Montreal newbie needs advice on best strategy to grow portfolio

[Danielle Leo]

Hi Everyone, I'm a beginner in RE investing from Montreal, Canada. I'm very excited to have found this community of like minded people!

I started a few years ago with two small condos that didn't need a lot of management (and also didn't generate a lot of return). Then about two years ago I purchased my first triplex in a good neighborhood. Over two years I increased total rental income by $12k a year through renovation and replacing tenants, and the triplex appreciated by 1/3 in a hot seller's market. I absolutely loved the process but also realized that this model is not sustainable if I'm managing everything by myself while holding onto a day job. 

My goal is to steadily grow my portfolio by 6-20 doors per year for the next few years, whichever my financing allows. Me and my husband are both young professionals holding busy corporate/business jobs with good income, and we don't plan to quit either job to do full time RE just yet. So far, the only strategy I'm familiar with is: buy a property with sub-par conditions and price-->clean up and renovate-->charge higher rents to new tenants-->buy new property and repeat. However, I find the initial process after the purchase is a real bottleneck for me: 

1. Difficult to rehab long term tenants with low rent (local law very protective of tenants);

2. I haven't found a general contractor that I fully trust to entirely outsource reno projects;

3. Majority of the offers on the market are marked up and the profit margin is very thin if no rehab/reno is completed. I have a good broker who's looking at off market deals for me, but those are hard to come by. 

4. I should find a property manager to manage the on-going maintenance and tenants turnover. I don't have one yet. 

 My other option is to buy something off flippers that's already renovated and ready to rent, but most often the prices are already jacked up and the appreciation potential is limited. 

So my question is: what is the optimal strategy to quickly grow my portfolio if I can't, or am not willing to, devote too much time in the renovation and maintenance process? Is the "buy and hold" model the only strategy I can use if I only work on this on a part time basis (evenings and weekend)? Are there other options? 

On the financing side, we have decent borrowing power now based on our income, but when will we hit a wall? 50 door? 100 doors? we have friends who are in similar situation as us and they can no longer borrow from the bank through refinancing and HELOC after a few years of buying. I'm not a mortgage specialist so I don't when that will happen to us, too.

Any suggestions and advice is much appreciated! (this was originally posted in the RE strategy forum but I'd love to hear from a Canadian esp. Montreal perspective)

[Philippe Busque]

As long as you use commercial financing, you will not hit a wall. Your income does not matter for 6+units buildings.

Finding a partner is a good solution. You have money but no time? Find someone with time. Go to your local RE monthly meeting (CIIQ, Immofacile, mordus, etc). Do you speak french? If you have capital and go to Immofacile meetups, you will have A LOT of offers from active investors looking to scale up with more capital buying big deals and offering 50% of the pie to people with money. Investors with the contract get a great deal with 0 downpayment but have to structure, manage and stabilise it all, you get a great deal with 0 time invested. It's exactly the structure they teach there at Immofacile. Very win-win, I like it a lot. 

I did the CIIQ coaching program and it helped me a lot (from 2 to 9 doors in 1 year, last 6 units is already ready to refi and take out my downpayment to buy another 6 units, but I want to buy bigger...). I'm starting to like Immofacile's approach more, you buy bigger/better assets this way and for someone like me who has a lot of time, it allows me to always be looking for deals, instead of waiting for buildings to refi to keep going. I am in the quebec city area, if you are interested in buying around here, we could connect. I can probably give you a few names of investors who structure deals in montreal if you only want to invest there, just pm me. :)