US mortgages

Navigating US Mortgages As A Canadian With Scott Dillingham

Welcome to the Truth About Real Estate Investing Show for Canadians, I am a Canadian real estate investor since 2005, investment specialist Realtor since 2010, my team and I have done over $440 million in investment transactions, my name is Erwin Szeto and I currently have three houses of my own for sale and I have some experience share to frame the what I’m seeing in the market, call it a market update: I have three listings, all best in market student rentals, two in St Catharines, one in Hamilton. I sold one in St Catharines to a family whose child goes to Brock University and is going to move in and rent rooms to his friends. The two others were not attracting the interest I was expecting which is nuts because there is so little out there in supply to buy or rent.

I luv luv luv having options when investing. I’ll explain, my plan was to sell and I’m not looking to give away my properties so I put them back up for rent. My St Catharines property I have a group interested in paying me $4,550 inclusive for a house I’m asking $650,000 for sale. We have their deposit already and the new rent would be 10% higher than what I got last year.

My Hamilton house located near McMaster University? Our showings for rent were through the roof at 15 over three days. We signed a lease with a group of students for $5950 per month plus utilities. An increase of around 40% over last year between increase in rent and switching the utilities from inclusive to exclusive. I have first and last month’s rent in hand for a house I’m asking $850,000 for.

These are some of the best numbers you’ll see in these markets and I was ready for plan B of enjoying my higher cash flows and hold for another year but when I told the showing agents what my rents were, all of a sudden, their buyers became interested and now I’m sold conditional on my other two listings.  Fingers crossed they firm up.

This is why I luv income properties with options as in they rent for positive cash flow so I don’t mind holding them and choosing a market for which to sell them in.

Market wise, this is still the least investor activity I’ve ever seen. 

In my expert opinion, student rentals are one of the top investments in Ontario because the rents are so high and due to regular turnover allowing rents to adjust to market rents yet investor demand is at an all time low in my career while supply or quality properties is extremely low while my rents are at historic highs.

Cherry and I will have a hefty tax bill to pay on all these capital gains but to me it’s worth it. Raising cash and paying down debt will allow us to take advantage of other opportunities as no one knows where these recessions will take us. 

Next for Cherry and I is planning a trip post tax season, a workcation to visit sunny and warm, landlord friendly USA to check out some properties we intend to buy this year.  We’re going to enjoy some southern hospitality, fried chicken, BBQ, Graceland, Lookout Mountain, the Duke’s of Hazzard Museum. 

I can’t wait as I’m a total real estate nerd, I luv to make money, eat good food, listen to great music and experience iconic attractions.

Public service announcement: I’m seeing some interesting stuff on social media. One podcast with a bankrupt host just released a new episode. Another guru is running ads saying they are basically financially free even though I know they have six separate parties suing them: former joint venture partners and coaching clients. They even display a testimonial in the ad from my friend who is suing the guru.  

So buyer beware, do your own due diligence, before you invest with anyone do ten reference checks. The more references who made money and paid out the better the reference. It’s hard to fake being paid unless it’s a ponzi but ponzi’s can’t last a down cycle which is why it’s a good idea to only invest in a strategy, business, investment that’s been through more than one cycle. 

Sadly the businesses and so called experts going bankrupt right now haven’t been through a cycle before and it shows. High leverage, difficult flips or expensive cottages on Airbnb in a recession? It can be done by well capitalised investors who were strategic, bought for great value and big caveat, anyone who survives this period should come out great.  That is why cash flow from multiple sources is so important and why I’m working on building a six figure cash flow from single family houses in landlord friendly USA and it’s easier when there is no rent control.

If you’re interested in learning more about how Cherry and I are investing, we are hosting a US Investing Workshop Saturday morning, April 13th in our office in Oakville and online via Zoom Webinar.  We have already sold half of the in person seating so to avoid disappointment, buy today. Link is in the show notes:

We will be covering economic fundamentals, the numbers behind the investment, corporate setup, tax implications, and of course the financing which is commercial style: the ideal style for anyone who wants a scalable portfolio and to generate a significant amount of cash flow.

FYI, I just had a client close on a 1,100 square foot bungalow, built in 1981 in Memphis, Tennessee. Price was $95,000, reno budget $25,000, rent is $1,100 per month plus utilities. Single family detached house.  Not to mention no rent control, no LTB or RTB or RTA. My client is happy with how much he’s going to cash flow and I couldn’t be happier for him.

Navigating US Mortgages As A Canadian With Scott Dillingham

On to this week’s show!

Today we have my Mortgage Broker Scott Dillingham from Windsor Ontario who as far as I know is the only investor specialist who can help Canadians with mortgages in both Canada and the USA. Scott while he was the #1 mortgage broker at one of Canada’s biggest banks got my clients and I many mortgages at cheap rates and I’m now selling one of them.

Scott has since opened his own mortgage brokerage called Lendcity, he shares how American debt service coverage ratio mortgages work when buying income properties in the USA. Scott is a real estate investor himself and shares some of his own challenges as a Windsor landlord and how/where he plans to buy his next investment property and why.

For long-time investors, you’ll remember the days around ten years ago when we used to negotiate seller credits to bring down our downpayments, thus improving our ROI. Well roll back the calendar as seller credits are more of a norm in the US, even more so with builders in this slow market with historically high interest rates.

Scott of course will be our mortgage expert, guest speaker at our next US Investment Workshop on the morning of Saturday April 13th at our office in Oakville broadcast live over Zoom.  I thought the last one would be our last as it’s not easy, nor cheap to have as much talent in the room that we do.

We have everyone’s favourite real estate Accountant, my wife Cherry Chan, the CEO, CIO and CFO of Share: Andrew Kim, Dmitri Bourchtein, Carmen Da Silva respectively to explain how to be a USA landlord without all the work but keep all the equity.

Link is in the show notes: simply choose between in person or virtual.  Cost is only $30 plus tax and eventbrite fees.

You can also reach Scott and team at, an a custom email address made specially for you, my 17 listeners.  

Please enjoy the show!

To Listen:

** Transcript Auto-Generated**

(00:00) welcome to the truth about real estate investing show I am Canadian investor since 2005 investment specialist realtor since 2010 my team and I have done over $440 million in investment transactions my name is Eran CTO and today we’re going to talk about my guest and I are going to talk about how we one a Canadian can get infinite mortgages in the United States but before we get to that we’re going to talk about uh I haven’t experience this year um I currently have three of my own houses for sale that I’m listing and this will
(00:30) frame uh what I’m seeing in the market so call it a market update again I have three listings uh all best in Market student rentals two in student CA two in St Catherine one in Hamilton I sold one in St Catherine to a family whose child goes to Brock University and they’re going to move in well the sun’s going to move in the student going to move in and rent out rooms to his friends the two others were not attracting the interest I was expecting which is nuts because there is very out very little out there
(00:59) in Supply in terms of uh to buy or to rent uh and I love if you know me you know I love having options when investing I’ll explain my plan was to sell and uh I’m not looking to give away my properties so I put them back up for rent my St Catherine’s property I have a group interested in paying me $4,550 per month inclusive for a house that I’m asking $650,000 for uh we have the deposit already and the new rent would be $10,000 sorry would be the rent would be 10% higher than what I got last year my
(01:36) house in Hamilton is located near mcmas University our showings for rent went through the roof uh in just three days of loan uh we had 15 showings we had actually more than that we had all these Uninvited people asked knock on the door as well to see the house uh we signed a lease with a group of students for $5,950 per month plus utilities that’s an increase of over of around 40% over last year because between the increase in rent and also I’m switching now the utilities from being inclusive to exclusive uh I have first and last
(02:09) month’s rent in hand and uh leases are signed for our house I was asking 850,000 for now these are in my experience are some of the best numbers you’ll see in the market and and as I was ready for Plan B which was to enjoy my higher cash flows and hold for another year um but when I told showing agents what my rents were uh all of a sudden their buyers became interested I’ve taken up the risk of renting up the property uh the rent numbers were uh obviously of interest to the buyers and now I’m sold conditional
(02:40) on my other two listings fingers crossed they firm up uh this is why I love income properties with options as they are they rent for positive cash flow and so I don’t mind holding them I do not mind holding them for another year and based on my expectations and what I’m seeing in the market and also with interest rates expected to be start cutting in in June this June I expect a better market and as I tell the other agents these buying agents I tell them I’m happy to hold on to these properties collect my cash flow and I’ll sell these
(03:10) properties for more money next year Market wise uh this is still the least investor activity I’ve ever seen uh it’s now March so seasonality wise whenever we have a warm winter spring Market starts sooner it doesn’t actually follow the technical definition of one spring is many years I’ve seen February be a hot market and this is a very uh slow spring Market based on what I’m seeing from investors in my expert opinion uh student rentals are one of the top probably top two top three top investment uh strategies in
(03:48) Ontario because the rents are so high uh there’s limited vacancy du and also because we can get regular turnover of tenants students graduate uh for example my Hamilton property the students are graduating uh from their undergraduate programs so they they need to leave they’re going to go home whatever move on in their lives and I have the opportunity to adjust my market rents based on um Market rents uh so again investor demand is at an all-time low uh based on what I’ve seen in my career of being um a coach
(04:20) and realtor specialist to Investments since 2010 uh and again from my experience my properties are quality uh and again Supply extremely low while my rents are at historic highs uh Cher and I will have a hefty tax bill to pay I know many people are asking what we’re going to do about taxes but yeah there’s there’s no avoidance of taxes or death so we have we have significant taxes to pay on those capital gains but to me it’s worth it raising cash and paying down debt will allow us to take advantage of other opportunities as no
(04:52) one knows where this where this recession will take us also one my Hamilton property is is unfortunately part of the rental licensing territory so I don’t even know where that’s going to go anyways next for cherry and I is we’re planning a trip post tax season uh a workation if you’ll call it to visit sunny and warm landlord friendly USA to check out some properties that we intend to buy uh this year we’re going to enjoy some Southern Hospitality Fried Chicken my favorite barbecue a visit to uh the
(05:22) king’s graceand uh you the king of I don’t even know what Elvis was the king of Elvis is Grace anyways Lookout Mountain and the Dukes of Hazard Museum so Terry and I have different very different backgrounds on being raised but uh I you know I gotta see the General Lee I I’m going to take her to Duke Duke the Duke of Hazards Museum I can’t wait as I am a total real estate nerd of course who doesn’t like warm weather I love to make money obviously I’m an investor uh I love to eat good food listen to great music and
(05:56) experience iconic attractions public Service Announcement I seeing some interesting stuff on social media one podcast uh with a bankrupt host is just released a new episode he’s back uh there’s another Guru who’s running ads saying that they are basically financially free even though I know they have six separate parties suing them uh and they are uh former joint ventor partners and coaching clients so wow just wow they even display the testimonial in the ad from a friend of mine who’s suing them
(06:30) so buy or beware do your own due diligence before you invest with anyone do 10 reference checks that’s what I do the more reference checks who made money and paid out the better the better the reference it’s hard to fake being paid cash money unless it’s a pony scheme but Pony schemes generally cannot last a down cycle which is why it’s good a good idea to only invest in a strategy a business partner investment that’s been through the more than one cycle sadly businesses and so-called experts are are
(07:00) going bankrupt right now it’s all part of the cycle U folks who got too greedy at the wrong time they’re they’re it’s unfortunate uh High leverage strategies or difficult flips or expensive cottages on Airbnb in a recession it can be done by well capitalized investors who are strategic bought for Great Value and big caveat anyone who survives this period should do quite well that’s why survival should always be the first priority of any investor uh this is uh and this is done by having multiple cash flows
(07:34) having multiple sources of cash flow which is really important hence cherry and I are working towards building a sixf figure cash flow from single family homes in landlord friendly USA it’s easier there and when there’s no rent control your rents can go up I literally reviewed one of my properties and and I’m getting I’m under rented by almost $1,400 on one property $1,400 would make a big dent to my cash flow anyways if you’re interested in learning more about how cherry and I are investing we are
(08:02) hosting a US investment Workshop Saturday morning April 13th in our office in Oakville and online via Zoom webinar we’ve already sold half the in-person tickets so these always sell out and people always last minute ask me if there’s anything I can do I can’t there’s a whole thing called fire code so we can only have so many people in the office so to avoid disappointment I’ve got the link in the show notes we will be covering economic fundamentals uh for my research the numbers behind each investment corporate
(08:32) setup tax implications and of course financing which is and financing is commercial style which we’ll cover in today’s show uh and if you don’t know financing is the ideal style of of mortgages should anyone want a scalable portfolio because you need a scalable portfolio in order to generate any sort of significant amount of cash flow or returns uh so to give an example I just had a client close on a property uh an 1100t Bungalow built in 1981 I mentioned 1981 81 because that is younger than the
(09:03) vast majority of my portfolio in Memphis Tennessee price was $95,000 American renovation budget 25,000 American rent is $1,100 per month plus utilities American for a single family detached house not to mention there’s no rank control no landl tenant board no rtb for those folks in BC no residential tendency act my client is happy with how much he is going to cash flow and I couldn’t be happier for him on to this we show today we have mortgage broker Scott Dillingham from Windsor Ontario who as far as I
(09:36) know is the only investor specialist who can help Canadian Canadians with mortgages in both Canada and the United States Scott was the number one mortgage broker when he was working at one of Canada’s biggest banks you all know the name of it but we’re not naming names uh likely a quarter of you have bank accounts at this at this firm I know I do uh and Scott I’m a past client of Scotts as well he’s got me several mortgages and my clients mortgages at cheap rates and I’m actually selling one
(10:04) of them Scott has since opened his own mortgage broker called l City he shares how on today’s show he shares how American debt service coverage ratio mortgages work uh that’s what they’re called that’s what they call in the states uh we have them here as well for anyone who does commercial real estate meaning apartment buildings or if you’re buying like a strip mall these are all debt service coverage ratio mortgages and uh we’re going to talk about why this the most effective way to
(10:29) to finance uh income properties and this is the only really the only way to do it on this in this business sense scalable format Scott is a real estate investor himself his portfolio is actually significantly large larger than mine he’s got way more do doors than I do for sure he shares some of his own challenges as a windsor landlord and how he and how and where he plans to buy his next investment property and why for longtime investors you’ll remember the days around 10 years ago when we used to negotiate seller credits um if you’re
(10:56) new to this don’t worry Scott’s going to explain it uh where we were able to bring down our dam payments thus improving our return on investment we’re going to roll back the calendar as seller credits are more of a norm in the US especially with uh new construction as Builders are as it’s a slow Market in the states in certain States many states uh so Builders are offering more seller credits uh while we are in a mar slower Market with historically High interest rates SC of Scott of course will be our
(11:23) mortgage expert guest speaker at our next us investment Workshop that I mentioned earlier on Saturday April 13th at our office again links in the show notes we’ll also have everyone’s favorite real estate accountant my wife Cherry Chan CEO uh and explaining the Canan side of the taxes and also we have all all the executives from share my friends at share Andrew Kim Demitri bin Carmen D Silva and they’re again they’re all spiked to their respective are respective areas of expertise again Linked In the show notes uh you can also
(11:53) reach out to Scott and team at iWin lens I I have the email in the show notes again that’s iWin lens i w n l n d CI T it’s a custom email address made specially for you my 17 listeners please enjoy the [Music] show hi Scott what’s keeping you busy these days all kinds of stuff irn I’m getting my hands wet in all kinds of different projects um one of the biggest and that I’m most excited about is the US lending yeah let’s dig into that should say investing us investing but I do the
(12:39) lending we are well us investing doesn’t work with like like most people will say that investing in real estate doesn’t work without lending like without unless unless we can borrow for for good rates right Y and that’s honestly what’s kept me out States for for like back in ‘ 08 like any sort of real estate education if you’re around any of it it was like widely known right that the US had many FR landlord friendly areas like and then and but the lending was never there so then pretty much everyone was forced to
(13:09) go to Alberta many people got hurt real bad with the oil crash many people made a ton of money in the states at the same time right after especially after the crash like you know like for Ryan P like mutual friend of ours like him and his clients made a killing after the financial crisis uh but again most of us didn’t have the we didn’t have that kind of capital to take advantage and the lending facilities weren’t there and I didn’t know about lending facilities until you told me about it yeah yeah no that’s true and I
(13:44) stumbled upon it sort of by accident myself not really though can I share that can I share the story yeah well you again I’ll go through it in the beginning but you know you’re big time for sure you at the Bay Street Bank you were the number one guy right investor focused so you had people’s attention so it didn’t just stumble by accident no absolutely and and that’s where the problem started actually was was at the bank because people and this is how long ago the the demand was right when I was at the bank
(14:24) people wanted to buy in the states M and I kept asking the bank you know when are we doing this when are we doing this because they’re expanding into the states they’ve got branches there like oh eventually so then I left the bank nothing happened um and then they opened up their version of us lending which is you can buy your secondary home or like a cottage there for yourself yeah so professional use yeah yes and you’re not allowed to rent it out at all right wasn’t that yeah like it’s not like I
