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James Morris
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hello bigger pockets.. progressing one door at a time!

James Morris
Posted Jan 22 2023, 14:29

Hey everyone,

I'm in North York, Ontario and have been dabbling in the world of real estate for a few years now. I've had great success with single-family rentals and they've been a steady source of income for me. However, due to some changes in my financial situation, I'm no longer able to qualify for a mortgage.

But don't worry, I'm not throwing in the towel just yet! I'm currently in the process of going back to school to get certified in a new career, and I've also recently come into a pretty substantial inheritance. I'm excited to use this newfound wealth to jump back into the real estate game and make some smart investments.

My question for all of you experts out there is, what are my options for investing around $300k in Ontario? I'm open to any and all suggestions, so please feel free to share your thoughts and experiences. Let's make some money together! 

Thank you.. looking forward to learning and sharing.. 

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Alli Breighner
  • Lender
  • San Diego, CA
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Alli Breighner
  • Lender
  • San Diego, CA
Replied Jan 23 2023, 05:40

Hi James, welcome to the BP community! This platform has numerous resources so definitely take advantage of it all. 

I'd love to discuss any questions or interests you have in real estate, and would love to connect!

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Gregory Grant
  • Lender
  • Mortgage Broker
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Gregory Grant
  • Lender
  • Mortgage Broker
Replied Jan 24 2023, 02:16

Hi James,

Have you reached out to a mortgage agent to assist you with your mortgage needs?  If you need some assistance please give me a call.


Gregory

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Sankeethan Ratneswaran
  • Investor
  • Ontario, Canada
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Sankeethan Ratneswaran
  • Investor
  • Ontario, Canada
Replied Jan 26 2023, 20:03

You got a bunch of options, but it ultimately depends on what you’re trying to do and your situation.

You said you’re in the process of going back to school to get certified in a new career. Is the career real estate related? If that’s the case, then you should invest in yourself; in whatever business you’re starting. If that’s too risky or if your new career is not real estate related and you’re looking for something simpler, you still have options.

I’ve broken it down below for you based on types of investing styles for someone who isn’t going to get a mortgage:

Real Estate Private Lending:
You can connect with a good mortgage broker and learn about private lending in real estate. Essentially there are a lot of people in the real estate game who are looking for 2nd mortgages.
There are 2 types of ways to lend. Secured lending and unsecured lending.
Secured lending means your name is on title on the house, so if the buyer defaults, then you can sue and try and get your money from the house. Unsecured lending has higher interest but is more risky. Private lenders typically earn 10-13% interest annually. So on 300k, you can potentially make $2500 – $3,250 monthly plus you can charge a lenders fee on the total amount from 1-3%. There are risks associated with this that mortgage brokers and lawyers can explain in detail to you.

Pre-Construction Builds:
A lot of Torontonians buy precons because they have 2-3 years before they have to assume the property. Essentially, they try to do an “assignment sale”. You said you no longer qualify for a mortgage. This means before you have to get the mortgage and assume the property you try to sell the property. I’d never recommend this because the taxes are CRAZY for assignment sales. But it is an option and a lot of people still do it.

Upgrade your existing house:
You mentioned that you have a single family rental in the GTA. See if you can increase the amount of money you make but creating a basement unit. If you’re renting out an entire house and the basement is unfinished. You can create a separate entrance and create a 2 bedroom basement unit! This will increase the amount of money you make monthly. If you want your money back, you can then ask the bank if the rental house qualifies for a refinance based on the value add you did!

Syndication:
There are groups of people who come together to buy real estate. Like cottages, vacation properties etc. But I’d be careful. I wouldn’t just go and invest with anyone. If it’s your family and friends and you trust them then why not?

Joint Venture/ Partnering with Active Partners :

There are a lot of people like me who flip/brrrr and turn around multi family properties. Working with these individuals is usually very passive. You’re money gets invested in larger multi family properties that need to get turned around. It’s a pretty passive way to build your portfolio. Essentially the active partner will raise money, get private mortgages to buy a building. Then they renovate the building and rent out all the units. The bank appraises the building based on the new Net Operating Income of the building. Majority of the time the active partners gets all the investors money back and now everyone is a part owner in a bigger multi-family building. Property Management companies take care of the properties and you get paid in the form of a dividend. So even from a tax perspective you save a lot of money. The risks would be finding someone in the game you can trust and build a relationship with for the long term.

Real estate Funds:
Building from my last paragraph, there are even larger companies that borrow larges sums of money from several people like yourself and they essentially pay you interest. You don’t own the property, but it’s like private lending with lower returns.

I think your decision really depends on your situation, like if you’re in your late 50’s, then perhaps keeping the cash is a better idea. I hope I gave you some insight or that you learned something new.

Good Luck! 

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Drew Sygit#2 Managing Your Property Contributor
  • Property Manager
  • Royal Oak, MI
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Drew Sygit#2 Managing Your Property Contributor
  • Property Manager
  • Royal Oak, MI
Replied Jan 27 2023, 04:42

Are there DSR loans in Canada?

You could also look to invest in the USA