Building a side by side duplex financing

[Ziemer]

My wife and I were throwing around the idea of building a side by side duplex. We would live in one side and rent out the other.



What would the bank financing requirments be for that because it would be two different titles? Minimum 5 % down on our side that we would live in and 20% down on the rental side? Or could you build it all under one title and transfer it into two seperate titles later?



Eventually in a couple yrs we move out and rent out both sides.



Thanks for your comments



Evan

 

[Thomas Beyer]

[quote user=Ziemer]What would the bank financing requirments be for that because it would be two different titles? Minimum 5 % down on our side that we would live in and 20% down on the rental side?


yes that is the preferred option.



[quote user=Ziemer] Or could you build it all under one title and transfer it into two seperate titles later?
an option too .. but WHY ? The city might change their mind and in 3 years they may not let you sub-divide the 2nd title off .. and then you can't sell it !



When BUILDING banks will look for 20-25% down CASH anyway .. of COST .. and not of VALUE !! 5% down (of value or price) doesn't exist for construction !

 

[RobMacdonald]

Both CMHC and Genworth have construction programs that permit financing up to 95% of the completed value. Both will allow up to 2 units in the dwelling.



The title would be limited to one lot, and you would run into complications down the road if you subdivide later. You would need to have substantial equity in the home to subdivide otherwise, it would be deemed to be a high ratio rental property.



Subdividing first, then building would be quite complicated as you would be working under the CMHC program on one side and conventional on the other. Each program has different schedules of draws etc.



Under the CMHC construction program, the first draw can be used to buy the land and is allowed once the foundation is complete. So part of the negotiation on the purchase contract is making sure the vendor will allow some constructions to start.



These programs are quite tricky, but you will have some options. Not every bank will offer this program, or really understand the program to give you the appropriate direction.

 

[HandyAndy]

Why subdivide a duplex?

I'm new here, so I'm just askin'....