Financing - other than banks in Montreal (or Canada)

[Simon Foucher]

Hi,

Long time listener of the podcast, but fairly new to the community. My wife and I are completing our first project; 3ples converted into a 4plex in HOMA. Great cash flow property; rents cover mortgage/taxes, and we are living there for free, but here is the issue.

Basically, we are looking to do a second deal shortly, this time more a short term flip rather than buy/hold, but are stuck with financing. The bank was super conservative; based on their evaluation, our property has a cap rate of almost 7%, so because of this, our LTV is at 90% so we can't really use a HELOC for a while. In terms of revenues, banks only consider 1/2 of rental revenues as income, and since we are supporting a significant mortgage, our DIT is > 50% so we are not able to get a loan.

I understand the bank's conservatism, but basically we only have food as living expenses, we own a property that is paying itself and our credit rating is top notch. We are in a great financial position, just dry on hard cash and our ratios are not "bank approved".

Based on this project's experience, I'm thinking we need ~250k$ of cash (~140k down payment to avoid CMHC, ~60-80k$ renos, 15k$ purchase costs, 15-35k$ safety buffer)

We are considering JVs, but I really don't feel confident approaching investors with "no skin in the game"; I'd rather secure a loan for say 50-100k$ then approach other investors to go 50/50 or something. We could also look into temporary seller financing, but that limits our potential projects and removes some negotiation leverage...

Or any other way we could come up with this amount of cash, or other approaches we could take?