(14:56) think if you rent it out afterwards what are they going to do kind of thing you know what I mean but on paper you weren’t allowed to yeah on the closing date it’s supposed to be for personal use so the thing not a scalable model to accumulate a portfolio of properties no you can get one right you get one and tally scalable yeah yeah great yeah that’s great it’s better than nothing yeah but then you know I left the bank started my own company lens City because uh I just needed more options for clients that was
(15:29) really it it was all about the options and I hated making a relationship with a client at the bank getting them their five properties because that was the and then shaking their hand and saying see you later right so I wanted more options so I started lending uh through Dominion Lending and uh we have a commercial team and a residential team so then you know I’m getting in inquiries from from investors all the time saying let me know when you have us lending CU I want to invest there MH and then it it kept happening and I’m like
(16:08) okay like this is this is something and and then I thought back to my bank days and I’m like I literally left the bank because I wanted more options for investors and then here’s the Canadian investing World which is sort of crumbling I hate to say it like it doesn’t you know it needs fixing I love Canada and you know I still invest here but it needs fixing and investors are coming to me saying hey you know we want more options and so all comes down to options then here we are I I was born in the states so I’m like all right well
(16:43) I’m going to figure out what I need to do to be able to lend over there and uh I figured it out and uh here we are now we do Residential and Commercial over there too can you elaborate more how did you figure it out you a special circumstances that not everybody else has yeah so I actually got to give my neighbor credits um this was a a goal of mine right to get us lending and you know in life when and pretty much no one has cracked it as far as I know what’s that no one from our community has cracked this no for
(17:19) sure for sure so this is super cool um but the um like in life whenever anything’s meant to be you know how it sort of happens I don’t have an example to give you per se but everybody who’s listening to this I’m sure something in their life it just happened and it was like meant to be you know what I’ll give you an example actually I do have an example one day I’m on the highway and I’m driving actually I had to go to a real estate event and I’m in my lane and out of nowhere and this has never happened
(17:50) to me before my car went from the Middle Lane to the left lane like the wind took me one whole Lane to the left out of nowhere it’s never happen happen to me like that like you feel the wind but to completely move you but at that same simultaneous time a truck’s tire blew right to the right of me and he merged into my lane so it was like one of those things like it was meant to be that I lived you know what I mean and in life those things happen and so this is exactly how it happened with the US lending so I had a a dream and and a
(18:21) vision of how to do this like I want to do it but the question was how to do it so I think in life when you start opening up your eyes and looking for things they come to you and that’s exactly what happen so my neighbor um who’s also a mortgage broker we do like a mastermind and we talk and have coffee and just figure out what’s working what’s not working and throw ideas off each other to grow and he said you know what one of my past clients he moved to the states and he works at this lender and he was telling
(18:55) me like if any Canadians want to um buy over there that he could help them and he’s like you know what you should talk to them because I told them like the US is something I want to do I talked to the guy and it morphed from a simple referring people to them to why don’t you join us and we can do this and uh that’s what happened so um from there I joined them and then of course I joined a bunch of other lenders as well um so we have multiple options for the clients um but that’s how just a a mastermind
(19:28) session with one of my neighbors right so combine your track record with networking and the opportunity appeared absolutely think it does for whatever you want in life I believe whatever you want if you start seeking it you will find it yeah I’m seeking uh away from the tyranny of being a lario landlord and all the government’s levels of government hating me I still have to return the call from my bylaw officer as apparently a couple my properties fall under uh rental licensing so I’m going I’m just going to whine and
(20:05) say my rents aren’t going up and I can’t really can’t afford this there’s there’s not enough cash flow to afford like the $2,000 plus dollars to to comply to your rental licensing standard and I’m not renting the students anyway so I’m not I’m not the people you’re chasing everything my basements were done with permits you your city inspectors already been semi property I don’t know why you’re bothering me anyways I digress no that’s a problem though everywhere you
(20:30) bring up a valid point though even in Winter they’re trying to make they’re testing it in certain districts yeah but they want rental licensing and the landlords are pushing back and actually they’ve started to sue the city and they’re saying no like our property meets the code and your rules don’t allow for income to be generated from the property and we’re already tight so with the interest rates right so yeah problem everywhere yeah and you know I’m for some sum like like I’m a pragmatist
(21:01) I’m all for like protecting the people’s lives but for example part of the rental licensing requirement is an Esa electrician inspection every two years if I don’t touch the electrical even if I do touch touch the electrical I need a permit for it anyways so why do I need it inspect it as well every two years yeah I think as a landlord you know what I mean it might not be a bad idea just like you have to regularly check smoke detectors right sure they’re good I think that might not be a bad thing for an an investor to to
(21:34) check them right because tenants can tamper with it right so I think from that standpoint it’s okay but to have Esa come in and do all that like Overkill that’s crazy oh and also Ling requires a annual fire inspection which is practical right which Sol which you know solves your your your objection right like solves the problem of smoke alarms right of literally have someone from the fire department in the property that’s that makes a lot of sense but an electrician when you haven’t touched an
(22:01) electrical that makes no sense I I agree I agree might as well get a plumbing inspection too while you’re at it don’t give them ideas true you touch Plumbing Haven it inspected yeah anyways so with the lenders that you signed up in the states like these are like some of them were or like Wall Street like they’re not just they’re not fly by night Regional Banks some of these are as big time yeah yeah yeah no they’re they’re they’re big lenders um like the biggest how names are they not yeah I mean I
(22:37) don’t want to throw out any names here per se but uh yeah we we have some very very big lenders um I’m getting another part of my mortgage license it’s called the M uh n MLS over there so then we can do even more things for investors that license I didn’t it wasn’t my go-to because that one’s more for like the owner occupied stuff and that’s not our Target client um but what it will do is it will allow us that when we have you know an investor who invests over there and they build up a credit score it just
(23:15) gives us more options to potentially get them lower interest rates right right so we are looking that yeah I was still imagine some of your clientele like uh we had when we sent out a survey uh I think 10% of people were actually exploring moving to the states yeah so I imagine that’s within your clientele as well that you have a percentage that will eventually want to move their residents to there as well or at least buy a home buy buy a secondary home whatever absolutely we’ve got a client right now we’re refinancing their home
(23:47) they didn’t know what the options were and so they they’re a snowbird so they live in Florida for half the year and then um actually Windsor for the other half of the year and um they bought at cash right so we’re helping them to refinance so so yes I mean it is it is a thing and we do have lenders that we can refer those files to right now um but soon I will be able to do them but our Niche is absolutely the investor though so Focus there but I actually met a gentleman from Winnipeg when I was in
(24:16) Texas and uh like he was having trouble getting financing for his joint venture Partners I said you gota meet Scott so you’re can so CU he he uh he’s diversifying the states as well uh from Winnipeg uh and he’s there regularly and again like his Jo Venture partners are all back in Winnipeg but like so they couldn’t figure out a way that made sense to get financing in the states like oh here you me Scott so I sent you guys I sent Jillian and him an email to introduce each other um but I think
(24:51) folks need to appreciate that you are an investor yourself can you touch on what your Ontario portfolio is like yeah yeah so at the peak of it it went up to eight properties I did sell off a few um I used the proceeds to buy my office cash now my office um we had it fully rented preco and then Co came and then we stopped renting it out but we’re actually renting it out now so even my office is an investment property I specifically bought it and we subdivided and there’s all these little offices and things like that um fully tenanted um we
(25:30) should be able to get uh 8 8,000 plus HST per month in total rent building and that’s including us still having space in there um so really attractive and uh I bought that four years ago for like 420,000 so the 2% rule applies so I love that because with commercial you don’t have the same rules as residential right commercial you have a lot of the US style rules right you don’t pay the rent they’re out in two weeks it’s it’s much better um so I really really like that um so just imagine like a Wei workor that’s kind of
(26:08) what it is but we’ve got a lot more private spaces where wework is just very open so a lot of courses out there are teaching like high leverage and you’re you’re actually you’re in the business of providing people leverage why the decision to buy all cash it was um I guess to be honest at the time it was because I didn’t understand commercial that well I had worked at the bank and I had worked with commercial clients and referred them to commercial people within the bank um but having one
(26:41) lender and the way that that lender did it was was just that you know you had to refer the file over to somebody in commercial I just wasn’t aware of all the options right so um and what I did I was strategic is I sold the properties that I knew an investor would buy MH um that had you know good numbers and stuff that way they could sell quickly because I had to um the seller of the property that I bought uh they were under he didn’t tell me at the time but I found it after but they were kind of under financial
(27:15) distress so they really needed the money from the sale so it had to be a quick close so it just like made the most sense um I didn’t want to sell a bunch of stocks and have capital gains and stuff like that and mind you rental properties have capital too but I have only renovated all of them too like I turn them all over so I had a lot of uh Capital cost allowance to minimize the capital gain so um it just yeah made the most sense and and that’s what I did um the other thing too though so I’d say
(27:44) lack of knowledge is about 80% of it but the other thing too is when you start a business you want to keep your expenses as low as you can so my thought was if I own the building right there’s no any expense on it besides taxes and utilities that it’ll work and I mean it did it served its purpose right during Co when nobody even used the building um it was great to have no money on it right so and that was what allowed a lot of yeah that’s what allowed a lot of small businesses to survive anyone who
(28:13) owned their building especially outright they were able to survive versus anyone who had rent or big mortgage payments they didn’t do so well in the pandemic yeah yeah so that helped right so that’s a blessing and disguise but now we’re looking at taking out funds on it right because want to invest more in the states and before talking about the states though let’s talk ID money yes idle money there so uh yes we’ll talk about the states why not more property in Ontario you live in W Ontario which is a which
(28:44) from my research should be a great place to invest in my you know I don’t live there but from an outsider point of view like there’s not there’s probably not many better places in Ontario to invest than Windsor with your affordability and the job story that’s going on yeah it’s it is a great area to invest I I’m very Pro Canada and and I know you are too I just want to announce that I don’t want people to think we’re we’re against Canada um when there you’re right there’s lots of good areas um we just
(29:14) got um a listing that I shared with some investors the purchase price is 500,000 uh it’s got three units and it can rent for 5,000 a month right so really when I grew up up into the investing world right the 1% rule was was what we were told is is good so if you can rent a home for 1% of its its value yeah then you’ve got a really strong property so I mean they’re here the properties are here but that’s not my challenge right my challenge is the system and that’s where I think things are broken now things are improving I
(29:54) just read an article the other day I wish I knew the source and I would it here but I don’t but they’re saying you know the Ontario tribe they actually hired a bunch more people again so they did a round of hiring in the past and they’re hiring a bunch more again to really shorten the weit times so I think that’s important because investors waiting eight months to get a non-paying tenant out is a nightmare that can best case that’s like a best case though yeah and that that can absolutely bankrupt
