Next Level investing- Part 1 of Commercial RE investing

I do already own commercial property but oddly, they were financed basically through cash on hand or a very large HELOC.  When I talk about Next level investing, I am talking about investing in multi unit (+5) properties that will require me to use commercial mortgages that are around 1.5% higher than what I can get for a residential mortgage and are based on the rent minus expenses of the property. (NOI)

It has been a while since I posted.   I wanted to finish off a big project that I was working on for my family that took six weeks longer than I expected.   I was supposed to be in Edmonton looking at property this month (August) and making an offer in September.

Two months ago, we were down around 50 cases/day in all of BC, hitting a low of 30. Back then, I was planning a trip for the 3rd week of August.   Now we are over 800 cases/day in BC and over 1000 in Alberta.   

I guess it is easy to blame Covid-19 but I am trying to create a workaround. 

Any more delays will put me off my long term plan, so ten days ago I decided on which mortgage broker to go with and began preparing my paperwork.    I have listened to this mortgage broker speak on several occasions over a few years and is himself an investor.  The broker is also part of a financial planning group that essentially specializes in investors at my level of investments.   (Think, corporate structure for long term investing and Smith Maneuver)

It was an revelation to see where all the money is coming in and going out for my existing properties. It was good to see that I am strongly positive cash flow for my existing property.   

What I did find out was that I needed to set up an active property management company and charge the holding company the management fees.   It is weird, but banks want to see all your property in a Holding company for liability reasons, and the CRA (I live in Canada) charges a high rate of tax on passive real estate income in Holding companies.   As part of my plan, I am now a licensed PM and Strata Manager so I can legitimately have a property management company that charges my holding company for services. 

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