up to a 30 year.

I do this on all purchases whenever possible to avoid those high fees and up the cashflow.

This is in line with an idea of the post that "you can always pay more, but you can never pay less" (when it comes to the mortgage payments).

 

[SteveO]

This is one way. Although, in my opinion both are less than fastlane based on the examples.

 

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