I'll try my best to reply to all the questions and comments. First, thank you to @Eleena de Lisser for the great detailed reply. That is how I feel as well, but everyone I have talked to, or heard about, always seem to find the deal first then stress over the money part. Just wondered if it was possible to find investors first or if they actually like to see the deal before even giving a maybe. :)
Some clarification...I will be looking for arms-length people to fund my flip. So Roy nailed the reasoning in his final paragraph. Banks don't like them because the BANK doesn't make money - the RRSP holder makes all the money. There are a few trust companies that are setup to do self-directed RRSP accounts though. My biggest draw to using RRSP money is that I know more people with large RRSP accounts (that are probably giving a pretty weak return) and not so many people with large amounts of cash.
@Dale Plant I can't explain exactly how it works here as there are entire books written on the topic but this is not just limited to RRSP money - it can be RRSP, RESP, or TFSA accounts. If you are interested in getting an awesome book that details this strategy I would recommend "The RRSP Secret" by Greg Habstritt. The "best" version of this is using an arms length person/people and you can keep your property outside of CMHC, bank has no say, etc just like private money. It is done by setting up a self-directed RRSP account that about 4 trust companies will actually do for you. The lender then receives an RRSP statement and it will show the mortgage on their statement along side any other investments they may have at the same trust company. Fees to setup the trust account are very small. I see the approximate 40% return as an annual return and is only able to be that high if using RRSP money for a flip. If they get paid 20% within 6 months then it is like a 40% annual return with interest paid out twice annually. If I could do 2 flips back to back with exact same numbers (my perfect world example) it would be as if they invested $100,000 for one year and got paid $20,000 in June and $20,000 in December. Yes, it is actually two deals and two investments each returning 20% but that 20% is actually earned in 6 months - not one year. And yes...tax deferred interest would be the better way to describe it.
@Roy N. Using non arms-length RRSP money is a lot harder and you are stuck dealing with a bank still. As outlined above, arms-length is the way to go (it looks as if you've learned about this as well) because all the banking rules are cut out and the lender actually becomes the bank - setting terms (full payout on sale of property if shorter than 1 year term), interest rates (any agreed upon rate), and even the maximum funding - up to 100% ARV if they are willing to take a larger risk.
