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Podcast Transcription

Sandy Mackay [00:00:31] Breakthrough, a real estate investing podcast. Episode 101.

Announcer [00:00:36] If you are looking for the skills and tools to succeed in real estate investing, you’ve come to the right place. This show is about breaking through barriers, breaking through limiting beliefs and breaking through to the life that you want to live through the power of real estate investing. This is the Breakthrough Real Estate Investing podcast, and now here are your hosts Rob Break and Sandy MacKay.

Rob Break [00:01:09] Welcome, everyone. Thanks for joining us again today. Hey, Sandy, how are you?

Sandy Mackay [00:01:12] Hey Rob, fantastic yourself.

Rob Break [00:01:15] Very, very good. Just still sort of in the first phase of my first multifamily deal, and darling knows about that are just so well, maybe touch on that a little bit, although I don’t want to get into anything too personal on this. But yeah, it’s pretty exciting and you know, a couple of other things going on. How about you?

Sandy Mackay [00:01:40] Nice. Yeah, lots of stuff. I guess we’re fresh off our one hundredth episode, so that was cool to do all that at the events. And then I was just looking forward to making that event exciting. And that’s been a lot of my focus for the last while. So back-to-back to kind of normal business and buying some properties and doing all that fun stuff.

Rob Break [00:02:04] Right on, right on. Everyone should go over to our website, Breakthrough Aria podcast, Dot S.A. There you can listen to every single episode that we’ve done. And you can also get in contact with the guests because all of their contact info that they’ve shared will be there and available for anyone who would like to get in touch. So please go over and do that. Breakthrough Aria Podcast Dot S.A. What else can they do over there?

Sandy Mackay [00:02:28] Saving cover free reports? The ultimate strategy for building wealth in real estate. And that’ll come with it as you jump on our email lists and get access to all that stuff that the Rob mentioned there. Get access to our property tours or events that are coming up. Get notified of every episode that we release and just hopefully our goal is to deliver more value to you. So jump out on that list and get access to everything there.

Rob Break [00:02:57] Great as well. Jump over onto iTunes and subscribe to the podcast there. You can leave a rating and review which would be greatly appreciated for anyone who just has a couple of minutes, can go over, and tell us what they think about the episode that they’ve heard so far and the guests and maybe even what they’d like to hear more of on the show. So if anyone would care to leave us, a review would be greatly appreciated.

Sandy Mackay [00:03:22] We’ve got some great recommendations. I’ve seen some come through the last couple of weeks that have been interesting, so we’re going to have a few new topics. I think if we can track down some good guests. There are some good ones I read that have come through,

Rob Break [00:03:33] well, you know what? I’ll shout it out right now. Somebody asked us to do a podcast about agricultural land and renting it to farmers and that kind of thing. So if we have any experts in that kind of area listening to this, then please get in touch with us. That info breakthrough podcast dossier. We’d love to hear what you have to say and possibly have you as a guest on the show. Talk about it. Yeah. Well, I guess we’ve gotten through all the housekeeping, Sandy, so we should probably talk to our guest.

Sandy Mackay [00:04:02] So it’s good. Yeah, we’ve got Dalia standing by. So welcome to the show, Dahlia.

Dalia Barsoum [00:04:06] Thank you, folks. Thank you for the opportunity.

Rob Break [00:04:09] Oh my gosh, this has been such a long time coming here. We’ve had so many mishaps and we were all on. We almost did this interview one time before and then I can’t. Oh, we had a bunch of technical difficulties, I think. And then you were sick and then I was sick. And oh, Sandy was probably sick in there too somewhere. But we’re finally doing it today. So thanks for being here. Appreciate your

Dalia Barsoum [00:04:35] focus.

Rob Break [00:04:36] Yeah, I’m pretty excited and we are doing something a little bit differently today. We’re going to get to I put it out on Facebook and Instagram that you were going to come on the show and talk to us today. And I have a bunch of listener questions here to ask you. So that’ll be interesting to get into that.

Dalia Barsoum [00:04:54] Excellent.

Sandy Mackay [00:04:56] Perfect. And for those of you who don’t know Dalia Barstools, she is an award-winning mortgage broker, a financial advisor. She got over 20 years’ experience in the banking sector, wealth management, lending, and real estate. She’s the author of Canada’s best bestselling real estate financing book, and it’s an Amazon bestseller as well. Canadian real estate investor financing seven Secrets to Getting All the Money You Want, and She’s Been nominated for a whole bunch of awards here. I’m not going to get there. All of them top 75 brokers 2017 18 19 in the Canadian market professionals. What else? Their top mortgage broker in 2017 2015, Canadian Real Estate Wealth Magazine Woman of Influence 2017 Top 100 women driving, reshaping the Canadian real estate industry and a whole bunch of others. And as a public speaker, she is a regular columnist in the Canadian Real Estate Wealth magazine and various other media outlets throughout the real estate and finance worlds. And she’s the president and principal broker of St. Streetwise Mortgages, which is one of Canada’s top 75 brokerages as ranked by Canadian mortgage professionals. And Dalia helps many real estate investors kick start their investment plans, as well as take their portfolio to the next level. And her clients range from rookie investors to more sophisticated investors with multi multimillion dollar portfolios and whole bunch of more things. But we’ll probably get into all that sort of stuff as we get to the interview. So again, welcome to the show, Dahlia. Happy to have you here.

