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With an extensive career spanning nearly two decades in real estate and investment, Candice Bakx-Friesen offers valuable insights and an in-depth understanding of the market. Candice is highly sought after for her proficiency in advising clients on buying properties at 100% Loan to Value (LTV). Let’s delve into the invaluable expertise that Candice brings to the table.
Candice’s track record speaks volumes about her abilities. Over the years, she has fine-tuned her skills to navigate through the often daunting landscape of real estate. Whether it’s helping investors find the right opportunities or assisting first-time buyers with the intricacies of the market, Candice stands out as a pillar in her line of work.
Candice approaches real estate with a unique perspective. For her, it’s not just about buying a property. Instead, it’s about understanding the marketplace dynamics, studying the financial landscape, and identifying the right opportunities within a client’s risk tolerance. She firmly believes that buying real estate at 100% LTV can yield substantial benefits if approached strategically.
In her podcast interactions with Georges El Masri, Candice discusses the philosophy that drives her approach to real estate. She emphasizes education, understanding one’s investment goals, and maintaining a sense of patience as vital components in successful real estate investing.
In the following sections, we will explore Candice’s insights on buying real estate at 100% LTV, the potential risks involved, factors influencing the LTV ratio, and how to build Wealth through organized real estate investment. Prepare to dive deep into Candice’s sea of knowledge to the pool.
But first, if you want financing for your next investment and want to know what type of collateral may be involved, click the link below for a free strategy call with our mortgage team at LendCity to discuss your specific situation.
The Benefits of Buying Real Estate at 100% LTV
There are certain advantages to purchasing real estate at 100% LTV (Loan to Value). One of the main benefits is the reduced upfront cash requirement. In an average property transaction, potential buyers must provide a down payment. The larger this down payment, the closer you get to a 0% LTV deal, meaning the property is entirely self-financed.
However, in a 100% LTV scenario, buyers can purchase property without upfront cash. This puts real estate ownership within reach for many people who previously couldn’t afford the initial down payment.
Capital Appreciation Potential
Beyond the accessibility of real estate, 100% LTV offers the potential for significant profit through capital appreciation. Property values, particularly in high-demand markets, often rise over time. Buyers are thus allowed to benefit from this appreciation despite not investing any initial capital.
Leveraging Financial Resources
Another rationale for considering a 100% LTV purchase is the leveraging potential it provides. You can invest in multiple properties instead of tying up substantial capital in a single property. This strategy may amplify your profits if the properties appreciate. It may also increase your risk exposure, so careful planning is necessary.
In a podcast episode hosted by Georges El Masri, guest Candice Bakx-Friesen, a seasoned real estate expert, shared her insights on buying real estate at 100% LTV. We’ll cover some of her viewpoints and recommendations in a subsequent section.
Exploring the Risks Involved
As with any investment, buying real estate at 100% Loan to Value (LTV) comes with potential drawbacks. As an investor, you must understand these possible pitfalls before you start to minimize the chance of surprises.
Potential for Negative Equity
The first potential risk of buying real estate at 100% LTV is the chance of negative equity. This happens when the property’s value decreases below the amount owed on your mortgage. Considering that you’ve borrowed 100% of the property’s value, even a slight decrease in market prices can put you in negative equity.
Higher Interest Rates
One of the factors that lenders consider when setting interest rates is the LTV ratio. Generally, the higher the LTV, the higher the interest rate. This is because the risk to the lender is more significant when the borrower has less equity in the property. Therefore, if you’re considering a 100% LTV, be prepared for potentially higher interest rates.
Stricter Lending Criteria
Lastly, while it might seem enticing to not put any money down, it’s important to remember that qualifying for a 100% LTV loan isn’t easy. Lenders may have stricter lending criteria given the higher risk associated with these loans, including higher credit score benchmarks and proof of stable income.
While the risks might seem intimidating, remember that Georges El Masri and Candice Bakx-Friesen believe you can navigate these challenges and find potential opportunities in the real estate market with thorough understanding and careful planning.
Factors That Influence Loan-to-Value Ratio
The loan-to-value (LTV) ratio determines who qualifies for a mortgage loan and at what interest rates. When dealing with real estate, several factors often come into play that influence your LTV. But what are these factors, and how much impact do they make?
The first and perhaps obvious factor is the property’s appraised value. Lenders use this value as a benchmark to determine the loan amount they will provide. In simpler terms, the higher the property value, the higher the loan amount you may receive.
The next factor affecting LTV is the down payment – the upfront amount you pay to purchase a property—the larger your down payment, the smaller your loan, and the lower your LTV ratio.
Your credit history or credit score is another influential factor. The better your credit score, the more likely lenders will offer you a higher LTV ratio. This is because a good credit score signals your ability to repay the loan to the lender.
Debt to Income Ratio
Last but not least is the Debt to Income ratio. This is calculated by comparing your total monthly debts to your gross monthly income. A lower debt-to-income ratio may help to secure a more favourable LTV ratio.
In conclusion, understanding these influencing factors can empower you to improve your LTV ratio, making property purchase at 100% LTV a more attainable dream. As Georges El Masri discussed with Candice Bakx-Friesen in the podcast, every little bit of financial management can lead you closer to your real estate goals.
Insights from Candice Bakx-Friesen
The strategic savvy in real estate that Candice Bakx-Friesen brings to the table can’t be emphasized enough. Let’s look at her insights about 100% LTV real estate investing.
