February 11, 2025 • 20 mins
Understanding real estate financing is essential for investors aiming to succeed, and Scott Dillingham breaks down critical insights to navigate the complexities of borrowing across borders. From differences in lending practices in Canada, the USA, and Mexico to innovative financing strategies, Scott shares how investors can adapt and thrive in varying markets.
• Scott shares his journey from investor to lending expert
• Discussion of lending differences between Canada, USA, and Mexico
• Advice for new investors on securing financing
• Importance of assembling a strong team for investment success
• Innovative financing strategies that can enhance property acquisitions
• Key considerations for diversifying investments internationally
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The bank.
They didn't understand me.
I had to sit there over theguy's shoulder and explain the
application to him while he'spunching it in.
Speaker 2 (00:12):
Welcome to the Five Questions Podcast, where we
unlock real estate and businessinsights, one question at a time
.
Welcome to the 5 QuestionsPodcast.
I am your host, mario Lamar,our guest on today's show.
(00:35):
He has been in the lendingbusiness for over 16 years.
He's helped thousands of realestate investors fund their
projects and he makes itpossible to have funding in
Canada, usa and Mexico.
Welcome, scott Dillingham.
Scott, welcome to the showtoday.
Speaker 1 (00:53):
Thank you so much.
I'm so excited to be here.
Thank you for having me, Mario.
This is great.
I love your show here.
I love what you're doing withthe cruises.
It's just so exciting.
Speaker 2 (01:02):
The concept, scott, of the podcast is I ask five
questions, either about realestate or business, and we get
straight to the point.
You ready, okay, ready, allright.
So my first question to you canyou start from the beginning
and can you share maybe yourstory on how you started in the
real estate lending industry 16years ago and maybe what sparked
(01:25):
your passion for assistinginvestors?
Speaker 1 (01:29):
Yeah, absolutely.
So I remember I just moved outwith my girlfriend at the time
and we had only dated for likethree months and I was just.
I was sitting there and I'mreading books and I'm learning
and I want to grow and develop.
I want to be this massive,amazing person and I learning
(01:50):
and everything right Personaldevelopment, business and
finance, just all this stuff.
And then I came across Rich Dad, poor Dad, and I loved it.
So then from there I signed upfor a couple of his courses.
So in Canada it's not run byRich Dad, poor Dad Enterprises
At the time it was TigrantLearning, okay.
(02:11):
So I joined their wholesalingclass and the rent-to-own class,
right, and so I started doingthat.
And then from the wholesalingclass I learned that you want to
find, like a JV partner and youwant to have them partner with
you and you find the property.
So I found a guy to do it andhe was going to qualify for the
(02:35):
financing and I just had to findthe properties.
So what happened was I foundthe property and he told me he's
like, buy it cash, right, wehave to be competitive and then
we'll move forward.
So I did that and then, as soonas I did that, he was gone.
Like what the heck?
Like, I just bought a propertycash and you're gone now.
(02:56):
So I was like well, you knowwhat this happened and this is
where I want to go.
So let's just, let's just dothis, let's figure out how to
get the financing and do it.
So that's what I did.
So I went to a bank and theyhelped me and we got it done and
it was great.
But then what started happeningis, after the first one, I
started to buy a few more andwhat I noticed was the bank.
(03:17):
They didn't understand me.
I had to sit there over theguy's shoulder and explain the
application to him while he'spunching it in.
So I was like this guy does notunderstand investors and if it
wasn't for myself, I probablywouldn't be getting these
approvals, because I wasliterally guiding him.
So I was like well, that's it.
I mean, this makes sense for meto enter this business, and
(03:41):
because I started off as aninvestor first and then got into
lending, it just continued.
So that was my niche, that'swho I like to work with as
investors and that's how I gotstarted.
Speaker 2 (03:50):
You know it's and I love your story because a lot of
people that are successful inwhat they do they start out of a
pain somewhere or somehow andthey have to solve that problem
and then you kind of went andgot your own solution.
So you understand real estateinvestors now and you can help
them.
So that's amazing.
That's an amazing story, thankyou.
(04:12):
That brings us to our secondquestion.
And you have your companycalled LendCity, and LendCity
operates in Canada, does lendingin the US and Mexico.
Maybe you can explain to ourviewers how do the lending
opportunities and challengesdiffer across the different
(04:32):
markets?
Speaker 1 (04:40):
Absolutely Great, great question.
