Ross & Amy: Smart Financing for a Profitable Investment
Ross and Amy had built a strong track record as property investors, typically buying homes, renovating them, and selling for a profit. But with their latest opportunity, they saw a different path—one that involved long-term rental income instead of a quick flip.
The Challenge: Making the Numbers Work
The property they wanted to buy had great potential, but in its current state, it wouldn’t generate enough rental income to cover mortgage payments. Their plan was to renovate and add two basement suites, which would make the property cash flow positive once fully rented.
The Solution: A Two-Step Financing Strategy
Since the property’s value and income potential would change significantly after renovations, ApproveU.ca structured a two-phase financing approach:
Initial Financing for Purchase & Renovation
Ross and Amy secured an initial loan at a slightly higher interest rate, which provided the funds needed to purchase the property and complete the renovations.
Long-Term Financing Once the Property Was Income-Generating
Once the renovations were complete, the property was reassessed with its new income potential. With two additional basement suites bringing in rental income, Ross and Amy secured a new 30-year amortization mortgage at a competitive rate—one that was fully covered by the rental revenue from the main unit and the two suites.
The Result: A Cash-Flowing Investment Property
By structuring their financing strategically, Ross and Amy transformed a property that initially wouldn’t cash flow into a profitable long-term investment. Their decision to renovate first and refinance later allowed them to hold onto the property and generate passive income instead of selling—setting them up for continued real estate success.