All Forum Posts by: Zorya Belanger

@Andre Manzo I just got CMHC financing on a brand new 6 plex in Edmonton. I expect the process to be similar. I worked with a mortgage broker who is knowledgeable with CMHC commercial lending. That's someone who will be able to give you an idea of cap rates. Or they can direct you to an appraiser, which over the phone may be able to give you an idea on the cap rate they will use. For 5-6 unit buildings, CMHC relies a lot on the appraisal to determine the value. The appraiser will use the income approach and direct comparison approach, and will determine value somewhere between. Cost us about $3000 for a commercial appraisal (the lender typically does not pay for the appraisal), which was a 65 page report with a lot of valuable data. You can get one before it's finished being built and then get it updated once you have actual leases in place. New-builds are tricky to finance with CMHC from the beginning as they want it fully leased before funding it. We had ours fully leased before possession but still ended up having to get a temporary commercial loan at 75% LTV because CMHC was so slow. Then we refinanced with CMHC which ended up taking 6 months. A lot of work and unexpected fees, but it will be worth it in the end for 85% LTV, 40 year amortization and <2% interest!

@Russell Kieftenbeld either private lending or look into Calvert home mortgage

@Shane Melanson

Hi Shane, I'd be interested in finding out more about your property. I'm a MF buyer (in the 6-24 unit space) and Edmontonian. I will PM you. Thanks!

@Jacob Perez

I'm by no mean an economists, but from what I've learned from Don Campbell, it makes me think that just "demand" cannot be a fundamental economic driver. It's the result. What's the underlying driver that's causing the demand? Yes, when there is demand, that then can cause prices to rise. Like @Account Closed, it depends where you are. There's not as much as a housing supply issue outside of major centers.

@Account Closed where out west are you?

@Account Closed Exactly - there's no legitimate economic drivers.

I'm hearing more people say not to incorporate lately. However, the right answer is "it depends!" I also recommend talking to an investor-focused accountant and a lawyer.

Hi @Derek Kohut! That's awesome that you have been successful so far in what you've done that someone who wants to join you! 

Generally speaking the joint holding of rental real estate is considered a joint venture and not a partnership. I think what you want to do is a joint venture, where you both are co-ventures (proper legal term). Many people use the word joint venture partners (I'm guilty of this too) which is not quite right, as its not a partnership.

There is a lot to learn, but the most important thing is to have a proper Joint Venture agreement in place, drafted by a lawyer.

I recommend reading this book by Russell Westcott: Real Estate Joint Ventures: The Canadian Investors Guide to Raising Money and Getting Deals Done

Some info might be a bit dated when it comes to mortgage rules and taxes, but the basics still apply!

If you're both providing down payment money, then you will both be applying for the mortgage, and you will both be on title. In a JV, each person takes their own portion of profit & losses and puts it on their own taxes.

For tasks, I think it's simpler to have one person be the main asset manager, who does all the work, manages the bank account and the tenants (or oversees hired help). However, it all depends on the experience, skills, and time of each person. So many ways to split it. 

If you want to talk more about it, feel free to reach out. I've done several different JVs with 8 different partners... I mean co-venturers! :)

It is very interesting to see the difference between Canada and US! After hearing a senior analyst talking about possibility of Canadian housing bubble and how we are due for a correction, and then seeing this, it's a little worrisome! Though if there will be a correction, it will be felt the most in those major markets of Toronto and Vancouver, where we are not investing.

@Alex Kovalenko I've heard a lot of investors are loving SingleKey lately. Haven't tried it myself. Anyone on here used it?

Totally agree with Frederick on there is no "Canadian real estate market". It is crazy what some are paying. What's going to happen to those people when there's a correction, which there very likely could be? We focus on cash flow and mortgage paydown, not appreciation. Right now there is a lot of pent up demand and FOMO, so you have to be careful. Good time to sell if you have something to sell.