So let's rank them from easiestto hardest, as far as lending
first, so the easiest is theStates, okayada would be second
and mexico would be third.
As far as how easy it is to getan approval, there's definitely
opportunities everywhere, evenin canada, and I know canadians
right, because this is where Ilive.
I know canadians arecomplaining about rent control
(05:01):
and tribunal delays and andthere's a bunch of things.
But there's still many marketswhere you can really do good and
have a strong, profitableportfolio.
So I don't want to discreditCanada in any way based on these
answers, but primarily, I'mseeing a ton of opportunity in
the States.
It's just, it's very landlordfriendly Right now.
(05:27):
I think investors are a littlebit held back, like we're
recording this.
You know middle of January,right?
So right now, the Canadiandollar against the US.
There's a big difference.
So I think that's holding somepeople back.
But I see a lot of cashflow inthe States, very landlord
friendly, but again same thingwith Canada.
So in the States, though, asbut again same thing with Canada
.
So in the states, though, asfar as qualification, why it's
easier?
(05:47):
It's just based on the cashflow of the property.
They look at the income to theexpenses.
If it covers itself, you'regood, you don't have to show
personal income or anything likethat.
Now in Canada, we do have asimilar product on the
commercial side of things.
Yeah, I know a lot of on thecommercial side of things.
Yeah, I know a lot of investorsare not aware of that.
(06:08):
So whenever they are introducedto us, this is a great avenue
that we have to help them out inCanada.
But traditionally in Canadait's income-based, right.
So eventually you get maxed outand they say, oh, you can't buy
anymore.
Either you have too many doorsor your debt-to-income ratios
anymore.
Either you have too many doorsor your debt to income ratios.
So we'll switch the investor tothe commercial route where it's
based on cashflow, instead ofgoing to like a B lender or
(06:30):
private lender, like a lot ofbrokers and lenders do.
So that's kind of our strategyand that helps save the investor
quite a bit of money.
And then Mexico there's tons ofopportunities there too, right.
Lots of development, justdifferent hot markets.
So we're seeing a lot of that'smore of a lifestyle purchase
(06:51):
we're seeing people make.
But they're renting out theproperties right, whether it's
Airbnb or whatever when they'renot using them, yeah, yeah.
The challenge with Mexico,though, is it's very much income
based.
The challenge with Mexico,though, is it's very much
income-based and also, none ofour lenders will even use rental
income to help you to qualify.
So when you're buying a rentalproperty there, they won't use
(07:13):
any rents, it's just your income.
So it's so much harder toqualify for based on that,
because you're kind of at ahandicap.
Now.
They will use your existingproperty's rental income, just
not the subject property.
Right, so bit challenging,right.
So people that want to buy inMexico, I say, right, show me
the money, show me your income.
But in Canada, right, we can gocommercial without showing
(07:35):
income in the US.
That's how it is everywhere.
Speaker 2 (07:37):
So it's pretty cool.
Seems to me like you havesolutions for people who want to
invest a little bit everywhere.
Speaker 1 (07:43):
That's the goal, that's our goal, and everyone on
our team has their own nicheand what they do, right.
We have people that specializein developing properties.
We have people that specializein multifamily student rentals
right Like flipping.
Speaker 2 (07:57):
It doesn't matter what it is, we have a team
member for that, and that's whatmakes it much more easier to
work with someone who has a team, like you said, who specializes
in different niches, becausenot everybody is the same.
So having a partner like you,like LandCity, makes it a very,
(08:18):
very positive and a plus to haveyou on their team to find
solutions.
Absolutely, but question numberthree If somebody is starting
in real estate investing, so ifthey're new, what advice would
you give them or would you giveabout securing financing for
their first rental property?
Speaker 1 (08:39):
Yeah, no, that's great.
So I mean one of the thingsthat I did personally.
Right, and this is Canadaspeaking but like this property,
I moved into it for a shortperiod of time and then I moved
out and I moved into another one, and so when you move into them
you can tap into 5% down.
(09:00):
Now you've got to stay therefor at least a year, but that's
kind of what I did to help meget started, because when I
first got started I didn't havethe capital right.
So that was kind of what led me, and then the properties
appreciate, then you canrefinance them Right, and then
it just kind of grows and growsand grows.
(09:20):
So for me, that's where Istarted.
But I think really the mostimportant thing is setting up
the proper team, and you know,mortgage lending is only one
part of the team.
