Newbie Looking for Info wholesaling in Canada

12 Replies

Hello BP world. I am up in Calgary Alberta and looking to connect with any investors in the area. I want to start my real estate investing business by first wholesaling some homes. Is there any Canadian investors who would be willing to answer some of my questions? They are mainly on the regulatory of wholesaling in Canada.

@Chris Stanley

Welcome to BP!  I have family in the vicinity Airdrie (Tebb).  A great uncle of mine use to have a ranch just to the west of Airdrie - his kids have long since sold most of it for subdivisions - who use to breed the Palominos which lead the Stampede Parade for years.

Wholesaling in Canada can be a tough slog.  In most of the country, markets a too small and attitudes are still too entrenched with "must get a realtor" to make a go of wholesaling.  Nonetheless, there are a few folks here on BP who are wholesaling in the TO and MTL areas ... the Calgary market may be of sufficient size and the economic conditions right to provide you with at least a short-term opportunity to wholesale.

@Gary McGowan is an investor & real estate agent in the GTA who could provide some insight.  @William Johnson is wholesaling in the MTL region.  There are also a couple out in the lower delta of BC who are wholesaling.

Medium greenapartmenthires 1024x1024Roy N., Louer Louer Ltd. | 1.506.471.4126

Great thank you for the info. I will contact them. Airdrie is a booming little town now. I moved out to Airdrie 4 years ago to get out of busy Calgary. When we moved Airdrie was around 35,000. Now the population boom to over 50,000. It's crazy with all the development. There is about 6 km's between Calgary and Airdrie city limits now.
Originally posted by @Roy N. N. N.:

@Chris Stanley

Wholesaling in Canada can be a tough slog.  In most of the country, markets a too small and attitudes are still too entrenched with "must get a realtor" to make a go of wholesaling.  

@Roy N. I would have to say that I wholeheartedly disagree with you...I think that anywhere that you go in the world that you will always have a reliable (but slightly variable) percentage of people who will do whatever they can to not pay the 5% commission to a realtor.  I doubt whether my opinion or yours could be objectively verified but if you have any statistics or documents to back up your ideas on this subject I would welcome that (although I actually don't have anything concrete to backup what I am saying ;)

P.S. The only reason that I am into wholesaling at this point in time is to eventually be able to get into your investing strategy.

Originally posted by @Chris Stanley :
Hello BP world. I am up in Calgary Alberta and looking to connect with any investors in the area.

I want to start my real estate investing business by first wholesaling some homes. Is there any Canadian investors who would be willing to answer some of my questions? They are mainly on the regulatory of wholesaling in Canada.

 Welcome to BP Chris, if you let it this site will change your life! For info on wholesaling I would recommend taking a look at http://www.recbc.ca/psm/assignment-of-contracts/ for regulatory information from B.C.  This pretty much summarizes the law in all parts of Canada.  The best thing to do though is to contact a real estate lawyer and ask how to do that strategy in Alberta while respecting the law.

Thanks for the response @William Johnson

I will be putting this question towards a real estate lawyer. 

Originally posted by @William Johnson:

@Roy N. I would have to say that I wholeheartedly disagree with you...I think that anywhere that you go in the world that you will always have a reliable (but slightly variable) percentage of people who will do whatever they can to not pay the 5% commission to a realtor.  I doubt whether my opinion or yours could be objectively verified but if you have any statistics or documents to back up your ideas on this subject I would welcome that (although I actually don't have anything concrete to backup what I am saying ;)

 William:

That's what makes this site so useful, we all have different experiences.   While MTL and the GTA have sufficient populations to potentially create a steady inventory for wholesaling, in a region like the Maritimes (NB, NS, PEI), you have population of 1.6 million (about the same as the Island of MTL).  With a market this small and geographically disperse, it is improbable you could turn enough deals to cover the marketing costs let alone make a living.   Out on the Prairies (exceptions possible for Calgary, Edmonton and Winnipeg), across northern ON & PQ, and in the BC interior you will have similarly small and disperse populations.   While I am sure you could find a wholesaling deal in any of those markets, I'm sceptical whether one could make a living at it.

 Like you, I have no quantifiable data.  Antidotally, I can say that any newly declared wholesalers I have encountered in the Maritimes in the past 3-4 years have faded away.