Dalia Barsoum [00:06:24] Thank you very much, Sandy.

Rob Break [00:06:25] Yeah. Thanks, Dalia. Thanks for being here. Said you must be exhausted after going through exactly

Sandy Mackay [00:06:30] how it was. I was trying to take some breaths there, but that was a long one.

Dalia Barsoum [00:06:34] Here you for the comprehensive intro.

Rob Break [00:06:39] What else do you want to add to that? What about family stuff? Do you do for fun, that kind of thing?

Dalia Barsoum [00:06:45] Yes. Well, I have two beautiful sons, Alexander, and Vincent, 12 and eight, and I have a labradoodle. His name is Yohji. That’s my little family. And what I like to do for fun is a lot of I do a lot of things, but mainly I like to take long walks with my dog. I like to travel with the kids and my husband, and I actually enjoy and love and addicted to Latin music. So I listen to a lot of Latin music. I do a lot of salsa dancing and Latin dancing. And on the sports side, I also play soccer.

Rob Break [00:07:28] Very, very good. That sounds like fun. Yeah. OK. Now I’m sure most people are listening to this real estate investing podcast are interested in, though, is the real estate side of it. So let’s get into the shot. So not only are you an investor focused broker, but you’re also an investor yourself. Do you want to tell us a little bit about your investing journey so far?

Dalia Barsoum [00:07:50] Sure. I started investing at about 2000 an age when the markets took a hit, and at that time I was actually working for one of Canada’s largest big banks. And I sold my stock portfolio sink, and my husband and I felt that we had no control at the time. And this is where we started shifting gears to real estate. So I started with a small property in southwest Bury. At the time, I purchased a townhouse. And from there I grew my portfolio in Bury, so I am primarily invested in Southwest Bury and in Northwest Bury. And I also got into Vaughan many years ago before Vaughan Mills and the subway station came to life. So my primary value is all buy and holds. I haven’t done any fancy footwork when it comes to flipping or renovations, but recently in Barrie, I started acquiring properties that allow for the legalization of secondary suites. And as we speak right now, I am putting offers on Toronto properties to do a buy renovate refinance in Toronto. It’s more massive, you know, type of renovation, but you know, the numbers make sense for us. So that’s where I am right now. And then the rest of my portfolio, I supplement with private mortgages.

Rob Break [00:09:14] So when you say Toronto, do you mean Toronto proper or

Dalia Barsoum [00:09:18] Toronto not, basically. Yeah. So Rob basically buying a property that is run down in a prime location in Toronto within minutes to the subway station. You know, you’re looking at a million or 1.2, that’s the range. And what we would do is we would literally gut the property. It costs about two to three hundred thousand dollars in renovations. It’s like I said, it’s a massive investment. But at the end of the day, the portion value is significant in a market like Toronto. And what we do is we create three or four units inside the property so that our gross rental income jumps to about 6000 or 6500 renting to professionals. Very, very. It’s the first strategy, but in Toronto. So that’s what I’m doing right now.

Rob Break [00:10:09] Very cool, that’s awesome. And then you started out with buy and hold, you said and just have just sort of, you know, that worked for you for the first little while. But as you know, I would imagine everybody gets sort of the edge to recycle their money a little bit and, you know, be a little bit more adventurous and try some new things. So. Yes.

Dalia Barsoum [00:10:31] Yeah, I mean, it’s all been bought and hold. They haven’t flipped property. Like I said recently, I started buying things to legalize a secondary suite. But my most massive, I guess strategy is the one that I’m deploying in Toronto right now.

Rob Break [00:10:47] So I mean, as far as the people that we generally talk to in this podcast, most of them are new investors. They’re building their portfolios still, they’re using different strategies, but, you know, typically they’re doing buy and holds either that or rent owns student rental, some flipping. And then what you just talked about with the buy, refi, buy, renovate, refinance, and rent strategy. How do you suggest that investors set them up for set themselves up for success using each of these strategies? So let’s just start with a straight up buy and hold.