I encourage an investor to geta property manager, even on
property one, and I encouragethem to have a game plan,
because a lot of new investorsthey get excited, right, the
concept of making money, passivemoney, right, they get excited
(09:43):
and it's really not that passivedepending on how you do things,
but I think that having theproperty manager is awesome.
I saw so many people quitinvesting because they tried to
do it themselves and they got areally bad tenant that ruined it
for them, where that problemcould have been avoided with the
proper team.
Right, and it'd still beinvesting today.
(10:03):
So I think it's the team andyour goals, like what your
property is, how many you wantto buy in a year, what property
type do you want to buy right,and just optimizing that before
you get going.
Speaker 2 (10:14):
You don't want to go gangbusters, you want to like
know what you want to buy, sothen you can plan for it
Establish your, your plan ofactions, establish your, your,
your vision, your goals, andthen and then go and ask for
some help uh from you.
Yeah, Question number four now.
Maybe with all the experiencethat you have now, what are some
(10:36):
innovative or maybe creativefinancing strategies you've seen
investors use that maybe othersmight not know about.
Speaker 1 (10:46):
Yeah, well, I mean definitely the um.
There there's many products.
I think in Canada is the uh,the commercial, so based on
cashflow.
A lot of people don't know that.
So, like when I worked at abank, I um first started on sort
of residential, but as you getgoing, you get to, you get to
(11:08):
learn stuff.
So I was discovering that I'mrunning these deals and they're
not working, but then thecommercial team is getting them
done and I'm like how is thispossible, right?
So that's actually where Ilearned about the cash flow
model.
And every lender has it, butthey don't talk about it and
every lender has their owncriteria and rules and
(11:30):
regulations, right.
So you've got to optimize that.
But but knowing that you canuse a cash flow model on a
duplex, like people don'trealize that they just think
that commercial means apartmentbuilding.
So I think in canada that'smassive, because anybody who's
been told they have too manyunits or their debt ratios are
too high, those problems aresolved when you go with
(11:50):
commercial.
The downside, right, is therates are pretty similar, but
there's fees to set it up,because in commercial, even the
people at the bank, they're paidon commissions and stuff.
So there's fees.
Right, you got to pay to play,but I think that's the massive
one, and then obviously, thatsame program in the States is
(12:10):
just phenomenal, um, but I thinkreally it comes down to the
proper plan for the investorbecause if you go, you can go.
Let me take a step back.
You can actually go and applyfor your mortgages in the wrong
order, and when I mean order, Imean like the lenders that you
go with are in the wrong orderand that can actually limit your
(12:32):
approvals.
A lot of people don't thinkthat.
They think I'll just go to mybank, they got me approved, I'm
good, but, um, and I won't namenames here, but let's just say a
bank with a green logo, rightthere they're going to want to
do five properties for you,right, and that's their max.
So five could be elsewhere orfive with them, it doesn't
(12:53):
matter.
Once you're at five, you'redone.
Now, this is residential side,of course, but there's a bank
with a red logo and they'll dofive, but they don't care how
many you own in total.
So if you go to the green bankfirst and then go to the red
bank second, now you've got upto 10 properties if you qualify
right.
But had you went to the redbank first, the green bank won't
(13:14):
be able to help you at all.
So now you're at five, do yousee what I mean?
Speaker 2 (13:18):
so I I love talking strategies like this with with a
specialist like you, because,see, even you just taught me
something right now that youstill can go to two a lenders,
but in different orders, andyou'll get different results.
Speaker 1 (13:32):
That is amazing.
Yeah, absolutely, and peopledon't know that either.
Right, it's just they just wantto get the deal approved and
quite often you know they'll tryto go for the who's the lowest
rate, and we do encourage that.
But at the same time it mightmake sense to take a little bite
and get that little bit higherof a rate so you can optimize
(13:53):
how many properties you can own.
Right Because residential ifyou can max out on that side
first, it's better.
Speaker 2 (13:59):
right Because you save those fees, and that's why
it's very important, like wesaid at the beginning of this
question, to explain your visionto the specialist.
So what's your plan?
Because you become one of theirpartners.
Right, you guys are going on ajourney together and, depending
on what the vision is, you mighttake different steps Absolutely
Well.
(14:19):
It brings us, scott, to ourlast and final question for
today If for investors lookingto diversify into international
real estate, like Mexico, likeUS, what are the key financing
consideration they should beaware of?
