Scaling up from 3 portfolios to 10 or more.
Member since 2021 · 16 posts · 5 votes
I looking at scaling up my portfolio holdings and wondering if anyone knows of a better strategy is this high interest environment. I have 3 rental units so far with tenants in them; I've looked at getting another condominium to make 4 units, but the bank would literally need me to put down about 40% as down payment to ensure its cashflow positive. Any thoughts?
Vancouver or the island are both going to be hard to cash flow even without the higher interest rates. Plus in BC you also have the property transfer tax to pay when you buy. I agree with Anthony-look at AB. I have places both on Vancouver Island (bought before prices went up) and in AB. Tenancy rules in AB are also different than in BC.
Also look for single family homes or homes with a suite rather than a condo. The condo fees will make it a lot harder to cash flow.
I looking at scaling up my portfolio holdings and wondering if anyone knows of a better strategy is this high interest environment. I have 3 rental units so far with tenants in them; I've looked at getting another condominium to make 4 units, but the bank would literally need me to put down about 40% as down payment to ensure its cashflow positive. Any thoughts?
To me, it sounds like you are probably buying the wrong property. I know Vancouver is probably very hard to cashflow positive if that is where you are investing. There are other markets like Alberta for example where you can find cashflowing properties for example semi-detached or detached houses with basement suites, or 4plexes. We just closed on a property that cashflow positive and the lender had no problem with 80%LTV
I think it depends on your goals as well. At least in my experience, cash-flowing properties are typically in less desirable neighborhoods. If you are buying in an excellent neighborhood, you might struggle to find a cash-flowing property. It might just be you are trading some cash flow for better appreciation in the long run.
Switch to commercial financing if you can and if your Networth supports it.
Then they will approve you based on that instead of your income.
I looking at scaling up my portfolio holdings and wondering if anyone knows of a better strategy is this high interest environment. I have 3 rental units so far with tenants in them; I've looked at getting another condominium to make 4 units, but the bank would literally need me to put down about 40% as down payment to ensure its cashflow positive. Any thoughts?
To me, it sounds like you are probably buying the wrong property. I know Vancouver is probably very hard to cashflow positive if that is where you are investing. There are other markets like Alberta for example where you can find cashflowing properties for example semi-detached or detached houses with basement suites, or 4plexes. We just closed on a property that cashflow positive and the lender had no problem with 80%LTV
Thanks for the insight! I haven't looked at AB markets, I'm mostly on Vancouver Island for proximity. I don't think its the property, but the Market. I'll keep other markets in Mind!!
I looking at scaling up my portfolio holdings and wondering if anyone knows of a better strategy is this high interest environment. I have 3 rental units so far with tenants in them; I've looked at getting another condominium to make 4 units, but the bank would literally need me to put down about 40% as down payment to ensure its cashflow positive. Any thoughts?
To me, it sounds like you are probably buying the wrong property. I know Vancouver is probably very hard to cashflow positive if that is where you are investing. There are other markets like Alberta for example where you can find cashflowing properties for example semi-detached or detached houses with basement suites, or 4plexes. We just closed on a property that cashflow positive and the lender had no problem with 80%LTV
Thanks for the insight! I haven't looked at AB markets, I'm mostly on Vancouver Island for proximity. I don't think its the property, but the Market. I'll keep other markets in Mind!!
Well, if the lender needs you to put 40% down for the property to cashflow, if your strategy is cashflow, then you should probably look for a better-performing property (which might mean to look outside of your local market) that will cashflow with 20% down, it's definitely possible even in this current market.
I think it depends on your goals as well. At least in my experience, cash-flowing properties are typically in less desirable neighborhoods. If you are buying in an excellent neighborhood, you might struggle to find a cash-flowing property. It might just be you are trading some cash flow for better appreciation in the long run.
That's Exactly my Problem. I haven't looked outside BC or other provinces simply due to my schedule. I might have to look at other less desirables. Only concern is that even after getting 2 more, I'm afraid I might still have trouble getting the big banks do it for me.
I looking at scaling up my portfolio holdings and wondering if anyone knows of a better strategy is this high interest environment. I have 3 rental units so far with tenants in them; I've looked at getting another condominium to make 4 units, but the bank would literally need me to put down about 40% as down payment to ensure its cashflow positive. Any thoughts?
