649 replies to this topic

[Mike K.]

That's called a stated income if you use your company to back up your personal income (be it dividends or whatnot).

 

With regards to dividends, if your business is two or three years old and established in the sense that there's a clear history of profit the banks won't mind using dividends, but with the stated income route where you use your business to prop up your personal financial situation some lenders will still require a down payment of 35%, if not more. I'm going through this right now and it's all a bit of a whirlwind.

 

Keep in mind though that lenders are getting more stringent and the rules are tightening. Also, your existing assets and the equity you've built is definitely a factor that can open more doors for you.

[lanforod]

^ 10.5 years in business and they still want 35% from ya? Ouch  

[MarkoJ]

I refinanced a condo I have at 834 Johnson (right across from Vivid) last year and even thought I had more in RRSPs than the value of the mortgage and the condo completely carried itself with the rental income + cash flow positive it took well over a month to secure financing and 50 documents later I had to provide everything from business documents to tenancy agreements for the suite at my personal home, etc.

[Mike K.]

Yeah. When you’re self employed it’s a whole different process than when you receive a cheque.

[tjv]

That's called a stated income if you use your company to back up your personal income (be it dividends or whatnot).

 

With regards to dividends, if your business is two or three years old and established in the sense that there's a clear history of profit the banks won't mind using dividends, but with the stated income route where you use your business to prop up your personal financial situation some lenders will still require a down payment of 35%, if not more. I'm going through this right now and it's all a bit of a whirlwind.

 

Keep in mind though that lenders are getting more stringent and the rules are tightening. Also, your existing assets and the equity you've built is definitely a factor that can open more doors for you.

I had a clear history of corporate profits, they also didn't care about using dividends vs income.  They didn't request 35% down, but I was putting more than that down before I applied.

 

Long story it took about 2 months for me to be approved and I was beginning to sweat after a month wondering what was taking so long.  My local bank rep told me not to worry I was just in the queue and at about 6 weeks in suddenly the document requests came one after the other and then I was approved.

 

Don't worry if you don't get approved TJV Mortgage starts loaning at 18% haha.

 

I refinanced a condo I have at 834 Johnson (right across from Vivid) last year and even thought I had more in RRSPs than the value of the mortgage and the condo completely carried itself with the rental income + cash flow positive it took well over a month to secure financing and 50 documents later I had to provide everything from business documents to tenancy agreements for the suite at my personal home, etc.

while RRSPs do count as assets I don't believe the bank can touch them even in bankruptcy (at least I am 99% sure)

 

I read on one of your posts that you didn't think it was worth renting out a suite in your house after paying tax on the income and losing partial tax free capital gains.  Did you figure it worked out in the end.

[MarkoJ]

I read on one of your posts that you didn't think it was worth renting out a suite in your house after paying tax on the income and losing partial tax free capital gains.  Did you figure it worked out in the end.

 

I was renting the suite when I refinanced the condo, but not renting it currently.

[Barrrister]

The strange thing is that my wife and I would qualify under these rules. We are both retired with an income of about 120k a year but a net worth of over 30 million. I am not sure this was intended to benifit us. Good thing that the idea of investing in condos in Victoria is less than appealing.

[VicHockeyFan]

Are you in the market to adopt an adult child?

PM me if so.

Edited by VicHockeyFan, 19 February 2018 - 07:00 AM.

[Mike K.]

Two? I'll even make you a moderator.

[tjv]

The strange thing is that my wife and I would qualify under these rules. We are both retired with an income of about 120k a year but a net worth of over 30 million. I am not sure this was intended to benifit us. Good thing that the idea of investing in condos in Victoria is less than appealing.

I think there are a lot of people like you in Victoria, very high net worths, but keeping their income lower.  My mom is a prime example of that and trying to keep her income below a threshold so she still gets her OAP and leaving the excess income in the corporation to invest

 

As for not investing in condos, the condo market is red hot and prices continue to escalate.  I will admit I don't like the rental laws of BC and the taxation of renting it out makes little sense financially

[lanforod]

Folks with very high net worth would mostly be filtered out because they won't have a desire to live in what is essentially a starter condo (albeit a new one). That primary residence requirement for 2 years is a good one.

[MarkoJ]

Folks with very high net worth would mostly be filtered out because they won't have a desire to live in what is essentially a starter condo (albeit a new one). That primary residence requirement for 2 years is a good one.

 

 

Downsizer wanting to live in a 2 bed condo on the 20th floor?

[lanforod]

Sure but would you pick Vivid or Promontory?

[VicHockeyFan]

Sure but would you pick Vivid or Promontory?

 

Ya, $30M new worth, I think I know the choice.

[shoeflack]

Sure but would you pick Vivid or Promontory?

 

20th floor at Vivid is/was $525k for 753 sq ft.

 

Closest comparable at Promontory that I could see recently was 9th floor and 720 sq ft at $590k. 20th floor and up are all million+. And looks like most anything above 10 in a similar size is 650-850k.

 

Save a couple hundred grand and get a top floor unit at Vivid...seems like a legit deal.

[lanforod]

Hey Barrrister, what would you pick? Price is obviously not a factor for you.

[Promontory Kingpin]

Word is that lots people are going to be renting out their units before the 2 year clause is up. Who knows if/what BC Housing will do to enforce the rules. I do hear that if you have to sell within 2 years, you will have to have it appraised, and then sell it for 8% less than that appraised value at that time. But really, what can they do if you rent the suite out?!?!?

 

Strata bylaws are identical to Yates at yates as strata fees are paid into the same pool. As Yates allows for rentals, this will not break any strata rules; therefore, strata CANNOT fine you for renting out your 2 bedroom top floor "penthouse" for 3k+ a month.

 

If anyone who has signed one of Chard's top secret contracts for a unit at Vivid can provide information that states there will be a set penalty please feel free to provide us with information. Otherwise, they will have absolutely no grounds to do anything... What are they gonna do? seize the condo

[G-Man]

I am sure that BC Housing will be only too happy to fine anyone doing that.

How are you hearing that "lots" of people will be renting them out?

[Mike K.]

The rules are very clearly stated as are the ramifications of disobeying a Covenant buyer(s) will have signed. Whoever is telling you there are "lots" of people planning to rent out their units and that there are no ramifications to doing so is very poorly informed on the situation and if what he or she says is true, is possibly misinforming other buyers.

 

The issue isn’t a matter of strata bylaws but of a Covenant placed directly on the title of all Vivid suites by BC Housing.

 

Purchasers must sign a Statutory Declaration acknowledging this Covenant and agreeing to abide by the rules it sets out, which your source, Promontory Kingpin, should direct to his or her lawyer for review and an explanation as soon as possible if he or she misunderstood the gravity of the situation the first time around.

 

The Covenant includes an agreement that for two years the suite will not be leased to a third party and may only be occupied by the qualified purchasers.

 

Should the purchaser choose to ignore this rule, the Covenant states that BC Housing "may exercise all of its remedies both at law and in equity in order to enforce the obligations of the Transferor [the purchaser] and the rights of the Transferee [BC Housing].” According to the agreement, this may take the form of “specific performance, injunctive relief (mandatory or otherwise) or other equitable relief”.

 

In other words, BC Housing can force a sale - at a price that is 8% below appraised market value - should a purchaser get caught breaking the rules.

[Mike K.]

Promontory Kingpin, if you have any further questions or if you’ve heard anything else through the grapevine post it up. Clearly there’s interest in this project and any question you may have a few dozen people out there likely share.