We talked a little bit about it, but is there any other things
you can give our viewers?
Speaker 1 (14:42):
Yeah, yeah, we'll dive a little deeper.
So in the States it'scompletely opposite from Canada,
in the sense that thepre-approvals are based on the
property first and the borrowersecond.
Right, because again, it'sbased on income, yeah.
So a lot of Canadians have ahard time wrapping their mind
around that.
Once they get it it becomesvery clear.
But they're used to providingincome documents showing credit
(15:05):
history, like all that stufffirst, and that's not the case.
So really, step one forpre-approval to get financing in
the States is let's look at theproperty, we'll run it through
all the lenders, we'll.
We'll show you what what ratesand loan to values the property
qualifies for, yeah, and then ifit works, then you move forward
.
So that's something I would sayto wrap your mind around that.
(15:28):
Also, I will say it's best tobuy in an entity in the States.
We can do personal name okay,but it's been very clear to me.
I'm not an accountant at all,but all my accountants that I
work with have told me that ifyou're buying in your personal
name as a Canadian, that youwill be double taxed from the
(15:50):
States and from Canada and againask your accountant for tax
advice.
But that's what they're tellingme.
So when it's in an entity theycan do what's called a flow
through.
So Canada recognizes the taxthat you paid in the States, so
you're not paying it twice,right?
So the entity protects you thatway and I know the banks are
(16:11):
big on trying to finance, like alot of the Canadian banks are
pushing and getting into the U?
S market, but they only allowpersonal name loans.
So it creates liability for theinvestor as well, because in
the States, as we know,everybody sues everybody, right.
Speaker 2 (16:28):
Oh yeah, it's a practice.
Speaker 1 (16:31):
So you want that liability protection.
So that's what I would say forthe States.
For Mexico, this is more of anawareness thing, but by being
aware of it you can help, youcan set it up properly.
But Mexico and I believe it'slike 50 miles inland from water
(16:53):
no foreigner is allowed to buy,okay, unless it's done through a
trust.
Okay, set up a trust and thelenders can help facilitate this
that we work with.
But you get your trust set upand then, because it's a Mexican
domiciled entity, now you'reallowed to buy waterfront
(17:13):
properties.
So that's kind of like it's alegal workaround, but it's
important because you want toset up the trust the correct way
, so you're having also the mosttax advantage strategies.
So, speaking to an accountantand knowing that that's a
possibility, that's that's there.
(17:33):
I would say with with Mexico aswell, I would consider and have
a Canadian or even American forthat matter, because we can
still the lending still forAmericans, but I would have them
review their equity inproperties they have here,
because the rates in Mexicocurrently are the equivalent to
private lending rates in Canada.
(17:55):
Okay, so it's higher, but it'sbecause it's Mexican money and
there's not as many banks inMexico.
It's not as liquid, so it has ahigher interest rate.
But we're dealing direct withthose lenders, so it's you know,
if there was somebody fromMexico applying for their own
loan, you're actually gettingthe same rate.
But we're dealing direct withthose lenders, so it's you know,
if there was somebody fromMexico applying for their own
loan, you're actually gettingthe same rate from Canada.
So there's no, there's nopenalty.
(18:16):
It's literally the same.
But if you have equity here,it's going to be cheaper for you
than accessing it there.
However, tapping into equitythere like I don't think you
should own properties free andclear there or in the States for
that matter because it doesn'tallow you to scale it's debt
equity if it's just sittingthere.
Speaker 2 (18:33):
Scott, it was a pleasure talking to you today.
Great insights from somebodystarting into real estate, out
to get their first financing.
You helped us understand how itworks a little bit in Canada
versus us versus Mexico and uhstrategies that we can use.
(18:54):
So thank you so much.
I hope that our viewers willtake a piece of your knowledge
and bring them on their journey,and we are going to put your
links also in the description.
If anybody wants to work withland cityity, maybe you can give
them the website or how theycan reach you very easily.
Speaker 1 (19:13):
Absolutely yeah.
So it's just LendCityca is ourglobal website, and then my
direct cell is 226-348-7884.
Speaker 2 (19:26):
There you go, guys.
Now don't call Scott for adinner a Saturday night dinner,
he's pretty busy but if you needhelp with your lending, call
Scott, he's your man.
Thank you once again and we'lltalk very soon.