Medium greenapartmenthires 1024x1024Roy N., Louer Louer Ltd. | 1.506.471.4126

@Chris Stanley

  I think buy low sell high works anywhere.. what I think would be tough and probably why @Roy N. comments were what they were, is the fact that the market in Canada is by and large pretty strong and stable. At least from what I see... But you will always have people that are not tidy and such and just want to dump homes... Based on my experience though buying homes in Canada for my personal use and lending money.. things are FAR more formal than the US... Also ( at least when I was doing things there 2000 to 2003) information that we can easily attain in the US is not nearly as easy.

Defaults are very low and my experience being a lender is .. foreclosure is not nearly as cut and dry and it is here.. the courts have great latitude to adjust payments interest rates etc.. they will give the borrower a lot of leeway to try to rectify the situation... Again based on my making half a dozen HML that one went a little wonky,, and had I know the foreclosure rules I would never have loaned money in BC LOL.

Each Province may be different in this regard I do not know. 

But new construction I think is pretty hot.. I almost bought a land deal in Kelowna which I wish I would have closed on.. we would have done very well building new.

Also made a run at some commercial up in Fort McMurray.

good luck with it.

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

@Jay Hinrichs

I was still thinking primarily about market sizes when I responded above.  However, you are correct, the low mortgage delinquency rates in Canada (mortgage arrears are < 0.5% nationally, delinquency is less than half of that again), mean you will be looking for an even smaller set of motivated vendors in an already small market.

The provinces in Canada are almost evenly divided between those with judicial foreclosure (BC, AB, SK, MB, PQ, NS) and those which use Power of Sale (NF, NB, PE, ON). Lenders, particularly in Power of Sale jurisdictions, have a fiduciary obligation to sell a property at market value (no fire sales permitted) and, as such, these properties are listed on MLS. As mentioned above, theses markets are small and pretty steady, so inventory, for the most part, moves.

A borrower in such a jurisdiction, realizing s/he is headed toward sale of her/his property, has no real motivation to move the property first using a wholesaler - unless they are certain the property will sell for more than what is owed - as they remain obligated for the entire outstanding balance of the mortgage (unlike in Judicial Foreclosure, where the lender seizes the property in exchange for release from the obligations of the mortgage).

Medium greenapartmenthires 1024x1024Roy N., Louer Louer Ltd. | 1.506.471.4126

@Roy N.

  I am sure the qualifications for one to borrow in Canada are somewhat stiffer than our predilection to allow almost anyone to own a home  with all sorts of government mandates to achieve this.. and of course those back fired and darn near brought the world to its knee's  LOL.

I enjoyed my borrowing experience there in B/C  you dealt with the bank directly and opened accounts etc. not sure what you had to have down as a minimum I put more than half down when I bought my place there so It was kind of a no brainer.. but I liked the process 250 for appraisal and maybe 500 for the attorney and that was it.. unlike the UN were you can have 3 to 5k just in junk fee's plus origination etc. and mortgage brokers trying to get you to go a little higher on rate so they can get the yield spread premium. Our lending was very flawed for some of those reasons.

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

@Chris Stanley

Welcome to Bigger Pockets. BP is full of resources. You will find resources here from blogs to pod casts and forums. You can also send messages to members which is my favorite part of the website

Medium mysolo 401k logoMark Nolan, My Solo 401k Financial | [email protected] | 800‑489‑7571 | https://www.mysolo401k.net/

Question for the Canadian wholesalers: did you start an entity and conduct all your business through it and if so, how is the income taxed? As business income? Or capital gains?

I'm curious to see how CRA treats this type of income.

@Amy Colin

Wholesaling is a business, similar to flipping, the properties are considered inventory and not investments.   If you are wholesaling under a Canadian Controlled Private Company (CCPC), the company will pay income tax at the small business rate (advantageous as it is low - 14% in Alberta ).  

Naturally if the company pays you a salary, you will pay personal income tax and there will be payroll taxes for the company,  However, if the company pays you predominately via dividends, then you would pay a lower personal income tax on that amount (subject to minimum tax).

Best to sit down with an accountant and, perhaps an attorney, to see how an operational company could work for you.   If you plan to both wholesale and hold properties, you may want two companies (perhaps even related) - one active, the other passive.  Once again, these are all questions for your accountant.

Medium greenapartmenthires 1024x1024Roy N., Louer Louer Ltd. | 1.506.471.4126