(30:27) someone and in fact I’ve seen it do that for certain investors right depending large your portfolio or small it is so you you’ve got that problem and I you know I’ve got a great story that I can share with you about that problem um but then the other thing is is rent control so you look and I feel for the tenants too I I want to state that like it sucks to live in a home when you’re on a fixed income and then if you’re Ren of skyrockets like that does suck right but at the same point um we don’t control where the
(31:02) interest rates are going and what they’re doing and when they went up people renewed even myself on one of my properties I had to renew and my property went from cash flowing a couple hundred dollars a month to actually losing 1,800 which is crazy because my mortgage just the renewal rates were four times higher than what I what I had it at so you know for an investor most people can’t take that type of a loss so it’s it’s it’s huge so the lack of rent control I think is a problem I believe if there was a no rent control
(31:41) let’s say and the rat Skyrocket like that and you’re going to lose your home right then you can raise the rent and it you know what it does suck if that tenant can’t pay but they could find somewhere else as well that might be affordable to them if they can’t pay the rent and then you put someone in who who can afford the rent so it’s a lateral thing but um in Canada we don’t have that ability so the landlord eats it all um yes and and I joke been joking with people that uh we are charitable in
(32:13) that we are subsidizing all the tenants housing inflation yeah not all of it but a good portion of it since we can only raise rents 2.5% when inflation’s for like seven it’s true and I saw this Tik Tok video and it was so good uh and it said something like you know if I were to go into the bank and Rob them for $10,000 I would go to jail but as a tenant I’m allowed to do that without really any penalty in Canada I’m is your right not pay the rent and live in the home for all this time it is your right
(32:49) I’m not a criminal here some free legal a too he’s a free lawyer yeah so like that should be a crime and in the states as you know certain states it is a crime if you don’t pay a rent and you can go to jail for it in certain States that’s the key part is that people like America is different just like states are different counties are different no different than parts of Canada are different yeah Alberta does not have the same problems that Ontario does for sure but they’re trying to force rent control
(33:20) in Alberta I won’t be surprised if we see something for like Calgary it’s just because they’re just uh you know like that’s another that’s another topic for another day sorry before you were recording though you were mentioned that your own story because you have a property you want you have listed right now yeah yeah yeah so the one that I’m actually losing 1,800 a month it doesn’t make sense to keep it right why keep a weak property so you want to sell that take your capital and reinvest into
(33:49) something that makes you money it’s it’s a smart business decision I can’t control the rates right now and and they are coming down so like you know I see some L at the end of the tunnel um but it is what it is so this specific property um you know I put it up for sale because I want to redeploy the capital somewhere else and then um just during this process the tenants were really good to work with uh in the beginning they were um allowing us to to show the property and things like that um and this week alone they text the
(34:24) realtor and they’re like don’t text me again we’re not allowing you access to show this property I’ll report you uh if you text me again like that’s literally what they said to the the realtor um so you know you got that problem then they also um I don’t know what they did specifically um because they’re giving multiple stories like the one kid said oh I you know I spilled a water bottle in the basement and then another child told a contractor that went through there that he fixed the water leak
(34:58) whatever that means but anyways I got a quote for like 10 Grandin of damage in the basement so I feel like I don’t know and I don’t want to point fingers but it feels like you know that happened right before a showing and it just seems like they’re trying to make it so the property doesn’t sell right they’re avoiding the showings right um they it wasn’t flooded the basement but there was enough damage that to rip up the flooring trim all that stuff 10 grand you know what I mean like week or time
(35:27) too to get it done yeah and I don’t even know if I want to get it done while they’re there because is is it going to happen again do you know what I mean like already happened once and then so for me to process the eviction right if if that’s what we’re doing here eight months maybe longer right of of this so it’s just it’s not a good scenario you know what I mean it is what it is so it doesn’t matter if you’re a new investor or an experienced investor these problems can apply to anybody that invests here
(36:01) anywhere on Ontario yeah potentially BC as well is that before before we were recording I was saying I would pay them the 10,000 to leave because this is what this is the this is the situation that we’re facing onario is that we are we don’t have control over our own properties um it is a almost a standard operating procedure to buy out your tenant to compensate them for their moving expenses and the grief of moving in the figure of you know 5 to 25,000 yeah and uh but this that doesn’t happen in the states not in the right
(36:38) ones not in the right ones it shouldn’t be that way I think I agree In fairness on both sides I think there has to be because I I got to say too you know seeing lots of clients and stuff there’s a lot of landlords that don’t care they’re actually very bad landlords oh yeah so I understand the tenants and how they feel in certain cases when you’re a good landlord and you’re doing all the things properly for these things to be allowed to happen to you I completely disagree with yeah yeah the failures of the
(37:09) landlord tenant board are the worst for the tenants because they often have nowhere else to go and they have real problems yeah right say your problem was a say your property had a had truly had a leaking basement and the landlord wasn’t willing to deal with it you know that means mold that means sewage that means terrible Health implications right and that same tenant will need eight months to get a hearing the landord tenant board right to get any sort of forced action on it like it’s ridiculous Y and and the other
(37:40) thing too is like because when I heard that from the showing from the realtor that did the showing I called my property manager and I’m like hey there’s water in the basement send somebody out to fix it they called the tenant and the tenant’s like oh no there’s no there’s no issue here everything’s fine there’s no water do you know what I mean not only are they like hiding it but they’re they’re not announcing challenges which could cause more challenges right like mold you just
(38:05) said mold Could Happen yeah yeah so craziness craziness and then what are your plans to do with the with the proceeds if it ever sells yeah this is a great this is a great uh promotion for your property yeah I’m not sharing the address with any’s the address the realtor um who want a motivated seller the uh the the proceeds yeah I mean I want to uh invest in the states uh that’s that’s the goal um and and I’m not going to like completely exit Canada I want to invest here I love the commercial thing that we’re doing with
(38:45) my office uh that is duplicatable and repeatable right and and scalable um so I want to continue that right so there’s a lot of good things in Canada it’s just the states when it comes to residential properties in the states that I like you can get so much more income so much more flexibility um I don’t even know if this the word but there’s a pride of rent toship in in the states and areas that I’m looking at um it’s not like I don’t know it’s hard to explain you got to see it believe
(39:16) it uh what What markets are you targeting for for your own investments just like you I love Texas uh I love Texas I tell Texas but how can you tell I like Texas I don’t know give it away I just have this feeling for anyone who’s just listening I’m wearing my Texas hat so yeah yeah Texas is cool did you know this is more of a did you know but did you know that Texas has the legal right to be its own country if it wants to oh my God that’s probably that’s probably on the horizon it totally can be its own
(39:51) country um it can separate from the states no problem if they wanted to yeah um let me just add though like I doubt it will happen but it’s a great leverage tool to get what they want in in the negotiations with the federal government right like we see the same posturing we’ve seen the same posturing the P from like Quebec and now from Alberta and that got them benefits right Quebec Quebec as a province benefited from it Alberta will benefit from their posturing as well and I’m sure Texas will gain from it as well I can’t see
(40:17) them actually separating no for sure I don’t see it either um but I also like uh Ohio and I like certain parts of Michigan because Michigan is really close for me it’s literally I just cross a bridge because I’m in Windsor right so I just cross your bridge and there’s Michigan and you know driving through and going shopping with the family and because there’s all these really nice malls in Michigan so we’ll make a you know a fun day of it we’ll go see the mall but we’re also driving through the neighborhoods and
(40:44) stuff there’s some really nice areas and uh Michigan and Ohio have really cheap real estate prices so it’s just different different targets right for appreciation I think I like the southern states better um if I’m looking for cheap real estate with maybe like a stronger cash flow ratio maybe not dollars in the bank but ratio obviously Ohio and and Michigan will give you a higher ratio of cash flow um but yeah just buy a little bit here a little bit there um want to get some airbnbs in Florida as
(41:21) well so then you know in the when it’s not rented it’s available for myself if I want to use it know let me know what’s available sure the ni thing about Florida is like nobody can beat that weather you know what I mean yeah like maybe California can but California is pricey uh and also you know you and I are our East Coast folks which is like I should correct myself because there is no Coast in Ontario we don’t actually touch the ocean but you know what I mean we’re Standard Time Florida is just
(41:49) straight to South for us um and I just want for listeners benefit I too agree that I want to go south um cuz for example you mentioned Ohio uh Columbus Ohio is getting an Intel plant uh so that’ll be thousands of jobs it’s a multi multi- it’s a several billion dollar investment but also Phoenix Arizona is getting the tsmc Taiwan seg conductor manufacturing company is building like Phoenix there’s someone else I’m gonna look it up right now but there um there’s a Sam not Sams in Austin Samsung’s in Austin Austin that’s
(42:22) it okay yeah yeah yeah so there you go I was out I was I was probably making security nervous by standing on the property taking [Laughter] pictures anyways uh but so when investors ask me like oh how do I choose like um like I I say to them like okay so you’re say for example you work in manufacturing microchips you an employee of the you can you’re you’re qualified to work for Intel or tsmc right which you choose to live in Columbus Ohio or Phoenix Arizona and not one person has told me they’d rather live in Columbus Ohio than
(42:56) Phoenix Arizona so I will prefer to invest South right because that’s gener really demographically like like people have roots and family whatnot but you know for someone who’s that doesn’t have Roots anywhere and there’re moving specifically for work I’m going to guess that tsmc will be have more luck recruiting for Phoenix Arizona than Columbus Ohio hence why like Columbus Ohio on paper makes a ton of sense but again like demographically and we see it demographically as well it’s generally
(43:26) people have moved South for the better weather like largely for the better weather yep and it’s the same as here right we all live in different locations for certain reasons yeah right so like you said you have to come up with your why like why do you want to invest there what is it you like about the area um I like making money that’s why I like investing there yeah but I mean in both you got to admit Phoenix Arizona and Ohio you’re gonna make money in both but it’s just like you know yeah just for me because I
(43:57) want I want like every check mark in my favor and also because my plan is to buy in like you know Carolina’s Alabama Texas Tennessee Georgia you know I only have so many dollars to stretch yeah and the other thing too just for the listeners here the reason I like Michigan and Ohio is they’re so close to me like I’m in Windsor Ohio is maybe two hours away and Michigan like I said I just drive across the bridge and it’s right there so that there’s a level of convenience for me but people in GTA
(44:29) like yourself you don’t have that super close proximity I mean you got Buffalo New York I’ve had a lot of investors buying Buffalo which did a it was a duplex they bought it for 220 and it rents for about 3,000 a month yeah um but still I agree with you right the southern states I think it’s where it’s at and like you said it checks off more ticket boxes yeah I think I heard some things about Buffalo’s becoming more tenant friendly so I didn’t like those Rumblings that could be that could be
(45:02) I’ve not researched it as an area that I want to invest in so I didn’t look that far into it so Scott tell me about how a US mortgage works for a Canadian because um I find almost nobody knows how these things work including myself until you brought it up to me back in like August 2023 yeah so pretty much you want to buy in a company name or limited partnership we do have it’s very few lenders but we can close in the personal name but if you want best rates best terms right you want to close in an
