Scaling A Canadian Real Estate Portfolio

13 Replies

Hello,

My Name is Jayden I am 19 years old. I just closed on my first 4 Plex this week in Medicine Hat, AB using traditional financing. I still have tons learning to do when it comes to real estate. When I have time off work I am doing the best I can to learn more. I am interested mainly in Buy and Holds. I am extremely determined to scale into a much bigger portfolio, However I haven't seen to many Canadian real estate investors with large portfolios on BP yet. Does anyone have tips or experience on scaling in Canada to 100+ units? 

Thanks

Congrats on the 4 plex at your age that's fantastic! Is there any difference between the US and Canada? I would assume its exactly the same process just keep on buying. 

@Dan M.

It is very much not the same process as USA, lending is entirely different. The big 5 lenders, or “A” lenders all cap out at slightly different number of mortgages and/or overall lending. TD for example (currently) will allow 5 in a personal name and 5 more personally guaranteed. There is also no such thing as non-recourse mortgages in Canada. And then, unless you’re getting fairly creative (read: legal, but B lenders or private lending) you’re going to be using minimum 20% down. 35% is not uncommon for newer less proven commercial mortgagors. .. and those also require personal guarantees.

Get a good broker who can help you navigate to 10 personal mortgages. It isn’t easy at all. After that, you’ll want to investigate commercial financing which is entirely different (mainly in a good way at this point) but I wouldn’t recommend starting out with a Corp/ commercial as the drawbacks likely outweigh the benefits until you’ve maxed out personally.

To me its the same I use traditional funding 20% and personally guarantee all of my loans through an LLC. Though there are people that are able to do other things such as the strategies you mentioned I do not really see that as necessarily being advantageous. Maybe I'm just not big enough to have those type of problems you mentioned.

On one of the BP podcasts they talk something along the lines of "dont let the 10 mortgage rule be a deterrent when you own 2 properties, worry about that when you get there" 

@Dan M.

Well done. Far too many investors drink the "low/ zero down!!" Koolaid. There is no max of 10 here, it's all based on personal portfolio and net worth etc but once you're beyond 4 or 5, you're in "exception" territory and better have awesome DCR and TDSR along with a noticeably substantial net worth. In Canada, 99% of mortgage brokers won't be able to put a plan together for more than 4 in current lending environment.

@Jayden Thompson Most investors with 100+ units are not spending time on BP or other similar platforms because they have other businesses or traveling, etc. There are a few investors in your area that are at 100+ doors. Look into high-networth programs with National Bank and CIBC. Funding requirements are not impossible after 5 doors. What is driving your target of 100+ doors? 

@Huong Luu I am trying to obtain financial freedom so I can travel and take time off as desired and enjoy life. That being said I would be lying if I said I don't care for materialistic things. 100 Units seems like a good goal to have and seems like a big milestone in real estate investing (to me at least).  

Thanks for the advice on the high-networth programs. I will check into that when the time presents itself.

@Jayden Thompson You don't need 100+ units to have financial freedom to travel. You can achieve that with 5 properties. The more units you have, you are getting other headaches (ie You will be managing a team of property managers then). I currently have 16 doors and travel F/T. There is a saying 'put your ladder against the right building'.  

Congrats Jayden!  You will likely need to joint venture or partner to get to 100 units.  But you have the biggest asset on your side which is time since you are starting so early!  So you have lots of time to keep growing your portfolio and refinancing along the way to purchase more.  4 plex is a great first step!!!

Congrats on your first purchase. That's an amazing accomplishment at 19. As for owning 100 units so you can go traveling and have a wonderful life, you can accomplish that with way less units. The more units you own, the more time you will actually spend working. 

buy great units in nice neighbourhoods, and focus on monthly cashflow. That will give you the money to travel the world, pay for college, and buy a nice fancy car if you want. By having homes in nice neighbourhoods, the value of your assets will appreciate every year and when it comes time to refinance, that is where you will see your large chunk of money come in. So you can enjoy your nice things you are dreaming about. Or you can use the money to buy more cashflowing houses, which is a smarter idea. Good luck.