In this episode, Quentin talks with a member who is who is upgrading to a larger principal residence, they need to move their properties from their personal name into a corporation in order to create qualification room.
The member shares that he started his real estate journey after attending a real estate conference. He started with student rentals, and over the years, he managed to build a portfolio of fifteen properties that includes student rentals, duplexes, single family homes and some condos as well. He says that as he purchased properties in his personal name, with a trust agreement to the corporation, now he is unable to qualify for a bigger mortgage when he wants to get a bigger house. Now, he wants to move some of his properties from his personal name into his corp.
He shares that when he was building his portfolio, he used his personal residence for my personal residence. So, now he has a huge credit line on his personal residence that as he moves this over, he is going to take those proceeds and pay himself back and free up debt on his personal name, so that he could buy a larger personal home. He adds that his primary objective is qualifying for a larger home, secondary is paying off his debt, refinancing and freeing up equity in those properties.
Quentin says that the member needs to look for a portfolio lender, that’s going to take on all of those residential properties and bring them over. He suggests that the member should approach the commercial lending department versus the residential lending, and ask them to give a portfolio loan against all four at the same time. They have the same payment structures as a variable rate mortgage. The rates are higher, but they have the same of flexibility for selling one out of the portfolio. He adds that with the B lenders, the rates will be even higher.
He also adds that the challenge that the member will have is the student rental component, because that’s not favourably looked on by the lenders. He says that another option for him would be credit unions, and they may be able to offer him different options as well. Quentin adds that his joint venture partners are going to have to qualify on those mortgages as well when he is bringing them over. If those are personally owned and not JV properties, then there shouldn’t be an issue. In conclusion, Quentin suggest doing it in stages. Stage one is flip it over from personal to corporate, and then stage two, access equity later on.
• Introduction [00:00]
• His Background and Experience in Real Estate Investing [00:50]
• What is the LTV on the Properties He Wants to Move? [07:03]
• Is He Using the Smith Maneuver? [08:22]
• Does He Have a Bear Trust on the Properties He Wants to Move? [09:45]
• What are the Paperwork Requirements For the Process? [16:08]
Quentin D’Souza is the Chief Education Officer of the Durham Real Estate Investor Club. Author of The Action Taker's Real Estate Investing Planner, The Property Management Toolbox: A How-To Guide for Ontario Real Estate Investors and Landlords, The Filling Vacancies Toolbox: A Step-By-Step Guide for Ontario Real Estate Investors and Landlords for Renting Out Residential Real Estate, and The Ultimate Wealth Strategy: Your Complete Guide to Buying, Fixing, Refinancing, and Renting Real Estate.