(45:41) entity and a COR now I’m not licensed for tax advice I know Cherry is do you have any advice from her from a tax perspective on what’s better between personal versus limited partnership are you allowed to say that uh I’ll just you know give the regular disclaimer I’m not an accountant go talk to your accountant uh but personal is seems to be more for people who are going to be very small scale okay right because uh the accounting fees are significant if you’re going to if you have a corporation of any sort right
(46:16) because for example if for investors in Canada if you already have a corporation you know what your fees are like and you should expect to to you know to have basically the same in the states right that’s the cost of doing business for a multinational bu Investment Company right and so my advice to clients is uh this us investing doesn’t really make sense unless you buy at least three properties so then you can generate enough cash flow to cover all these extra expenses and overhead right and if you’re going to go
(46:43) that if you’re going to own three or more and your plan is to grow because my first for example my plan is to grow to 20 30 properties like it makes sense that I go LP format at least yeah right and and that’s the importance of having a good team because your uh your accountant needs to be able to talk to your mortgage person so that you’re all in the same page because what’s optimized for tax is not necessarily optimized for lend for borrowing yep because you do not want to get this wrong sure but no you you bring up good
(47:14) points and and that that’s exactly it I think that’s why the lenders prefer it too so then the down payments they can range okay and generally speaking the more money down you do up to 50% that’ll get you the best rates so the very smallest down payment I saw it’s only available for Rock Solid deals is 25 down but 90% of the lenders are going to want 30% down or more okay now where they get the or more from is because the other thing that they look for is is the cash flow of the property so if the
(47:59) property has a weak cash flow some of the lenders are going to want you to increase your down payment to the point where have positive cash flow so that’s why it can go higher but we have other lenders that don’t care what the DCR number is but what they’ll do is they’ll charge you a higher rate because it’s riskier for them to lend on properties that don’t make as much money so then they just increase the rate but keep the down payment small so kind of how that starts but for a Canadian uh buying and it’s actually
(48:30) any foreign buyer doesn’t have to be Canadian so if you’re listening to this from Mexico that you know this still applies yeah um they don’t look at your like you don’t need a credit score in the states um they don’t even look at your income at all um what we have to supply them is pretty much your Canadian credit report and they’re not even really looking at the score uh they want you to be a homeowner in Canada or own an investment property um because they don’t want to lend to someone who has no
(49:00) experience do you know what I mean that’s kind of their thing um or or may think you’re trying to buy something to move into ver have your home here then you’re less likely yeah exactly exactly and so those are things that they but these requirements are all very minor super minor yeah it’s so easy um and then of your home that you have if you have a mortgage on it they want to make sure that you don’t have any late payments on your mortgage so that’s really what they’re looking for from
(49:31) your Canadian credit they’re not looking at your score um they’re not looking at uh the other items as well so um from that uh they’ll move forward now you know your down payment they do check a 60-day minimum some lenders want a little more but the smallest one that we have is 60 days um right anti money laundering rules just like Canada Canada has 90 days they want 60 days of proof of where your funds are at and they want the funds to be in the states so you’ve got to really transfer the funds at least 30 days before the
(50:11) closing okay just so it sits there so that’s a requirement um some lenders you can sign fully remote so you don’t have to leave Canada at all some want you to at least sign with um a notary or someone in the states sign with someone in the states um so it all depends and that’s part of our Discovery call that we have with clients is we find out if they have the capacity to go to the States because if you can you will get better pricing because the lenders right you got to think of it from their Viewpoint their is if they can reduce
(50:46) the risk yeah then that you get a better rate so so if you can go to the states it’s less risky to them because you’re a validated person yeah you get the better rates yeah I’m down for that I’m down I’m cheap I’m coming N I come the property too you know what I mean so it’s it’s worth it the view from the US side’s better too so yeah yeah so that’s really it like I know I’m I’m being so high level um the pre-approval process it is really is there that much beyond the high level
(51:20) though no no I mean there’s there’s rules and things that they look for it’s all pretty standard and if client is following like you said at the beginning you leverage your team properly and if they’re following Our advice and the realtor’s advice like we’re help you to make it work right so there’s not going to be a big thing there is an application you got to fill out there’s little things like that but we help you with all of that um but yeah super super simple I had a great point I forget
(51:47) where I was going with it but um a good point yeah me getting a be lender mortgage is worse than this process yeah yeah and they give me they’ve been giving me crap ltvs too it’s me Equity takeouts even though I have lots of cash and lots of equity like this is start to to put words in your mouth but actually apologies because you actually said it uh you said at the at the last us work investing Workshop we we had I believe your words were it is 10 times easier to borrow money and build a portfolio in the states than it
(52:20) is in Canada 10 times easier yeah yeah they just want to see you have really the down payment they do want you depending on the lender this is another condition between 6 months to 12 months of of payments um that can even come from a line of credit so you don’t even have to have the money in your bank account but they just want to make sure that you can pay it in case there’s a vacancy or whatever now those funds they do not have to be earmarked so on a future purchase you can use those same funds to
(52:51) count as your payments right you don’t have to keep growing that um but yeah then from there it’s super easy it’s it’s simple now I want to share something with everybody too that we discussed and that’s the seller credits you think that’s yeah yeah yeah yeah because we we used to have those yes the good old days yeah please explain because I haven’t we haven’t talked about in the show we haven’t talked about it on the show for I don’t know if ever because I don’t when was
(53:19) the last time we could do seller credits in in Ontario I honestly Irwin probably 10 years ago because when I first it was acceptable we actually did it in Canada as someone’s down payments so the purchase price was 200 the seller credit was 10 grand to be applied as the down payment and the lenders were okay with it when I first first started right right right and then it went away it was gone so for the listeners benefit to catch them up uh around 10 years ago we were able to um get sell our credits for
(53:50) for uh our closing cost for example that was the most common one we’d ask for and then any sort of we’d ask for even seller credits for any sort of deficiencies we’d find in the home inspection like say the electrical is bad so we need like $5,000 we’d asked for a credit uh in in the in schedule a of the uh agreement of purchase and sale so it was all above board lenders see it all right that all stopped like around 10 years ago as well yeah yep but they they have it in the states so the right because everybody wants the
(54:27) best rate and by default if you look at the state’s rates versus Canada’s rates they are higher in the states than in Canada by default doesn’t matter what lender you’re going to um it’s just how their Market is we have lower rates here so what you do as a Canadian who’s buying over there is you ask for a seller credit I’ve spoken to a few realtors in the states and they said anywhere between two two to 3% of the purchase price is extremely common over there like extremely common now I’ve done the math for many
(55:07) investors um and uh you make out much better getting the credit and I’ll explain why in a second if you lower the purchase price on the home now ideally you want to do both right you want to try to negotiate a lower purchase price and also get a credit but if the seller’s being really tough MH get the credit okay now what we do is we can use some of that credit there’s limits to how much we can use but we can use some of that credit to buy down your interest rates so right now the lenders depending
(55:39) on everything and I’m going to like just a blanket statement rates the average is between eight to nine and a half and they’re so different because in the States you can make your mortgage fully open from day one but that cost you 1% in the rate to do that that um but then as an investor right you can refinance whatever you want to do right it gives you flexibilities also certain States like New York right there’s higher rates if you’re fully open you can do a bur then exactly you refinance cheaply in
(56:10) yeah you can refinance after post renovation exactly so so that’s why I’m giving you such a range right so 8% is just the standard um n and a half is you want it fully open like you’re good to go but then you can apply the seller credit and the seller credit can get your rate down to as low as 6.
(56:32) 5 that’s the lowest that the lender will go or that I’ve seen A lender be willing to go to um as of today now it changes right so in December the lowest they call it the floor rate the floor rate in December was 7% but now it’s come down to six and a half so I suspect as the rates drop in the states that the floor rates will also come down meaning you can secure that that lower rate but just by adding um roughly let me see if I’ve got the deal real quick I’m going to pull it up here uh I know I have it saved but we worked on one and I
(57:09) actually presented it to your group and I just want to give everybody here um the example so the client was buying a condo in Florida and uh it was around 300,000 uh let me see here and ,000 yeah and he asked for a 2% seller credit so he got 6,000 bucks and I’m just pulling this up here let me just add to the Celler crater part and when I was in a in a new in um in a built in a developer’s office there they were building new homes in Texas they were offering seller card at at the promo and uh they weren’t
(57:55) offering that off the price but they their suggestion was to buy window coverings because it’s a brand new house so there’s no window coverings period right so putting some like you know um Venetian blinds or something whatever right and also they’re buying down the rate so yeah just not something we’re too used to back here yeah and you can use it for other stuff too so like say you negotiate a 3% um seller credit the lender will let you buy down um and I’ll show you here in a second but the client only negot at
(58:25) 2% so he put all the money towards it so anyways if we take his $6,600 and we pay it down to the rate so he would have received 8.375 okay so I know I said rate started at around eight but this was a condo and the DCR wasn’t that great because it also had um an HOA fee which is the same as like a condo fee over here like it’s Home Owners Association fee so condos are priced a little bit higher because their cash flow is a little bit weaker so so he couldn’t get the floor buy down rate but he used that money and he
(58:58) bought down his rate to 7375 M so he was very happy with that when you shop the market at what that rate looks like was very aggressive for this this time and all came from the seller so he didn’t have to no skin off his back right and he saved by getting that seller credit $150 a month in cash which is crazy yeah and then his more of his payments were going to principal because he wanted principal and interest although you can do interest only but his he he just wanted to pay this thing down um so now more of his payments go
(59:35) to pay it down and everything all because the seller gave him the credit so it’s such an awesome tool I have so many questions that’s okay can you I I still think the point needs reinforcing like how much easier is it to get a mortgage in the states than than in Canada 10 times it’s so much easier like who who gets denied because I get denied on financing here in Ontario yeah you know I I think the biggest challenge that I’ve seen with any approvals is when you have all kinds of Partners involved right um because the
(1:00:15) lenders if it’s too convoluted in this partnership on that one and that one owns there it’s hard for them to track so I honestly find that the super complicated corporate structures that’s when the lenders are just going to say okay we’re going to do it but we’re jacking up your rate because we don’t understand what you’re doing over here it’s crazy and so they do charge you more if you have that complicated structure I’ve not had an application declined because of that but
(1:00:42) it gets confusing for them that they’re not in the business of knowing all these corporate structures um so you’ll pay for it so so that’s kind of been a negative that I’ve seen um and then obviously right you can’t have payments on your house mortgage but I haven’t had any clients that had that but that’s a hard like you’re declined if if they see that um so it’s all reable yeah and they don’t want the last major thing for somebody is they don’t want very rural properties okay because you’re a foreign