Thank you so much, mario, takecare.
Thanks for tuning into the 5Questions Podcast.
If you enjoyed today's episode,don't forget to subscribe, like
(19:46):
and hit the notification bellon our YouTube channel so you
never miss an episode.
Stay tuned for more insightsand tips to transform your real
estate and business game.
See you next time.
The bank.
They didn't understand me.
I had to sit there over theguy's shoulder and explain the
application to him while he'spunching it in.
Speaker 2 (00:12):
Welcome to the Five Questions Podcast, where we
unlock real estate and businessinsights, one question at a time
.
Welcome to the 5 QuestionsPodcast.
I am your host, mario Lamar,our guest on today's show.
(00:35):
He has been in the lendingbusiness for over 16 years.
He's helped thousands of realestate investors fund their
projects and he makes itpossible to have funding in
Canada, usa and Mexico.
Welcome, scott Dillingham.
Scott, welcome to the showtoday.
Speaker 1 (00:53):
Thank you so much.
I'm so excited to be here.
Thank you for having me, Mario.
This is great.
I love your show here.
I love what you're doing withthe cruises.
It's just so exciting.
Speaker 2 (01:02):
The concept, scott, of the podcast is I ask five
questions, either about realestate or business, and we get
straight to the point.
You ready, okay, ready, allright.
So my first question to you canyou start from the beginning
and can you share maybe yourstory on how you started in the
real estate lending industry 16years ago and maybe what sparked
(01:25):
your passion for assistinginvestors?
Speaker 1 (01:29):
Yeah, absolutely.
So I remember I just moved outwith my girlfriend at the time
and we had only dated for likethree months and I was just.
I was sitting there and I'mreading books and I'm learning
and I want to grow and develop.
I want to be this massive,amazing person and I learning
(01:50):
and everything right Personaldevelopment, business and
finance, just all this stuff.
And then I came across Rich Dad, poor Dad, and I loved it.
So then from there I signed upfor a couple of his courses.
So in Canada it's not run byRich Dad, poor Dad Enterprises
At the time it was TigrantLearning, okay.
(02:11):
So I joined their wholesalingclass and the rent-to-own class,
right, and so I started doingthat.
And then from the wholesalingclass I learned that you want to
find, like a JV partner and youwant to have them partner with
you and you find the property.
So I found a guy to do it andhe was going to qualify for the
(02:35):
financing and I just had to findthe properties.
So what happened was I foundthe property and he told me he's
like, buy it cash, right, wehave to be competitive and then
we'll move forward.
So I did that and then, as soonas I did that, he was gone.
Like what the heck?
Like, I just bought a propertycash and you're gone now.
(02:56):
So I was like well, you knowwhat this happened and this is
where I want to go.
So let's just, let's just dothis, let's figure out how to
get the financing and do it.
So that's what I did.
So I went to a bank and theyhelped me and we got it done and
it was great.
But then what started happeningis, after the first one, I
started to buy a few more andwhat I noticed was the bank.
(03:17):
They didn't understand me.
I had to sit there over theguy's shoulder and explain the
application to him while he'spunching it in.
So I was like this guy does notunderstand investors and if it
wasn't for myself, I probablywouldn't be getting these
approvals, because I wasliterally guiding him.
So I was like well, that's it.
I mean, this makes sense for meto enter this business, and
(03:41):
because I started off as aninvestor first and then got into
lending, it just continued.
So that was my niche, that'swho I like to work with as
investors and that's how I gotstarted.
Speaker 2 (03:50):
You know it's and I love your story because a lot of
people that are successful inwhat they do they start out of a
pain somewhere or somehow andthey have to solve that problem
and then you kind of went andgot your own solution.
So you understand real estateinvestors now and you can help
them.
So that's amazing.
That's an amazing story, thankyou.
(04:12):
That brings us to our secondquestion.
And you have your companycalled LendCity, and LendCity
operates in Canada, does lendingin the US and Mexico.
Maybe you can explain to ourviewers how do the lending
opportunities and challengesdiffer across the different
(04:32):
markets?
Speaker 1 (04:40):
Absolutely Great, great question.
So let's rank them from easiestto hardest, as far as lending
first, so the easiest is theStates, okayada would be second
and mexico would be third.
As far as how easy it is to getan approval, there's definitely
opportunities everywhere, evenin canada, and I know canadians
right, because this is where Ilive.
