All Forum Posts by: Cody Neustaedter

Hey Kurtis!

Welcome to BP! Your post is a little confusing...are you relocating yourself or just your money to DFW to try and BRRRR properties?

Not sure what part of Ontario you are from but congrats on getting your own house built! Assuming you have a good margin baked in that should be a great runway to start BRRRRing properties.

Cheers!

Quote from @Jason Ohs:

Good morning everyone. I am currently in the bit of a rutt. I have recently just purchased my 4th investment property all in my name and have accumulated a DTI of 45.9%. This is the max it seems most "A" lenders will loan too, I might get 50% from a credit union but that still probably not help in the short term.

How do people keep going? I know there's seller finance and "B" lender that are good for the short term, but if a balloon payment is due say in 5 years, there's no guarantee that my DTI would be in a better place then I'd be stuck without funding. I'm not sure if I'm simply over complicating this or not. I used a heloc to purchase the first 4 rentals, so $155k of dept is wrapped up In that until I refinance each property which have already appreciated extremely quickly given the current market. Would taking out a small business loan make sense st this point? I was going to wait to build my portfolio bigger before starting an numbered company, but I'd like to hear what the BP community has to offer in words of advice.

Here are the current numbers I'm working with. Thanks everyone.

Annual T4 income: 250K

380K in liquid investments.

Principle property est. valued at 670K with 250k left owing and 155K heloc attached.

Rental 1: purchased 2021 for 220K current est. value at 270K was a house hack with 5% down and $1600 monthly rental income.

Rental 2: purchased 2022 for 280K 20% down current est. value 345K rental is $2000 monthly 

Rental 3: purchased 2023 for 267K with 20% current est value 310K rents for 2100 a month.:

Rental 4: purchased 2024 for 240K with 20% down current est value 245K rents for 1800 a month.

I have no consumer dept, I only owe on my mortgages.

 Hey @Jason Ohs. I would recommend working with some more local banks/ credit unions. My credit union I work with will allow 1.3 million in debt or 5 properties before they want one to incorporate. I was making $63k before I became a realtor and had 1 million plus in mortgage debt so you should definitely be able to find some more lending options

Quote from @Ben F.:

Quote from @Cody Neustaedter:

Quote from @Ben F.:

Hello,

I am working on industrial and commercial deals in Ontario Canada and would like to connect with more lenders.

I am seeking lenders who can lend on DSCR at under 8% interest and around 75% LTV.

Please let me know if anyone knows someone I should speak to.

Serious inquiries only, please!

 Hey Ben,

DSCR doesn't exist in Canada. Some local credit unions will do similar types of mortgages where they consider the rental income in your DTI but they won't lend against just the property. You would still need to qualify based off your corporation's DTI or your personal DTI if your corp is younger than 2 years.

Hi Cody,

I am not sure if what you're saying is correct... Maybe the term DSCR is not common. Although I do know BDC will lend and look at DSCR as a major factor. Typically they want a minimum of 1.1-1.2%.

To add to this, I know they strongly base the loan off of the leases. They do not really consider personal or corporate finances to be a major role player in funding the loan. With this being said, I have not had them fund a deal for me yet. They move slowly it seems.

Ah I see what you are looking at now. Okay, so if you are buying commercial/industrial as part of your business (ie space that you will operate out of) then I believe they can give you a loan based off other leasable space. However, I don't believe you can scale this and use this loan program to purchase multiple properties. It may have changed but thats what every lender I have ever worked with or talked too has explained it. If it works out for you I would definitely be interested in learning what you did! Maybe I'm missing something about your business model...

Quote from @Ricky Singh:

Hi everyone,

I've been interested in investing in Canadian real estate for some time, but the price-to-rental income ratio never quite made sense to me. With the current downturn in the Canadian housing market, I'm curious if anyone is currently investing in the Toronto or Niagara Falls areas, or any other markets in Ontario that might present good opportunities. I wonder with Canadian economy struggling if there is potential to purchase distressed properties that could be converted into long-term rentals or successful AirBnbs (especially in the cabin markets that have been hit hard). I would love to hear your thoughts and insights and eager to learn and contribute to this discussion. Thanks!

Hey Ricky,

I don't invest in Ontario so I can't comment on the specific local markets BUT, there will not be a lot of opportunities to buy distressed properties in Canada. The people that will suffer the most from a bad economy will be renters. Mortgages are the last thing to default for a homeowner and appreciation has been so high in Canada that every homeowner who has purchased before 2022 has gained equity and could just refinance their loan over a longer amortization before defaulting. If someone dramatically overpaid in the peak of 2022 and didn't sell in 2023 when rates were at their highest than the chances are they will be fine in the coming year. The properties that are being sold here in Winnipeg almost all sell instantly as there is just not enough supply of homes.

If the Canadian economy continues to worsen and rates continue to drop house prices will actually go up. The best time to buy was the end of 2023 beginning of 2024.

Quote from @Ben F.:

Hello,

I am working on industrial and commercial deals in Ontario Canada and would like to connect with more lenders.