To me, it sounds like you are probably buying the wrong property. I know Vancouver is probably very hard to cashflow positive if that is where you are investing. There are other markets like Alberta for example where you can find cashflowing properties for example semi-detached or detached houses with basement suites, or 4plexes. We just closed on a property that cashflow positive and the lender had no problem with 80%LTV
Thanks for the insight! I haven't looked at AB markets, I'm mostly on Vancouver Island for proximity. I don't think its the property, but the Market. I'll keep other markets in Mind!!
Well, if the lender needs you to put 40% down for the property to cashflow, if your strategy is cashflow, then you should probably look for a better-performing property (which might mean to look outside of your local market) that will cashflow with 20% down, it's definitely possible even in this current market.
I'll definitely look into it. Thanks for the advise!
I think it depends on your goals as well. At least in my experience, cash-flowing properties are typically in less desirable neighborhoods. If you are buying in an excellent neighborhood, you might struggle to find a cash-flowing property. It might just be you are trading some cash flow for better appreciation in the long run.
That's Exactly my Problem. I haven't looked outside BC or other provinces simply due to my schedule. I might have to look at other less desirables. Only concern is that even after getting 2 more, I'm afraid I might still have trouble getting the big banks do it for me.
It all depends on your personal finances, without knowing the details it's hard to say, but getting cashflowing properties definitely helps with scaling your portfolio (on the residential side). There are residential lenders that do 16 properties (National Bank) or 10 properties (CIBC) so although it gets more and more difficult as you grow the ceiling is pretty high, and by the time you get to this size of a portfolio other options open up such as commercial blanket mortgages
I think it depends on your goals as well. At least in my experience, cash-flowing properties are typically in less desirable neighborhoods. If you are buying in an excellent neighborhood, you might struggle to find a cash-flowing property. It might just be you are trading some cash flow for better appreciation in the long run.
That's Exactly my Problem. I haven't looked outside BC or other provinces simply due to my schedule. I might have to look at other less desirables. Only concern is that even after getting 2 more, I'm afraid I might still have trouble getting the big banks do it for me.
I think it depends on your goals as well. At least in my experience, cash-flowing properties are typically in less desirable neighborhoods. If you are buying in an excellent neighborhood, you might struggle to find a cash-flowing property. It might just be you are trading some cash flow for better appreciation in the long run.
That's Exactly my Problem. I haven't looked outside BC or other provinces simply due to my schedule. I might have to look at other less desirables. Only concern is that even after getting 2 more, I'm afraid I might still have trouble getting the big banks do it for me.
So far its easier to manage my tenants as they are close and are all in growing areas of Vancouver Island. Remote areas may require me to subcontract a management company to do the work for me at a fee. Key is to keep it cashflow positive with the extra management fees.
I think it depends on your goals as well. At least in my experience, cash-flowing properties are typically in less desirable neighborhoods. If you are buying in an excellent neighborhood, you might struggle to find a cash-flowing property. It might just be you are trading some cash flow for better appreciation in the long run.
That's Exactly my Problem. I haven't looked outside BC or other provinces simply due to my schedule. I might have to look at other less desirables. Only concern is that even after getting 2 more, I'm afraid I might still have trouble getting the big banks do it for me.
It all depends on your personal finances, without knowing the details it's hard to say, but getting cashflowing properties definitely helps with scaling your portfolio (on the residential side). There are residential lenders that do 16 properties (National Bank) or 10 properties (CIBC) so although it gets more and more difficult as you grow the ceiling is pretty high, and by the time you get to this size of a portfolio other options open up such as commercial blanket mortgages
I knew about CIBC but didn't know about National Bank. I'll look at their offering. Thanks.
Switch to commercial financing if you can and if your Networth supports it.
Then they will approve you based on that instead of your income.
I'm exploring that currently with my main businesses with one of the BIG 5's that I deal with. Problem is I moved my real estate portfolio from my the one handling my main businesses to CIBC a few years ago as I found them more real estate friendly. CIBC can finance a property owned by the company with Personal interest rates provided you can guarantee it, the other bank wouldn't let me have the low rates.
I think it depends on your goals as well. At least in my experience, cash-flowing properties are typically in less desirable neighborhoods. If you are buying in an excellent neighborhood, you might struggle to find a cash-flowing property. It might just be you are trading some cash flow for better appreciation in the long run.
That's Exactly my Problem. I haven't looked outside BC or other provinces simply due to my schedule. I might have to look at other less desirables. Only concern is that even after getting 2 more, I'm afraid I might still have trouble getting the big banks do it for me.