Dalia Barsoum [00:11:28] So with us, so at the end of the day, when an investor wants to pick a strategy, what’s important is to understand why they are deploying that strategy. What are they after at the end of the day, are they after capital growth so that they can grow? Maybe they’re down payment money through a slip or a rent to own that matures in three years so we can take that and put it into long term buy and hold? Are they primarily after cash flow and therefore they’re looking at maybe student rentals or rent to own or legalization of secondary suites? So it starts with understanding why they’re actually tackling that strategy from a financing standpoint. What you should consider is not just the mortgage and the rate. As an investor, you need to understand what your plan is for the property. So if you’re getting into a buy and hold, OK, what I and you know that this property is something you’re going to keep for the long run, you really want to make sure that you have a couple of features. One, I’m a big believer off what’s called an advance of a mortgage on a long term buy and hold. As an investor, you’re going to run into issues, sometimes with tenants, you’re going to run into repairs, sometimes with tenants. You need some reserves to carry your properties. So an addressable mortgage on a long term buy and hold allows you to accumulate capital over time on a line of credit as you pay down the mortgage, so it gives you access to that reserve. So I would highly suggest, you know, an invincible mortgage on a long term buy and hold on a rent to own. You want to make sure that you have flexibility, primarily because you’ve got a tenant buyer who is going to buy the property from you, let’s say, in three years. And you need to think about two things what if that kind of buyer does not buy the property from you and needs an extension? And what if they bite from you before the end of the term because they’ve done great, and they can actually buy it sooner? So what I typically suggest in a rent to own is a variable rate mortgage, because a variable rate mortgage gives you that type of flexibility. If they extend, you don’t have to renew your term. And if they buy early from you, you know you can break that mortgage with the least penalty on a student rental. Student rentals are trickier if you’re buying a student rental. If you’re buying a property that looks and smells like a student rental from the get-go. There are very few lenders that will do that type of deal. They are financeable, but what you need to think about is what if later you want to take money out of that property, which we all do as investors, we want to recycle our capital. So again, on a student rental, because your universe of lenders going in is a little bit limited, you want to think ahead of time. And I would recommend also in advance of a mortgage on a student rental because on a refinance, it’s a little bit more challenging. So if you have an advance of a mortgage that would allow you to get access to capital in an easier format. And then finally, on a buy renovate refinance, what we recommend to investors is to consider a mortgage with two key things one, going into the deal go variable. Don’t go fixed because once you’ve done that renovation as an investor, you want to be able to go back, refinance and pull your money out. Pay your rental capital. And if and if you’ve done it really, really well, you’ll get some extra funds to take it to your next deal. So do it variable. So you give yourself the flexibility to pull that money out once you’re done. But also go to a lender or talk to your broker to work with a lender that will allow you to revisit the value once the work is done. Not a lot of lenders will let you refinance at the appraised value once you’re done. Some lenders will say Sorry, you know what, guys? You’ve owned this property only for three months, and all of a sudden, you’re telling us that the value has jumped by $100000. We’re not going to touch it. So for it, for an investor who’s doing a burst strategy, you’ve got to make sure your exit strategy is open. Not like go with a variable rate and you’re working with a lender that allows you to refinance at appraised value in a short time period. So that’s what I would recommend on the different strategies.

Rob Break [00:15:41] So that was interesting when you said in the student rental thing, just having a reimbursable mortgage, so that means that that you wouldn’t necessarily have to have it appraised in order to pull the value in order to pull. Well, you would. So let’s walk through that really slowly because I know that a lot of my clients and a lot of people that I’m working with right now are doing studio rentals as an initial strategy. But the properties that we’re into are also able to be used for second suites down the road if they want to do that kind of thing. But let’s just assume that they’re going to stay as a student rental. The term is up. They’ve had they’ve held the mortgage for five years now. They think that the property has as appreciated. They haven’t really made any changes by renovating or anything like that. It’s just over time. They feel that the property is appreciated now they want to access that additional income. So that’s not what you were talking about there. You more talking about if you if you pay the mortgage down, you can then have access to those funds again. Yes, up to whatever the initial amount of the appraisal was. Yes. What if we want to get access to the new appraised value?

Dalia Barsoum [00:16:56] OK, so at that, so knowing if you’re going to invest in a student rental, we want to make sure that upfront we plan the portfolio so that when the time comes, we’re able to refinance that deal back with the lender who initially approved it for you. Because what typically happens is as you borrow your portfolio, you outgrow the guidelines of the lenders that you have worked with initially. So you go to property number six or number seven, but you have, let’s say, five student rental properties that we financed with a bank early on and you come and say, I want to pull equity. These properties have a lot of money in them. If you have outgrown the guidelines of the lender we initially worked with, then you would have less options to work with. But if we upfront say, you know what, let’s make sure that when we allocate your deals, we’re structure your portfolio in a way so that we preserve your borrowing power with that lender that has lent you on your student rentals, then that would leave your options open with these lenders later down the road to go back and do a full refinance. OK, that’s one way. The other way is there are lenders that will consider student rentals. If there is if everybody is on a master lease agreement versus, you know, some sub leases. OK, so it is it works better for financing if you have a master agreement with names versus, you know, room rentals as well. It gives you more options to do a full refinance.