I am seeking lenders who can lend on DSCR at under 8% interest and around 75% LTV.

Please let me know if anyone knows someone I should speak to.

Serious inquiries only, please!

 Hey Ben,

DSCR doesn't exist in Canada. Some local credit unions will do similar types of mortgages where they consider the rental income in your DTI but they won't lend against just the property. You would still need to qualify based off your corporation's DTI or your personal DTI if your corp is younger than 2 years.

Quote from @Ryan Kane:

Long time follower of BP in Canada first time poster! Don't grill me too hard.

I own three rental properties, one is my primary residence with an apartment (5 units total between 3 properties: 1 airbnb, 2 medium term healthcare leases, and 2 long-term rentals). I net about 3.5-5k a month(depending on airbnb) after all expenses including my primary residence and utilities there.

I have built up a good amount of equity in the houses due to the renos I've done mostly myself and also from buying low during covid. I think I have about 450-600k equity depending on how well the properties appraise. I have very little debt besides mortgages and have spent my own money doing renovation over the last few years. I dont really have a lot of cash on hand (due to renos) and don't have any big loans or LOC to draw from.

I have a background in civil engineering and have a good understanding of residential housing and construction. I want to work my way into anything full time because I have a decent job now but eventually i want to have real estate/construction replace my income. 

I've thought about commercial real estate and/or residential house building but dont have any knowledge on where to start. I have a very basic understanding of the financing aspect and really just stuck on what I need to do next and who I should be contacting to move forward.

Any help is welcome, thanks

 Hey Ryan! Welcome to BP. Seems like you are only 1-2 properties away from potentially replacing your civil engineering income. This may be controversial but it seems like you would be saving a lot of money at the moment given your reduced living costs. Honestly at this point it seems like all you lack is some education. Keep networking with locals in your market who are doing what you want to do and then you will be able to chart a path forward. You are also making decent enough cashflow that I would encourage you to consider if you even want to scale or not? Nothing wrong with only a couple of properties that print money.

Side note: I was a mech Engineer in Winnipeg before I switched to being a Realtor and I was making $73k as an EIT so you should definitely be getting paid more. Maybe that's the next step for you?

Hey Ethan!

My first major investment was a house hack BRRRR. Live in one side and renovate that side, then after the lease for the other unit is up move into that one and renovate it. It may take 1-2 years and by the end you will have forced some appreciation from the renovations but also got some natural appreciation from the market. This allows you to purchase a place at 5% down and renovate as you need to. Just remember if you want to purchase another one you will need to refinance at an 80% LTV as you can only have one CMHC insured mortgage.

This is not as passive as other investing but it will help launch your portfolio so that you can continue to invest without needing to work additional jobs. Bonus points (and money) if you rent out the rooms of the unit you live in.

Quote from @Akintunde Aboaba:

I’m looking to start investing in real estate this year and would appreciate insights from experienced investors on the best strategies in today’s market. With new regulations in Canada like the flipping tax and property gains tax, I want to be mindful of the risks involved.

I’m exploring a few options and would love to hear your thoughts on each:

1. Airbnb Rentals: Is short-term rental still a profitable and sustainable option given current regulations?
2. Residential property rental: Could this be a scalable and profitable approach, or is it too risky?
3. Commercial Property Rental: How viable is investing in commercial spaces for steady income?
4. Other Strategies: Are there safer or more profitable alternatives I should consider?

I’m also concerned about challenges like dealing with difficult tenants and navigating new taxes. Any advice on how to mitigate these risks would be greatly appreciated.

Looking forward to learning from your experiences.

Thank you!

1. If hospitality interests you than you can pursue STR. These are by far the least amount passive so do your due diligence on understanding how to run a successful STR business and researching local laws on allowing STRs.

2. Least risky form of real estate investing, thus its hard to get cashflow. Scalable yes, quickly scalable? If you have access to private equity then sure, but if you want to buy properties yourself then at best you are looking at 1-2 per year if you have really good income. 

3. I don't recommend jumping into this world if you have no experience in the industry.

4. There are tons of strategies, pick one that excites you and run with it until you have mastered it and then you can decide to pickup another strategy. Too many people try something for a short time and are looking for the magic bullet strategy but the true winners in real estate are those that do one thing a bunch of times over a long time period

Hope that helps! Happy to share what's working in my current market here in Winnipeg.

Honestly the amount of money you have will depend on your options. Like everyone else has said cashflow would be tough in your local market. But if you buy 0% leveraged then you can cashflow and its all profit. This is not the best way to invest in real estate as you lose out on principal pay down but it gets you instant income that you can make mostly passive by hiring out the property management. This is the Dave Ramsey method of investing that works better if you have large amounts of capital and are just looking for monthly income. 

Sounds to be like you are seeking retirement advice on a platform that mostly advocates for long term wealth. Again, so much of the answer depends on how much capital you are getting. You could house hack and use the other portion to AirBnb as then you meet the primary residence requirement in B.C.

Doesn't exist in Canada. Best you can do is individually pull title on properties. However if you are looking at commercial properties a lot of them will be owned by corps and then it will still be hard to find the actual owners!