First things first, the idea of using leverage in real estate investing is a cornerstone of Candice’s strategy. This concept might seem technical or complex, but it’s simply using borrowed money to finance an investment. In this case, it means getting a loan for the total value of a property, hence the term 100% Loan to Value. Candice insists this can be a wise move as long as it’s done responsibly and strategically.
Vendor take-back mortgages (VTB) is the term Candice used to explain how this can be done. In a vendor take-back mortgage, the seller of a property provides some or all of the mortgage financing to the buyer to facilitate the sale. Doing so allows investors to purchase properties without their money down, reaching a 100% Loan to Value.
Candice also explained why achieving 100% LTV is so appealing to her. Using the leverage provided by a 100% LTV, investors can potentially scale their property portfolios quicker than if they had to save for large down payments. However, she emphasized that this strategy, while potentially beneficial, has its risks. It’s vital to have a good understanding of the real estate market and solid financial management skills to succeed.
Key Points from Candice Bakx-Friesen
- Using leverage is a critical strategy in real estate investing
- A 100% Loan to Value can help investors scale their portfolios quicker
- Risks are involved, and sound financial understanding and management are vital
- Vendor take-back mortgage can provide one path to achieving 100% LTV
Common Misconceptions about 100% LTV
One common misconception about 100% LTV is that it increases the borrower’s risk. This, however, might not always be accurate, as the level of risk highly depends on the individual’s ability to manage their finances properly and wisely.
Another misconception is that 100% LTV loans are only for wealthy people or big-time investors. This is not the case. These loans can benefit first-time homebuyers or individuals looking to build their real estate portfolio.
Is 100% LTV Free Money?
No, this is another misconception. Although these loans do not require an initial down payment, it’s essential to remember that they must be repaid with interest. Financial discipline and precise budgeting are keys to successfully managing a 100% LTV loan.
Is Approval Guaranteed for 100% LTV loans?
It is often misconceived that Approval for such loans is easy to secure. Despite their attractive features, not everyone qualifies for 100% LTV loans. Before approving a loan, lenders carefully evaluate each application, assessing the borrowers’ credit history, income, job stability, and other factors.
High-Interest Rates Involved?
Another common belief is that 100% LTV loans carry outrageous interest rates. While the rates can be higher than traditional mortgage loans due to the added risk for lenders, they are not always excessively high. The rate you receive will depend on various factors, including your credit score, the lender’s terms and conditions, and the current market rates.
Building Wealth through Real Estate
Acquiring properties at 100% Loan to Value (LTV) can be a viable strategy to build Wealth through real estate. This approach may seem daunting, especially to the novice investor, but with guidance from professionals like our guest on this episode, Candice Bakx-Friesen, it can be understood and utilized effectively.
Steps to Build Wealth through 100% LTV Real Estate Purchases
- Understand the Market: Knowledge about the local property market is critical. Is the area on an upswing? Are properties appreciating? Effective investment requires research and informed decision-making based on these variables.
- Identify Suitable Properties: Look for real estate that aligns with your income goals and risk tolerance. This can be residential or commercial property, depending on your investment strategy.
- Access Financing: Banks and financial institutions may be willing to finance 100% LTV depending on their assessment of your financial situation and the property you aim to purchase. Demonstrating the ability to make repayments effectively can increase your chance of securing such a loan.
- Manage Your Risks: It’s essential to have a risk management plan in place. Things may not always go as planned, so having a backup strategy can save you significant stress and financial setbacks.
Bakx-Friesen rightly points out that the potential to amass wealth through real estate with 100% LTV is significant but should be navigated with caution and professional guidance.
Candice shared some inspiring success stories of individuals who have created significant Wealth via 100% LTV real estate investments. However, she highlighted the importance of education, mentorship, diligence, and calculated risk-taking in their successes.
“Success in real estate doesn’t happen overnight, it requires patience, consistent effort, and continuous learning. But the rewards can be immense,” Candice Bakx-Friesen stresses.
Buying real estate at 100% Loan to Value may seem like a giant leap, but adequate preparation and guidance can be a powerful tool for wealth creation.
Key Takeaways from Candice Bakx-Friesen
During her insightful conversation with Georges El Masri, Candice Bakx-Friesen highlighted several important points for individuals considering purchasing real estate at 100% Loan to Value (LTV). Here’s a closer look at some of these valuable insights:
- Education Candice emphasized the imperative need to be educated about real estate investments. Understanding the mechanics of the market and the details of contracts can help reduce risks inherently associated with 100% LTV.
- Risk Management Candice explained the importance of balancing risk and reward in real estate investment. It’s crucial to have a plan B in place. Developing an exit strategy before entering the deal can significantly reduce potential financial losses.
- She explained that structuring a deal and adequately structuring your real estate deal is paramount. Essential features such as creative financing, seller backing, joint ventures, etc., make purchasing real estate at 100% LTV possible.
- The Importance of Networking She also mentioned one cannot underestimate the importance of networking. Building relationships can open up opportunities and bring forth new possibilities.
To summarize, Candice Bakx-Friesen stresses the importance of investor education, risk management, deal structuring, and networking in achieving success with 100% LTV real estate deals.
If you are ready to start investing today and want more information about how your mortgage may be secured – or are looking to apply for a mortgage today – click the link below for a free strategy call with our mortgage team at LendCity today.