Value Add CMHC MLI-Select Apartment Building Financing Strategy The Wisdom, Lifestyle, Money, Show podcast

Value Add CMHC MLI-Select Apartment Building Financing Strategy

22d ago 5:37

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In this episode, Scott is joined by Jennifer Champion and Christine Traynor to discuss value-add strategies for multi-family apartment buildings. The hosts share their active investing experience and explain how to force appreciation through strategic property improvements and rent optimization.

Key Timestamps: [0:00] Introduction to Value-Add Multi-Family Investing

Focus on forcing appreciation vs. just cashflow
Why controlling income and expenses matters in multifamily
Predictable refinance outcomes

[2:30] 💰 Forcing Appreciation Strategy

Raising rents to market value
Controllable income and expense factors
Difference from single-family appreciation methods

[4:15] 📊 Real World Case Study Example

$1.5 million purchase price
$200,000 renovation investment
$2.1 million stabilized value
75% LTV refinance at $1.57 million
Creating infinite returns with zero capital remaining

[7:00] 🏦 Understanding the Two-Loan Strategy

Bridge loan benefits (interest-only payments)
Takeout financing for long-term refinancing
CMHC standard and MOI select options
Higher loan-to-value possibilities

[9:30] 🌍 Market Selection Considerations

Landlord-friendly markets like Alberta
Challenges with rent-controlled markets
U.S. market opportunities for this strategy

Key Concepts Covered:

Value-Add Strategy Fundamentals:

Forcing appreciation through property improvements
Raising rents to market rates
Creating predictable refinance scenarios
Achieving infinite returns through strategic refinancing

Two-Loan Structure: Bridge Loan Phase:

Interest-only payments during stabilization
Lower carrying costs during renovation period
Short-term financing solution

Takeout Financing:

Long-term conventional or CMHC financing
5-year terms available
Access to created equity
Higher loan-to-value options

Investment Mathematics: Real Example Breakdown:

Initial investment: $1.5 million purchase + $200,000 renovations
Total invested: $1.7 million
Stabilized value: $2.1 million
Refinance proceeds: $1.57 million (75% LTV)
Capital recovered while maintaining ownership

Market Selection Criteria: Ideal Markets:

Landlord-friendly jurisdictions
Ability to raise rents to market rates
Limited rent control restrictions
Strong rental demand fundamentals

Challenging Markets:

Heavy rent control regulations
Limited ability to increase rents
Restrictive landlord-tenant laws

Strategic Advantages:

Tax efficiency (appreciation vs. taxable cashflow)
Predictable returns compared to single-family
Scalable strategy for portfolio growth

Important Considerations:

Calculate closing costs for both loan transactions
Factor in all fees and expenses
Ensure market fundamentals support strategy

Resources Mentioned:

Important Note: This strategy requires careful market analysis and proper financing structure. Investors should

Book A Strategy Call With An Expert On The Team

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Chapters

1. Introduction to the Show (00:00:00)

2. Today's Topic: Value Add for Multi-Family Apartments (00:00:25)

3. Meet the Guests: Jennifer and Christine (00:00:32)

4. The Importance of Forcing Appreciation (00:00:54)

5. Raising Rents to Market Value (00:01:13)

6. Case Study: Increasing Property Value (00:01:38)

7. Understanding Loan Types for Investments (00:02:47)

8. Bridge Loans and Takeout Financing (00:03:08)

9. Active Investment Strategies (00:03:56)

10. Conclusion and Next Week's Preview (00:05:05)

75 episodes