All Forum Posts by: Mike Hamson

 Thanks @Chris Baxter, I'll reach out to him. 

@Julie Toh Appraisal aside, the DSCR is giving the bank a much higher value than purchase price + improvements but they are ignoring that because we aren't outside the 3 yr window. So until 3 years is up they hold the value at purchase price + improvements costs. The message I'm getting is they are averse to lending someone more than they put into a property even if the math isn't in their favour.

Hi BP Canada,

I've run into this scenario a couple of times recently and I keep getting vague and inconsistent answers from le banc. Any insight or clarity would be greatly appreciated.

Buy a property off market at a serious discount -> rehab-> new tenants at increased rents etc. Then we go to refi through the same bank and they look at appraisal, debt servicing and purchase price and lend on the lowest value (always the purchase price). I'm told that after 3 years they will ignore the purchase price but that's a long old brrr. 

I would've guessed that buying with cash and bringing it to the bank after improvements would avoid that but it doesn't according to rbc commercial lending. Does anyone have experience with the big 5 or credit unions looking income/expenses and appraisals over purchase price within that 3 year period?

I know that these are questions for our banker but it seems like the more questions I ask the more rules suddenly appear and get applied to me.

*This is commercial lending I'm dealing with- all tapped out with residential mortgages. 

Thanks!

Mike

I feel like my dad when he signs off on his texts. 

Have you tried Co-operators? We've had success using them this year, especially for older/smaller multi res properties.

Mike

Hey Phil-We picked up two 4plexes on Walker street last year. What's on your mind?

Hi Janelle,

I am a Halifax/ NS investor as well. Currently have properties in Dartmouth, Bridgewater and Truro. We are always looking for partners on multi and flips. Happy to share contractors, lenders, agents etc. Good luck with the flip!

Mike 

Donovan Real Estate

B- Buy a house with cash or a short term (hard money) loan. Ideally you find a house that you can get a deal on. This could be a motivated seller, absentee landlord, derelict property etc. You could also have a specific way to add value that makes it a good deal for you. 
R- Renovate the property. Up to you what level of renovation you do but you should have your ARV(after repair value) in mind so that you can come out the other side in the green.
R- Rent out the property. I believe the laws in the states are different here and might differ province to province but when you go to the bank, having rental income will help you get your financing. From what I’ve heard, as long as you have leases, the bank will use the income. Do your homework here. 

R-Refinance by getting a mortgage on the property. If you have done your homework properly and the renovation comes in on time and on budget... then you should be able to get all of your cash back plus some. Now you have a property that you didn’t have to sink any cash into that has positive cash flow. An example here will help:

Find a deal on a duplex for 100k that you calculate will be worth 200k fixed up and will generate positive monthly cash flow. Spend 40k fixing the property. The bank appraisal comes in at 200k (this is a perfect world example) and they give you a mortgage of 80% which is 160k. You can opt to take the 20k out or keep it in and have more equity in the property. 

R- Repeat the process