Rob Break [00:18:27] So really, what you’re saying is when people want to get into real estate investing, they should have a good idea of what they want to do down the road and talk to somebody like yourself in order to set things up like this. Because really, mortgage like the rate, you know, the interest rate is not necessarily the most important thing, which a lot of people, that’s what they that’s what they drill down on. What interest rate can I get?

Dalia Barsoum [00:18:53] Yes, the interest rate is important to all of us, and we definitely want to make sure that your cost of borrowing stays reasonable given your strategy. But what’s most important for real estate investors, I find, is how they want to grow. We all want to recycle equity to grow a lot of us recycle as well. So it’s important to think ahead of time. How are you going to grow if you like if you take a five-year fixed rate? I just came across an investors, an investor that I met yesterday came to us and said, Daddy, I want to grow my real estate portfolio, but I just left with my bank on my four properties on a five-year fixed rates at two point seventy-nine. And unfortunately, we lucked with a bank. When I ran the numbers, they left with the bank that they cannot qualify further with to extract any money out of their properties, whether it’s a line of credit or a mortgage. So unless they break this big loan and go somewhere else, they can’t move forward. But that’s the rate mentality. They locked in because the bank sold them on a rate. And yes, the rate was great. But what’s your strategy as an investor? What do you want to do and how can we make sure that we structure things to allow you to do what you want to do? It’s really beyond just direct.

Sandy Mackay [00:20:12] Yeah, those are great points. Those are actually really, really important points because the amount of people I’m sure you come across a lot of daily are both wealthier that have locked into those types of scenarios. And they’re stuck right. They can’t move ahead. All it takes is a little upfront work, getting hacked with some of the right people, and that all can be solved upfront, right? So that’s one obviously a mistake there. What are some other common mistakes you see with people in the lending world?

Dalia Barsoum [00:20:40] So what I see? One common mistake is assumptions, assumptions. Clients sometimes make the wrong assumptions around what they qualify for from a financing standpoint. They know they make good income. They have great credit, and they say, OK, I’m getting a deal from my realtor. I’m going to crunch my numbers based on this amortization based on this down payment based on this rate. And then once the time comes for financing, if they haven’t planned it ahead of time, they may end up with different financing numbers and get surprised. So my it’s a very common mistake. Do not assume financing plan financing. When you plan financing, you will know not just what you qualify for on your next deal, but if you talk to an investor friendly broker, you’ll be able to map out what your financing game plan looks like for at least your next three to four deals, and you would know where your money’s coming from, what your rates are going to be, what your amortization is, what’s your exit strategy looks like. All of these things have to be covered before you actually go into a deal, and then it’s like, then you’re running, you’re already executing. It’s like a cookie-cutter. So assumptions is a big mistake. The other one is getting fixated on the rate, which is the second biggest mistake.

Sandy Mackay [00:22:05] Rob, any other mistakes you see from people commonly in that in that world are now the big ones for me, as there is the getting in that fixed, I come across a lot of people that that haven’t, you know, they have a few properties and they’re in, like you mentioned, got that fixed rate in there. People always ask what’s better, fixed or variable? I mean, I’m pretty much every time on the variable side, just because the flexibility,

Dalia Barsoum [00:22:28] you know, as I know, everybody is going to hate this answer. Yeah, it depends. Yeah, but if the answer is that, it depends on answer, but it truly depends. It depends on what your plan is as an investor. What’s your plan for the property? What’s your long-term plan? Are you going to rely on equity to grow? Are you going to flip this property? Are you going to sell this property? Are you going to renovate it and refinance it? That drives the type of rates. You know, we go into. The black and white answer is right now, as it currently stands, fixed rate is fantastic. It’s at this point you’re going to get a great fixed rate compared to going variable. But then you marry that with everything else and you put context around it. And it may not make sense for an investor, depending on what they do, what they’re doing. Mhm. So it really depends.

Rob Break [00:23:21] And maybe not a mistake, Sandy, but one of the things that I definitely see sometimes happen is, you know, you’ll get an unfavorable appraisal once you’ve done the once you’ve done the renovations and you want to have access to that new value, the money from the new value, the appraisal comes in and it’s completely unfavorable. What do you suggest people do when that happens?