There is no need to go to undesirable areas to get cashflow. Yes it is true that you usually get more cashflow in less desirable areas, but I've been buying cashflowing properties in B and C neighbourhoods for 10 years, you just need to find the right properties.
And you are totally right Stevo, there is nothing wrong in focusing more on appreciation, however it is much more speculative and WILL make it harder to qualify down the road as your debt servicing ratios will be much lower .
Talking to a mortgage broker that specializes in investment portfolios is a good first start.
Try Keaton Kirkwood.
There are cash flowing properties on Vancouver Island right now. I know of a few in Port Alberni and few in Nanaimo that cashflow well, even with the high interest rates.
There are creative ways to put properties in hold cos that will enable more mortgages.
I'm happy to hop on a phone call with you and hopefully help solve the problem. I closed on my 6th and 7th in April and know some tricks.
@Elijah ROberts DSCR loan. Look into it !
Owner finance and subject to.
Vancouver or the island are both going to be hard to cash flow even without the higher interest rates. Plus in BC you also have the property transfer tax to pay when you buy. I agree with Anthony-look at AB. I have places both on Vancouver Island (bought before prices went up) and in AB. Tenancy rules in AB are also different than in BC.
Also look for single family homes or homes with a suite rather than a condo. The condo fees will make it a lot harder to cash flow.
It is important to do your research when it comes to Real Estate investing. Vancouver can be a difficult market to cashflow positive, so it's smart to consider other markets that may offer more suitable opportunities for investors. Consider Alberta for example; we recently closed on a property with solid cashflow and our lender had no problem offering an 80%LTV loan. Doing your due diligence will help you make the most of Real Estate investments and ensure success in the long run.
Cheers!
- Real Estate Expert Team
I think it depends on your goals as well. At least in my experience, cash-flowing properties are typically in less desirable neighborhoods. If you are buying in an excellent neighborhood, you might struggle to find a cash-flowing property. It might just be you are trading some cash flow for better appreciation in the long run.
That's Exactly my Problem. I haven't looked outside BC or other provinces simply due to my schedule. I might have to look at other less desirables. Only concern is that even after getting 2 more, I'm afraid I might still have trouble getting the big banks do it for me.
So far its easier to manage my tenants as they are close and are all in growing areas of Vancouver Island. Remote areas may require me to subcontract a management company to do the work for me at a fee. Key is to keep it cashflow positive with the extra management fees.
@Elijah ROberts try a DSCR loan
I will reach out when I'm ready for the next one. I am fixing Last year's Balance Sheets for related companies to allow me go into the market after i pay the Tax man his dues!
Thanks in advance!
Talking to a mortgage broker that specializes in investment portfolios is a good first start.
Try Keaton Kirkwood.
There are cash flowing properties on Vancouver Island right now. I know of a few in Port Alberni and few in Nanaimo that cashflow well, even with the high interest rates.
There are creative ways to put properties in hold cos that will enable more mortgages.
I'm happy to hop on a phone call with you and hopefully help solve the problem. I closed on my 6th and 7th in April and know some tricks.
I will reach out when I'm ready for the next one. I am fixing Last Year's Balance Sheets for related companies to allow me to go into the market after I pay the Tax man his dues!
Thanks in advance!
I think it depends on your goals as well. At least in my experience, cash-flowing properties are typically in less desirable neighborhoods. If you are buying in an excellent neighborhood, you might struggle to find a cash-flowing property. It might just be you are trading some cash flow for better appreciation in the long run.
That's Exactly my Problem. I haven't looked outside BC or other provinces simply due to my schedule. I might have to look at other less desirables. Only concern is that even after getting 2 more, I'm afraid I might still have trouble getting the big banks do it for me.
So far its easier to manage my tenants as they are close and are all in growing areas of Vancouver Island. Remote areas may require me to subcontract a management company to do the work for me at a fee. Key is to keep it cashflow positive with the extra management fees.
I think it depends on your goals as well. At least in my experience, cash-flowing properties are typically in less desirable neighborhoods. If you are buying in an excellent neighborhood, you might struggle to find a cash-flowing property. It might just be you are trading some cash flow for better appreciation in the long run.
That's Exactly my Problem. I haven't looked outside BC or other provinces simply due to my schedule. I might have to look at other less desirables. Only concern is that even after getting 2 more, I'm afraid I might still have trouble getting the big banks do it for me.
So far its easier to manage my tenants as they are close and are all in growing areas of Vancouver Island. Remote areas may require me to subcontract a management company to do the work for me at a fee. Key is to keep it cashflow positive with the extra management fees.
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