I know canadians arecomplaining about rent control
(05:01):
and tribunal delays and andthere's a bunch of things.
But there's still many marketswhere you can really do good and
have a strong, profitableportfolio.
So I don't want to discreditCanada in any way based on these
answers, but primarily, I'mseeing a ton of opportunity in
the States.
It's just, it's very landlordfriendly Right now.
(05:27):
I think investors are a littlebit held back, like we're
recording this.
You know middle of January,right?
So right now, the Canadiandollar against the US.
There's a big difference.
So I think that's holding somepeople back.
But I see a lot of cashflow inthe States, very landlord
friendly, but again same thingwith Canada.
So in the States, though, asbut again same thing with Canada
.
So in the states, though, asfar as qualification, why it's
easier?
(05:47):
It's just based on the cashflow of the property.
They look at the income to theexpenses.
If it covers itself, you'regood, you don't have to show
personal income or anything likethat.
Now in Canada, we do have asimilar product on the
commercial side of things.
Yeah, I know a lot of on thecommercial side of things.
Yeah, I know a lot of investorsare not aware of that.
(06:08):
So whenever they are introducedto us, this is a great avenue
that we have to help them out inCanada.
But traditionally in Canadait's income-based, right.
So eventually you get maxed outand they say, oh, you can't buy
anymore.
Either you have too many doorsor your debt-to-income ratios
anymore.
Either you have too many doorsor your debt to income ratios.
So we'll switch the investor tothe commercial route where it's
based on cashflow, instead ofgoing to like a B lender or
(06:30):
private lender, like a lot ofbrokers and lenders do.
So that's kind of our strategyand that helps save the investor
quite a bit of money.
And then Mexico there's tons ofopportunities there too, right.
Lots of development, justdifferent hot markets.
So we're seeing a lot of that'smore of a lifestyle purchase
(06:51):
we're seeing people make.
But they're renting out theproperties right, whether it's
Airbnb or whatever when they'renot using them, yeah, yeah.
The challenge with Mexico,though, is it's very much income
based.
The challenge with Mexico,though, is it's very much
income-based and also, none ofour lenders will even use rental
income to help you to qualify.
So when you're buying a rentalproperty there, they won't use
(07:13):
any rents, it's just your income.
So it's so much harder toqualify for based on that,
because you're kind of at ahandicap.
Now.
They will use your existingproperty's rental income, just
not the subject property.
Right, so bit challenging,right.
So people that want to buy inMexico, I say, right, show me
the money, show me your income.
But in Canada, right, we can gocommercial without showing
(07:35):
income in the US.
That's how it is everywhere.
Speaker 2 (07:37):
So it's pretty cool.
Seems to me like you havesolutions for people who want to
invest a little bit everywhere.
Speaker 1 (07:43):
That's the goal, that's our goal, and everyone on
our team has their own nicheand what they do, right.
We have people that specializein developing properties.
We have people that specializein multifamily student rentals
right Like flipping.
Speaker 2 (07:57):
It doesn't matter what it is, we have a team
member for that, and that's whatmakes it much more easier to
work with someone who has a team, like you said, who specializes
in different niches, becausenot everybody is the same.
So having a partner like you,like LandCity, makes it a very,
(08:18):
very positive and a plus to haveyou on their team to find
solutions.
Absolutely, but question numberthree If somebody is starting
in real estate investing, so ifthey're new, what advice would
you give them or would you giveabout securing financing for
their first rental property?
Speaker 1 (08:39):
Yeah, no, that's great.
So I mean one of the thingsthat I did personally.
Right, and this is Canadaspeaking but like this property,
I moved into it for a shortperiod of time and then I moved
out and I moved into another one, and so when you move into them
you can tap into 5% down.
(09:00):
Now you've got to stay therefor at least a year, but that's
kind of what I did to help meget started, because when I
first got started I didn't havethe capital right.
So that was kind of what led me, and then the properties
appreciate, then you canrefinance them Right, and then
it just kind of grows and growsand grows.
(09:20):
So for me, that's where Istarted.
But I think really the mostimportant thing is setting up
the proper team, and you know,mortgage lending is only one
part of the team.
I encourage an investor to geta property manager, even on
property one, and I encouragethem to have a game plan,
because a lot of new investorsthey get excited, right, the
concept of making money, passivemoney, right, they get excited
(09:43):
and it's really not that passivedepending on how you do things,
but I think that having theproperty manager is awesome.