Dalia Barsoum [00:23:48] OK, so for investors who are renovating a property, I always suggest that they put together a binder, OK, outlining what they’ve done to the property, how much they spend and get comparables through comparables from their realtor. Then we take that, pass it on to the appraiser and say, hey, here’s everything you need to help you with your homework to help you with your valuation. That’s one key thing we do on renovated properties. The other thing is knowing who’s going to go appraise your property. OK, it’s there are appraisers who know the local market really well, and there are appraisers as much as they’re putting in their best effort. They don’t know the local market as well. So real estate is a local market. Your realtor knows a local market, your appraiser knows the local market. Your broker should know the local markets and knowing the local market is key in determining what value is. So this is where we work with appraisers who know the local market really well, but also do our homework upfront by sending them this package that will help them support the best value.

Rob Break [00:25:02] Mm-Hmm. And you’ll tell them what you’re looking for. Well, what the investors looking for it is that, oh,

Dalia Barsoum [00:25:09] of course, yes. Of course we on every deal we would ask, we would convey to the appraiser what we’re looking for. Mm-Hmm.

Sandy Mackay [00:25:20] That’s the big one. So we do have some questions, I guess, Rob, from some of our listeners that have reached out wanted to know some things here. So Godfrey wanted to know what is the difference between A, B and C lenders? How did how do we determine the difference? Are people toss those terms around a lot and a lot of people may not know what that is. So what does that mean?

Dalia Barsoum [00:25:42] OK. I can. I can write a book on a B and C lenders, but I’ll give you this summary on these three categories. So what’s categorized as an AA lender is a lender that will give you the best financing terms generally on a property. OK, so that’s 24 if you’re doing if you’re buying rentals, 20 percent down 30-year amortization and a reasonable rate, OK? There are some lenders that will also do 25 down 30 year am also great rates, so it’s really a lenders are all around the rates. OK, and then there are variations when it comes to down payment from twenty to twenty-five. Don’t be lenders. Before I get into B lenders, actually, the lenders are also the lenders that work with good credit. So six, 50 and above. Now the B lenders are the lenders who will work with clients who have more. Creative types of scenarios, so self-employed clients who maybe may be making great money in their business, but they’re not paying themselves enough on the personal side. OK, that’s a client that would work with a B lender credit that may not necessarily be a 650 or a client that is over utilized in terms of leverage where the numbers are so, so, so tight, they are at their ceiling with another lender. We have to go to a lender. A B lender will work with these scenarios, but they’re at a cost. It’s not for free. So they charge a higher rate, generally one percent higher than a bank. OK. They also ask you in some areas to put in a higher down payment like twenty five percent down unless the property is in a major market, and they also charge what’s called a lender fee. They charge a one percent of the mortgage amount on closing in a lender fee. OK, so that’s B, and then C is really the private money. OK. Private money is easy to get. There is a lot of supply for private money right now. As an investor, we use private money for many, many reasons. It could be because of a shortage and down payment. It could be because you need money to renovate. It could be because your deal doesn’t fit with an eight or a B lender. And we have to go down private trout until we organize things and then take them back to either an A or a B private money. Most expensive, that’s the C money. What do you expect? You can expect interest rates on a first mortgage in the range of seven to nine, and you can expect interest rates on a second mortgage in the range of, I would say, 10 to 13, depending on how risky the deal is, is considered by the private lender. And of course, there are all sorts of fees. There is a broker fee and there is a lender fee. If you’re looking for a guesstimate, it’s about three percent of the loan amount. Private money is temporary money. You should use it as a steppingstone. You should not use it as a long-term financing capital. So these are the three buckets, obviously through a portfolio planning. What we try to do is we try to squeeze as much as we can for you as an investor out of Group eight. Before we go to B, from time to time, we have to tap into C to give you time to restructure certain things. And again, it’s just a temporary steppingstone.

Rob Break [00:29:12] Yeah, so wow, that’s great. So I’m sure that the people that are asking these questions are going to really like the answers because you’re going deep into them. I think more so than, you know, they can get just readily on the internet or something like that. We’ve got another one here from Darcy, and Darcy says can someone in their 60s still qualify for an investment property? It’s a good question.

Sandy Mackay [00:29:36] That is, yeah.

Dalia Barsoum [00:29:37] Yes, we have done several deals for clients above sixty-six. And it really boils down to what you qualify for, depending on how you’re earning your income. It’s not about the age, it’s about how you’re earning your income and where your deal fits. So if you’re getting a pension, can we use the pension? If you have properties with some rental income and you have a low pension, how can we maximize on the usage of that rental income to help you qualify? But yeah, absolutely. It’s not really age related.

Rob Break [00:30:11] OK, so there’s so there’s nothing really that would be taken into account as far as the age, like the amortization and they go, man Mike and this guy might not be around that long.

Dalia Barsoum [00:30:19] No, no, it’s that ization is amortization is driven really by the economic life of the property. OK. So if you have a property with an appraisal that comes in, it says this property has 20 years left. The lender is not going to give you a 30-year mortgage because the asset they’re securing the money against is going to live for 20 years, so they’re going to cut down the amortization.

