Financing Multiple Properties in Canada

[Leanne Shum]

Hi all,

I posted something similar in the general financing section but some fellow members suggested I posted in the Canadian section for more specific answers as I am Canadian.

I am very new to real estate but am very interested to pursue a career in real estate in the near future. I apologize in advance if my question is silly/stupid.

My question is, how is it possible to finance for multiple properties at the same time? I'm not sure if that's exactly the way I would like to word my question and I know there are a variety of ways to finance for real estate but let's say, for example, if I put 20% down on a property and get a loan from the bank for the remaining balance of the purchase price. Assuming there is positive cash flow being earned when I rent out the property. A few years later, I save up enough to put another down payment on another property. But doesn't the bank usually look at how much I earn annually to determine how much they will lend me? What if I've reached the maximum that I've been approved for my previous property?

I saw from some where that when you have a x number of units earning income, they start to look at how much cash flow is being generated from the properties to determine how much they approve you for a mortgage. Is that true? And if so, is that the same for all provinces? I currently live in Vancouver, BC.

Thanks so much in advance for your answers and comments.

[Myron D.]

I live in Fort St John, BC.  I'm also fairly new to the real estate investment scene although I'm surrounded with friends who have been in the game for a long time.  From what I understand the bank looks at multiple items to qualify whether they'll give you financing.  1. your current debt ratio 2. the property value ( on the unit you're looking to purchase) 3. the amount of money you have to put down

All of the big 5 banks I've spoken with have said they'll also add a percentage of your rental income to your income to determine your debt ratio (this has been different based on which bank I've spoken with).  The local credit union will do upwards of 75% while the scotiabank, rbc  and TD all will only do 50%.  This is where cash flow becomes very important.  Some banks will also look at the equity in your home and any other investments that you might have.  once you get to a 2nd and 3rd investment property they have told me they will consider equity in the investment properties.  The largest hurdle that my friends are having is getting past 5 properties.  Banks become very tight when they notice you own a lot of property regardless of the cash flow they may be producing.  

The best bet is to call your current banker and ask the questions about qualifying for investment property.  Most loans officers are more than happy to answer your questions.  After speaking with your bank contact, get a hold of a broker and see what types of deals they are putting together and ask them what you might be able to swing.  Keep in mind that a broker will have access to 20 lenders all of which have different rules. 

I hope this will point you in the right direction!! Cheers