(1:01:13) buyer they’re looking more for cities so buying in even small towns are okay but they don’t want like you’re the only house you know five miles that way and five miles that way they’re they’re not into those right cuz they don’t want take it over they don’t want a bad asset exactly sounds very reasonable uh I don’t even know where I want to go next so uh oh you mentioned dscr and I had a question around that okay so sorry can you explain what goes into uh a Debt Service ratio mortgage what are the what
(1:01:47) are what what’s the calculation and what are the inputs and actually yeah this is great and I’m going to tie it into the statement that I was going to make about pre-approvals as well this is how you get PE proof too fantastic yes yes so what we do is we get the numbers of the property so we find out the estimated purchase price of the property so that goes in the DCR then we factor in the property taxes we find out if there’s a homeowners association fee um we find out the hazard insurance is what they
(1:02:19) call it over there which is home insurance so we find out what that is and then lastly we find out what the mortgage payment is right like what rate you’ll qualify for based on all the numbers that’s it that’s the only thing that goes into the debt service coverage ratio and based on that we get a net DCR result so if that’s a good results then we can write up a pre-approval letter for you that you can give to put in your offer now because of capacity we don’t just write pre-approval letters because I had
(1:02:54) one investor and he gave me like 20 properties and he’s like can you give me pre-approval letters on all these and I was like no like what run all the numbers exactly he wasn’t so we we can run all the properties for you but we only give the pre-approval letters when you’re ready to put an offer on the home right because it it would have taken a few hours to do this for this gentleman and he ended up not even offering on any of them right so we have to be careful of our time um but we will we’ll write you that
(1:03:26) pre-approval letter which I’m going to say nine times out of 10 uh the the sellers want to see this they want to see this letter now obviously if we’re doing a deal with Sher so Sher has a great and I know you guys who follow Irwin know share but just in case right Sher finds the properties underwrites them turns them over and rents them out and you get a turnkey property so something like that um you’re not going to necessarily need a pre-approval letter for right because they’re going to or or do they want one
(1:04:01) I don’t think they they want a pre-approval letter I don’t think they know I don’t think they need to because they they know they have proof of funds and they know what the property is yeah but if it’s you know you found the property on the market those are the things that you’re going to need and we can do that for you right right and we we share the tool too we’re not we’re not shy we share the tool for anybody you can download it and it’s got the 30-year term right next to the 40-year
(1:04:28) term so then you can kind of compare because maybe it’s a little tight with the 30-year but the 40-year works you mentioned 30-year terms uh are there going to be so so my understanding is that the in the states is the market is generally 30-year term mortgages as in your rate is your rate is fixed for 30 years so again as a Canadian like that just boggles that boggled me and it boggles everyone because that’s not what we’re used to here in our Market will are there going to are we going to see shorter uh amortizations terms anytime
(1:05:03) soon because I gota I gota imagine the market wants it especially since uh every all indications are that we peaked in rates there is we’re refinancing another property right now in Florida and the gentleman he’s got a 15year term on his so you you can get shorter but the thing is is for an investment property is it going to cash flow if you choose 15 years amortization or term they make it the same thing over there oh boy okay yeah no thank you but you can go with 30 and you could increase your payments if you want which
(1:05:38) will technically shorten the amortization um but that’s how they do it in in the states they don’t have separate terms like in Canada where the amortization and the term are two different things yeah it’s the same thing over there right right because I want a cheaper rate So speaking of Cheaper rate uh is there a way to build Credit in the states and is there a benefit to it and how do you do it there there is yeah so um The Lending is one part of it right so having the mortgage so it just depends on your entity right
(1:06:07) whether you set up as a corporate personal um these mortgages um from what I’m told they don’t build personal credit but they will build credit in your core yeah good enough I just want cheaper rates at some point yes so then you’ve got that credit now lenders they want you to have one other item so I opened up my bank account through coer when I set up over there com Bank name a whole bunch I hear Chase is really good for Canadian too um but the reason I chose Comer is well one it’s local to us um but two um they
(1:06:45) don’t require you to have a Canadian address or sorry a Us address to set up the account a lot of the banks want that um so anyways when I was there the guy told me he’s like look if you bank with us and we see your transactions and we see what you’re doing he’s like reach out three months six months and he’s like we’ll give you a credit card and he said you know what if if we don’t by default then we could give you a secured credit card and then that can help to start building your credit history and
(1:07:18) then from there once you’re getting that history then your pricing can go down because we’ve talked about this in the past everyone but it’s great for the the podcast here generally speaking the lender’s price as if you’re credit score is 680 as a foreign buyer um but it’s cheaper right if your score is higher than that so that’s why you want to build that credit history um but in the same point Irwin the floor rate is the floor rate they’re not going to go any lower regardless of your credit score m so if
(1:07:55) you’re getting that seller credit and you’re applying it and you’re getting that best rate your credit doesn’t necessarily come into play you know what I’m saying yeah but then I’ll try to i’ run a cheap raid based on my credit and I’ll use the seller credit for something else like you know yeah change the floors remove the carpet paint the house something like that yeah you can you can and um one more thing about the rates because it is it is lowering um over time just like Canada
(1:08:24) and what these lenders do is by default the longest I’ve seen is your mortgage is fully open after 5 years so they open it up the shortest I’ve seen is you’re open after three years and that’s without paying a rate premium that’s just built into automatically their mortgages that’s amazing that’s how it is with every mortgage after a certain period it becomes open in five years is usually the maximum right but if you’re an investor and you feel the rate is going to be lower in one year
(1:08:54) you can do open after one year or you could go open after two so obviously fully open has the full 1% rate increase but open after two I think it’s only about half a percentage higher on the rate so it’s not a big deal but if you’re concerned right and you want to wait because rates are going to lower um you don’t have to right just do open after two right you’ll get appreciation you’ll get that cash flow for two years and then we just change lenders or even maybe even with the same lender just
(1:09:24) refinance get that lower rate and you’re good to go right so just a highlight for The Listener benefit R are expected to bottom out in about two three years so to be open after three means you can pay you can pay off that mortgage with another mortgage at the bottom rate yeah which is strategically what everyone should do refinance when the rates have bottomed out that’s right and and it costs you nothing in terms of versus I have uh I have to I have a mortgage uring uh at the end of this month for my
(1:09:56) investment property that I’m currently selling so I have to renew my variable mortgage and so when I do have to break that mortgage that’ll be three months interest thank God I don’t have a huge mortgage that’s 30 that’ll be roughly $3,600 but you’re saying I don’t have to go through that I I won’t have a break fee once the mortgage goes open that’s right and just to share this with you Irwin you want to price it out but you should be able to renew into an open term um so there’s no penalty but the
(1:10:24) thing is the bank or lender probably has two open terms usually it’s a six-month term or a year and for some reason the six-month term is like 2% higher I’ve seen them coming at 9.99 for some reason um but it doesn’t matter if you choose the year because it’s still open you know what I mean so I would inquire on that because selling um you know this podcast here could just save you three months worth of interest if you r new into an open mortgage yeah yeah yeah but yeah the open’s 10% but yeah but they
(1:11:00) have two ask them what their other open is if they’re telling you 10% because they have the year is usually cheaper the year’s usually about what variable rate is okay check that out for the listener’s benefit Scott got me this mortgage so he knows exactly what I’m doing but it wasn’t a lender that I no longer work for so I don’t have you are an Insider yeah tell any you the SEC yeah so how how long roughly would it take to for someone to build uh significant credit to actually save on
(1:11:31) their on their mortgage interest rate well my favorite lender um they will you have to have the mortgage for one year and then you just have to have any credit any other credit item and you could have just opened it there’s no timeline so even if it is a secured credit card right you open that then you qualify to use your credit score for the pricing instead of default 680 mhm so yeah after one year so Scott uh fun news this back of the day I actually had lunch with a um a 20-year plus uh uh Executive Vice
(1:12:12) President of CB yesterday who’s been in commercial real estate uh never invested in real estate though before because you never thought you never found deals that made sense especially with residential tendency like it’s not worth the risk so I’ve been I’ve been regularly talking to people who are in the industry to poke holes in my thesis that investing in you know boring landlord friendly Southern States is a good investment can you like you’ve been around a long time can you do you got any holes to
(1:12:44) poke and I welcome all listeners to reach out as well poke holes in my strategy please here here’s I think the most important thing and I think where investors can fail is not having the right team and you already absolutely because you’re investing long distance and if you don’t have the right team if you’re not regularly kept up to speed with what your property is doing you’re not looking at the sheets that come in from the property manager right and inspecting things um you could you could
(1:13:19) have a huge mess on your hands that you don’t even know it’s there so I think you know locally here people want to use the realtor that their friend recommends or my mom says they’re great so I’m going to use you um and even though I think that’s a huge mistake for investors I feel like if you’re an investor you have to work with somebody that understands investors you have to because otherwise the realtor will just sell you a property and say oh yeah you can rent it out for X meanwhile it’s
(1:13:49) right next to the methodone Clinic where you don’t want to have tenants do you know what I’m saying like where a good investor focused realtor will say no you don’t want to buy there you want to buy over here so I think that’s super super important when you’re building your team across the border need to make the proper team or I think you could fail I don’t want to say you will fail right because the numbers and the landlord control it’s so much better um but I think you could fail if you set
(1:14:18) it up improperly no absolutely and just to add to that uh I’ve said this on the show I say this to my clients uh the greatest risk to an Ontario landlord is actually the tenant in my opinion if they don’t pay if they cause damage to your property your investment will be really challenged it’s going to strain it’s you’re going to lose sleep it’s going to strain your relationships right but we don’t have that same problem in the states we’ve eliminated that problem so then several steps down I believe is
(1:14:44) property management is your greatest risk um and and in my experience in Canada is there’s no really big property managers who have scale that will work with retail investors right versus I feel I’ve removed that risk by going through an asset manager like share in the states so I’ll have an asset I’ll have a property manager they’re going to negotiate and manage that relationship with property managers who have thousands of houses across the country under management so they have scale they
(1:15:13) have systems right they have accountants lawyers trades people on staff bringing down my costs that gives me the economies of scale yeah but I want to go back to team though because uh something that’s again something unique to lens city is you’re in Windsor right your team is all Canadians and asides from the Americans but what is the benefit of being able to do all your financing Under One Roof like I’m a Canadian like I I’m G to and I’ll have a question for you later on hilock and stuff but again like is it
(1:15:45) not advantageous to have both your us your Canadian mortgages and US mortgages Under One Roof yeah it it is and it’s it’s funny because I see um I’ve been to different investing events and there was um some us lenders that came to this event and it was in Canada um but this network is North American wide so they do events in the states and here and and so the US lenders pitch was we’re boots on the ground you know use us but the funny thing is is they’re actually one of my lenders I don’t need to be boots on the