Rob Break [00:30:41] Mm-Hmm. Does that happen?

Dalia Barsoum [00:30:43] We’ve seen it on tear down properties. It’s common on tear down properties. Or properties that require a lot of work.

Rob Break [00:30:54] OK. I haven’t I haven’t run across that myself, too, and so I’m just wondering like where what sort of the date is, is it the like? Is there a date where it’s built or is it more just the condition of the condition?

Dalia Barsoum [00:31:06] So if the appraiser goes in and the property requires a lot of work and you know, the structure is not as solid inside and outside is in bad shape, they may put an economic life below, you know, 30 years on that asset, and therefore the lender is not going to lend you alone. That extends beyond the life of the property.

Rob Break [00:31:29] OK. Darcy, so there’s your answer. You don’t have to supply a, you know, a life insurance policy or anything like that when you’re applying for a mortgage. That safe to say. OK. Well, the next one, Sandy.

Sandy Mackay [00:31:45] Yeah, so we’ve got Sonya here, wants to know what is the order that you see was the order you should utilize the lenders in order to be able to keep qualifying for financing.

Rob Break [00:32:00] That’s a loaded question. Yeah, right. Stomp on some banks there, I don’t know. But uh, is there a way? Is there a way that you can sort of answer that without and still be politically correct here, I guess?

Dalia Barsoum [00:32:13] Well, honestly, there is not a specific order. What we do is we say, OK, how can we get the best out of the first group before we go to the second group? And it’s all a numbers game. So I can tell you all. Here’s the order go knock on CIBC and Scotiabank TD and BMO, then go to a home trust and then go to equitable. But it doesn’t really mean anything because I don’t know what your numbers look like, so it’s really driven by your debts and income of where that first deal should go and where the next deal and the deal can go. Because what you don’t see the lending guidelines beneath the service as a client. OK, so even if you go knock on these doors, you don’t even know if you’re going to qualify with any of them. Yes, I can tell you which bank is offering the best financing terms today and give you a sequence, but it doesn’t mean it’s going to work that way. It’s really driven by your income and debt. And then once somebody reviews your file, they could say, OK, Sonya, your first deal should go here. Your second deal should go there. We got to make sure you do this so that your third deal goes here. That’s really the process. So. Unfortunately, there isn’t really a predetermined sequence that I can. List.

Rob Break [00:33:34] I want to stress the importance people who are listening to this to having someone on your team that understands how important this stuff is. So it’s not just it’s not just, hey, we can get six properties out a CIBC like there’s a lot of different things that go into deciding on how you should build your portfolio, how you should go forward. And there’s so many different variables that, you know, talk to somebody like Dolly and make sure you’re doing things right

Sandy Mackay [00:34:07] and they change a lot. I think change all the time, right? So some of that that’s on top of things and keep you be up to date.

Dalia Barsoum [00:34:13] The rules change all the time, and in regard to the CIBC points you mentioned, Rob. Yes, on the surface. CIBC has a great model when it comes to how they look at a portfolio. They use a lot of the rental income once you are beyond resort property, but there is fine print and the fine print is something called liquid networks, which not a lot of investors have. You know, on the first three properties, you need one hundred thousand. And as you grow your portfolio, you need an extra 10000. And a lot of investors would say, you know what? I’m not going to keep my money in a bank account sitting idle so I can qualify for a mortgage. A lot of investors are actively deploying their capital into deals. So on the surface, yes. Great model. But as an investor, do you have the liquid networks to be able to qualify with a lender like CIBC, where maybe going to a different lender that is slightly higher in rate that doesn’t require liquid net worth is where you should go. I’m just saying that these are the variations in lending rules that as an investor, you typically don’t see beyond the surface. But as a broker, we know the ins and outs of why things work, the way they work and what, you know, if they qualify where we send the deals.

Rob Break [00:35:30] Do you have different rules as a broker? If somebody comes to you and say they can’t qualify with somebody, know we’re just using CIBC right now. Yes, as an example, but say they can’t qualify with CIBC. Is there a chance that they might come to you, and you have different parameters that you are?

Dalia Barsoum [00:35:48] Absolutely. This happens all the time. All the time clients come to us, Rob, and they say I was talking to this credit union, or I was talking to this bank, and they said I maxed out. I need private money and I say, no, you don’t need private money. The fact that you did not qualify with the lender you’re speaking with means nothing. All it means is that based on their rules based on their box, your deal no longer fits their. It doesn’t mean that it doesn’t fit with anybody else. But it also there may be some opportunities for us to do things to help you qualify. Example can we pay down certain debts? Can we utilize some additional income, maybe from a job, even though that like a self-employment job, maybe that’s a source of income? So can we do anything with that, an income to help your deal qualify? So the fact that it doesn’t qualify with one lender doesn’t mean anything. Example we just had a client yesterday. Three deals was talking to RBC has been an RBC client for 30 years, nothing against RBC. But RBC told him There is no way it came to us. We qualified him to extract equity. 80 percent, 30 year. You know, Barnstable Mortgage, excellent, great. He was blown away.