I saw so many people quitinvesting because they tried to
do it themselves and they got areally bad tenant that ruined it
for them, where that problemcould have been avoided with the
proper team.
Right, and it'd still beinvesting today.
(10:03):
So I think it's the team andyour goals, like what your
property is, how many you wantto buy in a year, what property
type do you want to buy right,and just optimizing that before
you get going.
Speaker 2 (10:14):
You don't want to go gangbusters, you want to like
know what you want to buy, sothen you can plan for it
Establish your, your plan ofactions, establish your, your,
your vision, your goals, andthen and then go and ask for
some help uh from you.
Yeah, Question number four now.
Maybe with all the experiencethat you have now, what are some
(10:36):
innovative or maybe creativefinancing strategies you've seen
investors use that maybe othersmight not know about.
Speaker 1 (10:46):
Yeah, well, I mean definitely the um.
There there's many products.
I think in Canada is the uh,the commercial, so based on
cashflow.
A lot of people don't know that.
So, like when I worked at abank, I um first started on sort
of residential, but as you getgoing, you get to, you get to
(11:08):
learn stuff.
So I was discovering that I'mrunning these deals and they're
not working, but then thecommercial team is getting them
done and I'm like how is thispossible, right?
So that's actually where Ilearned about the cash flow
model.
And every lender has it, butthey don't talk about it and
every lender has their owncriteria and rules and
(11:30):
regulations, right.
So you've got to optimize that.
But but knowing that you canuse a cash flow model on a
duplex, like people don'trealize that they just think
that commercial means apartmentbuilding.
So I think in canada that'smassive, because anybody who's
been told they have too manyunits or their debt ratios are
too high, those problems aresolved when you go with
(11:50):
commercial.
The downside, right, is therates are pretty similar, but
there's fees to set it up,because in commercial, even the
people at the bank, they're paidon commissions and stuff.
So there's fees.
Right, you got to pay to play,but I think that's the massive
one, and then obviously, thatsame program in the States is
(12:10):
just phenomenal, um, but I thinkreally it comes down to the
proper plan for the investorbecause if you go, you can go.
Let me take a step back.
You can actually go and applyfor your mortgages in the wrong
order, and when I mean order, Imean like the lenders that you
go with are in the wrong orderand that can actually limit your
(12:32):
approvals.
A lot of people don't thinkthat.
They think I'll just go to mybank, they got me approved, I'm
good, but, um, and I won't namenames here, but let's just say a
bank with a green logo, rightthere they're going to want to
do five properties for you,right, and that's their max.
So five could be elsewhere orfive with them, it doesn't
(12:53):
matter.
Once you're at five, you'redone.
Now, this is residential side,of course, but there's a bank
with a red logo and they'll dofive, but they don't care how
many you own in total.
So if you go to the green bankfirst and then go to the red
bank second, now you've got upto 10 properties if you qualify
right.
But had you went to the redbank first, the green bank won't
(13:14):
be able to help you at all.
So now you're at five, do yousee what I mean?
Speaker 2 (13:18):
so I I love talking strategies like this with with a
specialist like you, because,see, even you just taught me
something right now that youstill can go to two a lenders,
but in different orders, andyou'll get different results.
Speaker 1 (13:32):
That is amazing.
Yeah, absolutely, and peopledon't know that either.
Right, it's just they just wantto get the deal approved and
quite often you know they'll tryto go for the who's the lowest
rate, and we do encourage that.
But at the same time it mightmake sense to take a little bite
and get that little bit higherof a rate so you can optimize
(13:53):
how many properties you can own.
Right Because residential ifyou can max out on that side
first, it's better.
Speaker 2 (13:59):
right Because you save those fees, and that's why
it's very important, like wesaid at the beginning of this
question, to explain your visionto the specialist.
So what's your plan?
Because you become one of theirpartners.
Right, you guys are going on ajourney together and, depending
on what the vision is, you mighttake different steps Absolutely
Well.
(14:19):
It brings us, scott, to ourlast and final question for
today If for investors lookingto diversify into international
real estate, like Mexico, likeUS, what are the key financing
consideration they should beaware of?
We talked a little bit about it, but is there any other things
you can give our viewers?
Speaker 1 (14:42):
Yeah, yeah, we'll dive a little deeper.
So in the States it'scompletely opposite from Canada,
in the sense that thepre-approvals are based on the
property first and the borrowersecond.