(1:16:26) ground to get the best rate but the beauty for a Canadian is um we can synchronize everything and it truly is a One-Stop shop so in the states um if we know what’s going on in Canada a lot of the conditions that you’ll need for that us mortgage we can satisfy for you yeah yep they have six to 12 months payments for to cover the mortgage yep the other thing too is we get paid by the lenders in Canada if you’re refinancing your home and say buying over in the states so another thing that we do is our investors that will work
(1:17:04) with us we’ll give them a break or a reduction on the fees so generally speaking the fees range from 0% on a mortgage in the states to 3% now the 0% fee lenders they’re going to have a higher rate so you’re still paying for it it’s just built into your rate the two to 3% lenders you’re getting best rate um but there’s there’s fees and I’ve run the math for a client um and it actually is cheaper to pay the fees because it’s like a onetime costs and then to get that lower rate forever than
(1:17:35) it is to accept the higher rate then that you’re you’re paying that forever right unless you change your mortgages but anyways we we’ll go to the lender and be like look we we got paid on the Canadian side here so we’re okay we’ll take a reduction and pay on on the US side over here um so it helps the Canadian to to save money um and then the other part of it is is because we are in Canada and we’re investing in the states we know the troubles that a Canadian is going to go through getting
(1:18:07) started where us lender you know they could claim hey we’re our headquarters is right here in Florida uh and they may be able to provide the lending they still haven’t went through the Journey you know what I mean so they’re not going to be able to give that good advice or you know hey watch out for that over there or we’ve got that so I think that’s what’s really important um and it works both ways actually now we’re getting us lenders because they can’t do it they’re actually referring
(1:18:36) us Canadians that want to refinance and then buy over there as well so we’re getting that now too so with us you don’t need to do that we have multiple lenders in the states we have multiple lenders in Canada we just optimize your flow and residential and Commercial and I got to be honest with you I did not expect this when we met and started talking about doing this Irwin I’ve actually done more commercial deals over there than I have residential deals I was not expecting that but there’s lots
(1:19:04) of apartment buildings that we are working with lenders as we speak to to fun so it’s it’s really interesting but I do think the um you know single family Southern States different things like like what shares doing I think that is very key um especially for the investor that’s getting started because it’s the path of least resistance and it gets your feet wet it allows you like I just said to go through that journey and experience everything and once you’re more Savvy and you want something bigger
(1:19:35) and better then you go off right and you start doing your thing yeah I’m just cranky and old and boring so I just can’t keep it vanilla but but that’s actually great brings up a great Point what is the difference what is the process how is the process difference for uh mortgage getting a mortgage AG for an apartment building compared to a single family home yeah so over there it’s really hard to find the first lender now we’ve got them um but a lot of times in the past a Canadian had to partner with a US
(1:20:07) citizen to be able to even buy an apartment building and um so actually a couple of our deals we’re refinancing them to get them out of that um but we’ve got the foreign buyer lenders that will move forward now but pretty much it’s just like um you know if you’re buying an apartment building through cmhc so we um we go through Freddy so we went through Freddy uh it’s called Freddy for anybody who’s looking at this small business loan um and it’s insured so it’s for apartment buildings it’s through the
(1:20:46) equivalent of cmhc but in the States you know there’s Freddy and Fanny um and they they run the numbers right and they’ll tell you based on the income the property is generating what you can qualify for as a lending and the and the purchase price U so you you don’t have as much control right because you could buy an apartment building for five million but if the rents only support four then that’s all the financing you’re getting based on do you know what I mean so that’s kind of the same over
(1:21:16) there too fantastic based all right Scott we’re really running out of time um thank you for being so generous with this with your time I I saw your Christmas pictures I had no idea how big your team was think I mean that’s only part right we’re missing Jillian in Toronto and then um we’re working on Murray and Quebec so oh fantastic yeah always growing so uh Scott um any final thoughts I always have to give my guests a share a chance to share anything they want to talk about without me prompting
(1:21:50) them um I mean final thoughts I just think it’s people I find are scared of what they don’t know it doesn’t really matter what it is if you don’t know how to do something you could be the guy that sits down at a table at a wedding and you don’t dance because you don’t know how to dance right so you’re you’re fearful of it right and and that’s just one silly example but like it applies to investing it applies to everything and I think that if a Canadian will take a little bit time and analyze investing in
(1:22:25) the states I think they’ll really like it um I don’t think like a Canadian should just say screw Canada and whatever I mean I think there’s some benefits of diversifying right having a little bit here a little bit there um different property types too um so I still think Canada is great but Canada has to get its act together so I just encourage the investor to analyze the process it’s not that complicated um you have people that can set this up for you from start to finish I also have people that
(1:23:02) can do that um and it’s all about building that teamwork and just just doing something and I think if an investor buys one property over there and and does all that I think they’re gonna want to get a ton more properties over there because it’s just n day better for the landlord yeah I’ve been playing with an example to just explain to invest uh how easy it is for example I I was just running a simple example if I bought 10 houses in the states uh in 10 years I can cash flow over 110,000 can uh US dollars per year yeah right that’s
(1:23:38) a very simple model it takes about two Mill about 2 million Canadian Equity to do so right so very slow boring it’s only 10 properties any issues in really getting financing for 10 properties Scott no right because these are all cash flow right from day one yeah the lenders they’ll do they’ll do 15 each but then they sell off the debt that’s very common in the states right sell off the debt to another mortgage company that wants to grow their books or whatever and and then you free up another 15 and and the selling of the
(1:24:11) debt can can tra take place within five minutes they do it on sort of like a stock exchange they have people that buy and sell debt all day long that’s all they um so you’re just like buy minutes later you’re good you got 15 more just five minutes you’re out of mortgages give us five minutes all right have more 15 more now yeah so again my my point though is that it’s very simple uh logistically operational is quite simple to own a 10 property portfolio uh and again my numbers show that you’ll get to
(1:24:41) 10,000 cash sorry 110 cash flow US Dollars and then you know and then I say to everybody find me this opportunity in Canada right because these properties because again there’s no rent control so my properties will be like eight caps in 10 years yeah right find me this opportunity in Canada right and again list 17 listeners like find me this opportunity I will am happy to hear about it yeah um Scott before you go actually uh I had a question is there a right mix between using cash and HELOC and morgage is there some sort of right
(1:25:19) mix yeah so we we did talk just preface that pref preface that question cuz we um like you and I know some people that are literally going down with large helocs to just some people are doing 100% heoc which I don’t agree with I don’t think you agree with either because at a minimum you got to be trying to build some credit your credit in the States but I’ll let you I’ll let you talk to it you’re the expert yeah I mean if you buy with all Canadian funds you have the highest risk of currency
(1:25:48) risk right look up currency risk you’re you’re investing with Canadian dollars into a different market so in the stock market you can hedge your investment and that limits the currency risk but you cannot do that in real estate and um you know I know I gave an example on your um one seminar that you had and um the thing is is if if you invest now in our money hits par with the US so it’s the same you actually end up overpaying for a property if everything stays the same then you’re good but um every recession
(1:26:28) the money goes really close to par so that’s when a lot of investors want to get out of the market if they’re tight right they when it when there’s a recession and things get tough they want to sell um because they financially need to so just if you invest with tons of Canadian dollars and then there’s a challenge and you do have to sell a couple properties let’s say um it’s going to be the worst time to do it because of the rates so I encourage investors just to only use their down payments from Canada and to
(1:27:01) try to use as much US dollars as possible now over time right so when you start that’s what you’re gonna have to do but over time as you have a couple properties then you can refinance them in the states and then you’re just using all us funds and buying over there with us funds so then you’re not there’s no currency risk right and then you reap the benefits where right now where we’ve got the 30% like the US dollar is 30% more then when you sell those properties or convert that cash flow or whatever it
(1:27:32) is convert that that money to to Canadian then you get that 30% boost in profit which is super so I would try to invest with as much as possible I know a lot of Canadians did want to use their lines of credit because it was cheaper right I mentioned 8 to n and a half% for lines of credit are prime plus half today so 7.
(1:27:55) 7 so they’re thinking okay it’s cheaper to use my line of credit that’s what I’m going to do right um but knowing about the seller credit and that you can buy down to six and a half it’s actually cheaper to get the mortgage in the states than it is to use your line of credit so right there’s yeah so there’s variables but I think the down payment is totally fine to leverage in Canada while you get started um and then after you build up a portfolio you won’t need to do that right you tap into your Equity there and just keep growing so
(1:28:22) that’s what I would suggest yeah get to that 10 20 portfolio number property portfolio number get that 100 Grand cash flow a year because I think that’s something that everyone should be going for because I think everyone could appreciate what $100,000 US in cash flow would mean to their lives right it’s huge and even if you shift Irwin say say you get your 10 you’re like you know what I’m done and then your strategy shifts and you just pay off that debt then you’ve got 110k US dollar a year
(1:28:53) salary and it goes up each year because there’s no rank control yeah like you might double in like five years now you’re talking 200 Grand I’ve spoken to a lot of people that do JVS over there yeah and this is past JVS but they’ve been able to repay their investor um everything like within five years from the success stories I’ve heard obviously there’s probably a ton of failures I haven’t heard oh there’s tons of failures out there but still like that’s incredible so you partner
(1:29:25) with somebody you can get your money back in in five years just based on the appreciation and how their Market is crazy yes yes lots of people lose money which is why I’m going down with the best possible team I can possibly find y makes sense Scott where can people reach you want me give your cell phone number sure I don’t mind I’m gonna give my cell phone but I made a promise to my team that I the consultant for the US lending but they’re all processing them so if anybody calls I’m just here to hold your
(1:30:00) hand but I will partner you with somebody on my team to actually process them um so yeah I’ll share it it’s 226 348 7884 fabulous upsite yeah that’s lend and actually if you go there right when you like we designed the page so you can book a strategy call it’s like right on the top of every page um so you can book a call with someone on my team myself if you’ve got commercial mortgages like there’s a commercial section on there it’s nice and easy to book a call fabulous and again you can you can
(1:30:41) service people both for Canadian mortgages and US mortgages absolutely residential and Commercial doesn’t matter fabulous Scott thanks so much for doing this thanks for bringing this to our community and at our Peak pain time as Ontario landlords the BC landlords are feeling it too Alberta you guys are good for now awesome you’re they’re basically the Envy of all of us it’s crazy I hope I hope they get to stay how they are I hope things don’t change but you never they should threaten the separate from Canada if
(1:31:14) they things change that’s right that’s right we’ll miss them though thanks Scott thanks so much for doing this thank you as well take care everyone thank you for watching if you want to learn how to invest in real estate from scratch my team teaches beginners how to use the number one investment strategy that I personally use in a virtual free training class every month go to investor training.
(1:31:52) com below and I do the best to answer each of those comments and questions myself again if you’re ready to learn the nitty-gritty about real estate investing from a professional investor register for next virtual class that’s at investor