Rob Break [00:37:12] Amazing.

Dalia Barsoum [00:37:14] I like. Don’t get discouraged. Don’t get this carriage. If you’re talking to one lender who says you maxed out, it’s only their view of the world. It doesn’t mean that there isn’t anything out there. There is always a solution. There is always a solution.

Rob Break [00:37:31] Well, Dahlia, I’ll get a little personal here. We do have one more listener question, but I’ll get to that in a minute. So the way that the way I work with you? OK, so the way that that came about was I had known of you for quite some time, but I got comfortable working with a different broker for, you know, off the bat and whatever. First time I heard of you was at the investor forum where you went all where one of your many awards. And then I think the next year you won the same award again. But a lot of people had told me, you don’t talk to Dalia. And the reason that I did was because at a certain point I went to my bank who I had financed with and they had switched over, so they no longer worked with brokers. Mm-Hmm. They had all their own agents who were who were who. Now you had to go to an agent at the bank and try to try to work things out with them. Well, I said, I want to refinance two of my properties, and they said, Nope, that’s not going to happen. And I said, Listen, I’m going to leave if you don’t help me out with this. And they said, Yeah, well, because we can’t, there’s nothing we can do. My hands are completely tied. I would love to help you, but I just can’t do it. You know, so, so and that’s how you and I hooked up and. And you know, it’s interesting how much I’ve learned just from working with you on and on the things that we’ve talked about today, just, you know, not necessarily the most important thing is the interest rates in that kind of thing. So. Mm-Hmm.

Dalia Barsoum [00:39:09] Thank you, Robert. Pleasure working with you as well. We learned a lot from you as well.

Rob Break [00:39:13] Oh, well, thank you. Last question from a listener here, Tara wants to know if there are certain things you can stay on top of to make a smoother qualification process.

Dalia Barsoum [00:39:31] Absolutely. So we’re big believers in planning financing, OK, as much as you can come to a broker with a deal and say I got an accepted offer. Figure it out, OK? And they can plug this deal into, you know, work with a lender to get you approved. That’s really not the best way to do it. Planning is key, Kiki. So what we have is something called an approval binder. OK. The approval binder is something we share with every investor that is planning to invest in real estate, whether they are starting out or whether they’re going to grow their portfolio. That approval, Binder states everything you need to prepare for as an investor from a financing standpoint and send it to your broker. This way you’ve got all of your ducks in a row. You’ve thought about everything. Your broker is organized and has pre-qualified you, hopefully for your next set of deals. That is very, very important to do. We do it with every client and as and some clients complain about the paperwork, OK, and they will complain about the everybody complains about the paperwork. Right. Right now, unfortunately, guys, OK, it’s needed. You’re going to deal with it sooner or later. So it’s better to deal with everything upfront. So you have a smooth ride. No surprises. Don’t figure out down payment in the midst of a deal. Don’t figure out you know where the money’s going to come from in the midst of a deal. Don’t figure out that you, you know you haven’t gotten your tax return in in the midst of a deal. Everything has to be dealt with upfront. And then again, it’s a cookie cutter. So that approval binder, in my view, is key for every investor.

Rob Break [00:41:15] So that would be something that you could contact them you they could contact you for and you could supply them right away.

Dalia Barsoum [00:41:21] Absolutely. If they email us at info at streetwise mortgages dot com and requested, we’d be happy to share a copy.

Rob Break [00:41:29] OK, thank you. I’m going to go back because I don’t think I got quite the answer I was looking for on the on the student rental refi. And so we had we had talked about how like, let’s just say the property value has increased over five years now and you want to go back and pull some of that equity out. Would they be able to do that with it being currently used as a student rental?

Dalia Barsoum [00:41:54] The answer is yes. OK? The question is where would it go? Because there is a group of lenders that lots to do rentals? And would give you 80 percent, 30 year and great rate, and that’s where I want to put the deal. OK, so. This is what I was referring to earlier. That’s to have a master lease agreement, not a room agreement, but also, it’s important to know. If you’re going to grow your portfolio beyond this, you know, beyond five rentals want to make sure that we line up a lot of equity from your student rentals before you cross that bridge, because once you cross the bridge into the sixth or seventh rental, you wouldn’t be able to easily work with. Some of these lenders will offer great terms on student rentals. So that’s what I was alluding to. It’s a refinance best to have a master lease agreement. But before you cross the bridge to the sixth or seventh rental? Want to make sure we line up a lot of equity in your student rental so that you don’t hit what we call a financing wall with these group of lenders that do sit around?