Right, because again, it'sbased on income, yeah.
So a lot of Canadians have ahard time wrapping their mind
around that.
Once they get it it becomesvery clear.
But they're used to providingincome documents showing credit
(15:05):
history, like all that stufffirst, and that's not the case.
So really, step one forpre-approval to get financing in
the States is let's look at theproperty, we'll run it through
all the lenders, we'll.
We'll show you what what ratesand loan to values the property
qualifies for, yeah, and then ifit works, then you move forward
.
So that's something I would sayto wrap your mind around that.
(15:28):
Also, I will say it's best tobuy in an entity in the States.
We can do personal name okay,but it's been very clear to me.
I'm not an accountant at all,but all my accountants that I
work with have told me that ifyou're buying in your personal
name as a Canadian, that youwill be double taxed from the
(15:50):
States and from Canada and againask your accountant for tax
advice.
But that's what they're tellingme.
So when it's in an entity theycan do what's called a flow
through.
So Canada recognizes the taxthat you paid in the States, so
you're not paying it twice,right?
So the entity protects you thatway and I know the banks are
(16:11):
big on trying to finance, like alot of the Canadian banks are
pushing and getting into the U?
S market, but they only allowpersonal name loans.
So it creates liability for theinvestor as well, because in
the States, as we know,everybody sues everybody, right.
Speaker 2 (16:28):
Oh yeah, it's a practice.
Speaker 1 (16:31):
So you want that liability protection.
So that's what I would say forthe States.
For Mexico, this is more of anawareness thing, but by being
aware of it you can help, youcan set it up properly.
But Mexico and I believe it'slike 50 miles inland from water
(16:53):
no foreigner is allowed to buy,okay, unless it's done through a
trust.
Okay, set up a trust and thelenders can help facilitate this
that we work with.
But you get your trust set upand then, because it's a Mexican
domiciled entity, now you'reallowed to buy waterfront
(17:13):
properties.
So that's kind of like it's alegal workaround, but it's
important because you want toset up the trust the correct way
, so you're having also the mosttax advantage strategies.
So, speaking to an accountantand knowing that that's a
possibility, that's that's there.
(17:33):
I would say with with Mexico aswell, I would consider and have
a Canadian or even American forthat matter, because we can
still the lending still forAmericans, but I would have them
review their equity inproperties they have here,
because the rates in Mexicocurrently are the equivalent to
private lending rates in Canada.
(17:55):
Okay, so it's higher, but it'sbecause it's Mexican money and
there's not as many banks inMexico.
It's not as liquid, so it has ahigher interest rate.
But we're dealing direct withthose lenders, so it's you know,
if there was somebody fromMexico applying for their own
loan, you're actually gettingthe same rate.
But we're dealing direct withthose lenders, so it's you know,
if there was somebody fromMexico applying for their own
loan, you're actually gettingthe same rate from Canada.
So there's no, there's nopenalty.
(18:16):
It's literally the same.
But if you have equity here,it's going to be cheaper for you
than accessing it there.
However, tapping into equitythere like I don't think you
should own properties free andclear there or in the States for
that matter because it doesn'tallow you to scale it's debt
equity if it's just sittingthere.
Speaker 2 (18:33):
Scott, it was a pleasure talking to you today.
Great insights from somebodystarting into real estate, out
to get their first financing.
You helped us understand how itworks a little bit in Canada
versus us versus Mexico and uhstrategies that we can use.
(18:54):
So thank you so much.
I hope that our viewers willtake a piece of your knowledge
and bring them on their journey,and we are going to put your
links also in the description.
If anybody wants to work withland cityity, maybe you can give
them the website or how theycan reach you very easily.
Speaker 1 (19:13):
Absolutely yeah.
So it's just LendCityca is ourglobal website, and then my
direct cell is 226-348-7884.
Speaker 2 (19:26):
There you go, guys.
Now don't call Scott for adinner a Saturday night dinner,
he's pretty busy but if you needhelp with your lending, call
Scott, he's your man.
Thank you once again and we'lltalk very soon.
Thank you so much, mario, takecare.
Thanks for tuning into the 5Questions Podcast.
If you enjoyed today's episode,don't forget to subscribe, like
(19:46):
and hit the notification bellon our YouTube channel so you
never miss an episode.
Stay tuned for more insightsand tips to transform your real
estate and business game.
See you next time.
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