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Before you go, if you’re interested in what kind of properties I am looking at in the landlord friendly states of the USA please go to for what I consider the best investment for most Canadians, most of the time.

I’ve been investing in Ontario since 2005 and while it’s been a great, great run. I started out buying properties in the 100,000s and now it’s $800,000 to $1,000,000.  How much higher can it go? I don’t know

To me, the remaining potential for appreciation does not match the risk hence I’m advising my clients to look to where one can find rental properties that are affordable range of $150,000 to $350,000 US$, with rents that range from $1,400 to 2,600/month plus utilities.   As many Canadians recognize, these numbers will be positive cash flow and are night and day compared to anything locally. Plus the landlord has all of the rights, no rent control, and income is US dollars which are better than Canadian dollars.

If you don’t believe me, US dollars are better than Canadian dollars, go ask 100 non-Canadians which currency they prefer to be paid in.

So to regain control of your retirement planning.  Go to and check out what great cash flow properties are available in the USA.  

The best part is, my US investments will be much more passive compared to by local investments as I’m hiring an asset manager called SHARE to hand hold me through the entire process.  As their client and shareholder, Share will source me quality income properties, help me with legal structure and taxes, they manage the property manager and insurance provider while passing down to me preferred rates so I save both time and money.  

Share will even tell me when to strategically refinance or sell.  SHARE can even support investors all over the country for proper diversification hence my plan is to own in Tennessee, Georgia, and Texas.  Share is like my joint venture partner but I only have to pay them fees while I keep 100% ownership and control.

If your goal in investing is to increase cash flow, I don’t know of a better strategy for most Canadians most of the time.  One last time that’s to see what boring, cash flowing real estate investing can look like on your path towards financial peace.

This is how I’m going to make real estate investing great again for my family and hope you choose the same.  Till next time!

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This episode is brought to you by me! We don’t have sponsors for this show. I only share with you services owned by my wife Cherry and me.  Real estate investing is a staple in my life and allowed me to build wealth and, more importantly, achieve financial peace about the future, knowing our retirement is taken care of and my kids will be able to afford a home when they grow up.  If you, too, are interested in my systematic strategy to implement the #1 investment strategy, the same one pretty much all my guests are doing themselves, then go visit and register for our next event.

Till next time, just do it because I believe in you.



As a committed advocate for transparent and responsible real estate investment, I want to openly share my involvement with SHARE SFR (Single Family Rental) as an Advisor. I hold an equity position in this company and receive a referral commission for clients I introduce to their services. My endorsement of their business model – focusing on direct ownership of positive cash flow income properties – is consistent with my own personal investing since 2005, is based not only on a professional assessment but also on my personal experience and belief in their approach. Please note that while I stand behind my recommendations, it is crucial for each individual to conduct their own due diligence and consider their unique circumstances before making any investment decisions. As always, my priority is to provide you with honest, insightful, and practical real estate investment education.
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