Rob Break [00:43:06] OK. And conversely, if someone was to, let’s say, the end of the term comes the students leave now it’s not a student rental, it’s just a single family

Dalia Barsoum [00:43:17] home, it’s a regular rental refinance. The universe of lenders, the universe of lenders available for student rentals is a smaller universe compared to the universe of French lenders that would rent on a just a regular rental. So can we get great terms, Austrian rentals absolutely can, we can we refinance and absolutely we just need to be proactive about how we go about the process because the group that finances them has guidelines around the number of properties a client owns. So you don’t want to really cross that bridge into the six or seven rental until you have lined up equity from your studio rentals. But if the students left and it’s a regular house. Yeah, no problem, we can finance it anywhere.

Rob Break [00:44:06] OK, now there’s a lot of mystery around this kind of stuff around the student rental, real estate financing and refinancing and all that stuff especially. So thank you for clearing some of it up. You’re welcome. Does a lot of years of them? There’s a lot of stuff to cover.

Sandy Mackay [00:44:25] Yeah, we’ve talked about a lot of I mean, we’ve talked about finance, you know, many different times and with mortgage people with mortgages, bills and people just like in the business of real estate. But there’s a lot of good stuff there. The advance of mortgages, I don’t know if we’ve ever talked about that.

Rob Break [00:44:40] We haven’t. So it’s great. Yeah. And up until recently, I think someone led me to believe that that wasn’t possible on, uh, on income properties. So all the time, right on

Sandy Mackay [00:44:58] in all the right people.

Rob Break [00:44:59] Yeah, and I think that, uh, if anyone has any questions, I’m sure Dahlia would certainly love to spend hours and hours answering them all. Or maybe a quick email might be better.

Sandy Mackay [00:45:13] Well, OK. People get in touch to the daily if they want to reach out and learn some more about this and hopefully do some business with you.

Dalia Barsoum [00:45:22] Well, we’re very reachable. Myself and my team include it, and clients can reach us in different ways. They can email us at inflects, streetwise mortgages, dot com, or they can go to our website streetwise mortgages, dot com and fill in the contact form. Or they can go to our website, and they’ll see all of our team phone numbers. They can call us directly or call on our one 800 number, which is also on our website. Either way, we’ll be happy to help, and we’ll get in touch with you.

Rob Break [00:45:53] So maybe. Thank you, Dahlia. So maybe as far as our contacts go on the on the website, we’ll just put your link to you. To your website.

Dalia Barsoum [00:46:07] Yes, we

Rob Break [00:46:08] start that again. You say maybe, maybe what we’ll do is we’ll just put your website on our contact space, on our website and that way. That’s probably the easiest way for people to get in touch with you. They can get all the different points of access from there. Yes. Great.

Dalia Barsoum [00:46:26] Well, keep it simple,

Rob Break [00:46:28] yeah, thank you so much for sharing all of this.

Dalia Barsoum [00:46:31] You’re welcome. My pleasure and I know there is a lot more to cover, but I try to focus on the key points. But happy to answer any further questions.

Rob Break [00:46:41] You know what we could probably have like a specialty podcast regarding certain different points that you know someone might encounter struggles with as far as financing goes, maybe we can do like a specialty episode with you sometimes.

Dalia Barsoum [00:46:56] Yeah, sure. That’s a great idea, because if you’re hearing certain things from your clients about financing and you want me to dive into these topics, we can do that. Mm-Hmm.

Rob Break [00:47:09] Great. Well, thanks again. Thanks for having patience with us and actually coming back time and again to try and get this done.

Dalia Barsoum [00:47:14] Yeah, no. No problem. I appreciate the opportunity, guys. Technical things happen all the time. No.

Sandy Mackay [00:47:20] So now lots of value here. That was awesome. Appreciate it.

Rob Break [00:47:25] Okay. How can people get in touch with you?

Sandy Mackay [00:47:29] at two eight nine three eight nine six eight four six or info at Mackay Realty Network AECOM.

Rob Break [00:47:35] And if anyone would like to get in touch with me, I’m still doing those property tours specializing in, uh, secondary suites and studio rentals in Peterborough, in Oshawa. So we’ve got that those markets locked down. So if anyone is interested in learning more about them coming out on one of the educational tours. Get in touch with me info at Breakthrough REI podcast. Any other questions, any guest recommendations, any anything you want to know, any comments you want to make? Uh, info at BreakthroughREI Podcast Dossier. Thanks everyone for listening. Have a great night!

Dalia Barsoum [00:48:12] Thank you very much. Now.

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