Help! I’m Maxed Out On My Personal Mortgage Capability!

By Dale Koeller

If you are finding that you are maxed out on your personal mortgage capability then congratulations are in order. If you have amassed sufficient real estate holdings to have hit every institutional lender’s upper limit for financing then you’ve done a tremendous amount right.

The first thing I’d suggest you do if you are in this group is ensure that indeed there is nothing more you can do to get more property and more mortgages in your name.  Have you gotten a second opinion from a mortgage broker who specializes in working with real estate investors?  Do you know the specific reason why you have reached the upper limit? Is it the same reason at all institutions?  Often times it can be due to debt servicing or income levels.  It can also be due to having properties in your portfolio that are underperforming and causing you to hit a limit that might otherwise grow if you restructured your portfolio, or sold some properties. Be sure to work closely with your mortgage broker and accountant to see if there are some solutions in the problems: very often the act of defining the problem can raise the solution. If you haven’t already got a mortgage broker, you might want to consider doing some research into the benefits of getting one. A lot of people find that mortgage brokers are extremely helpful, especially when dealing with most financial problems. Having some professional guidance can be beneficial.

If you’re still certain that you’ve reached the limit there are other options to investigate to profit in the real estate business. I’d encourage you to reflect on what your strengths and talents have been in building your real estate portfolio. Have you been good at finding a rental property that cash flows well, renovating it for maximized rents, suiting property to create new streams of income?  Often listing your strengths can help you discover a hidden business plan that might not rely on traditional financing.  

For instance, there are investors who excel at finding a property, renovating it for maximum cash flow, leasing it out to a great tenant and selling to other investors: this is a business plan that can be done with private mortgage financing.  Financing the property using the after repaired value is an added benefit in this strategy, meaning you won’t have to put a large down payment.  Once completed, you can sell to another investor to build their portfolio: if you find the right buyer, they may even become your joint venture partner and open up a whole new avenue of being a part of more revenue-generating real estate!

Financing property with non-traditional financing is an excellent tool if you’ve truly run out of room with the banks: your private lender will be focused on the strength of your knowledge, experience and business plan.  Your qualification criteria will be based on the property, and the value you can develop in it, both in terms of the renovations you invest in it, and the cash flow stream you can build into it.  Your private lender will know that your ability to be successful in the project will be based on how well you’ve built your plan, and your access to the funds to renovate it and carry it until you sell.

Your fellow investor colleagues in REIN will also help you be successful in this business plan because there are many who would gladly pay good money for a turnkey rental property they can begin getting cash flow from on the day they close their purchase. 

If you’ve hit your limit with conventional mortgages, inventory your strengths and partner with other investors or explore a new business plan with non-traditional lenders. All the best in your investments!

Dale Koeller is a real estate investor and private mortgage lender with Calvert Home Mortgage Investment Corporation based in Calgary. He’s helped hundreds of real estate investors profit in the real estate market helping them leverage wisely to build equity in flips, refinancing rental portfolios to assist in expanding them. Reach Dale at 888-752-4642 or Dale@chmic.ca.