We bought a turnkey legal secondary suite home on Hamilton market last week.

It was one of the easiest purchases we have done. 

  1. What kind of investment strategy should I be buying?

I’ve only invested in single family home, legal secondary suites and student rentals.

We believe in cash flowing properties, just to mitigate our risk.  

We don’t want to generate negative cash flow when we don’t have to, especially with our real estate investment.

This is why we opted for legal secondary suites and student rentals most of the time.


A turnkey legal secondary suite home in Hamilton is around $850K. 

With this type of pricing, it’s almost impossible to get cash flow, unless we get top of market rent.

One thing we look at is the cash flow of our overall portfolio. 

We don’t want to purchase a property that requires us to put money in, but… as long as my other properties are generating sufficient cash flow to cover this new property, that is sufficient for me to make the purchase decision.

Many of my clients purchased negative cash flow properties and had great success with them.

As long as you have planned ahead and know where you could pull money from to supplement the investment, who says you can’t make money with negative cash flowing properties?

  1. Which city should I purchase in?

Many of my investor clients are buying properties in multiple cities.  Some even go as far as buying out of province properties.

I personally like to restrict my investment to an area that I already have a team built, such as the handyman, the roofer, the plumber, the HVAC guy, the cleaners, the property manager, etc.

We want to simplify our lives, not to complicate our lives.   Hence, we continue to purchase in Hamilton.  😊

The key is to understand your own investment objective. 

If you want a cash flowing property and the only place you can get it is New Brunswick, by all means, go for it. 

It just means that you will have to rely on your local team more and manage your properties remotely.

The flights and hotels costs incurred to manage your properties are deductible by the way.  😉

  1. Which lender should I work with?

I opted to work with a B-lender this time around.

I didn’t even try an A-lender.  I already knew that I had the best chance with a B-lender if I want a mortgage at 80% loan to value.

Yes, I am paying 3.99% interest rate and I’m okay with it.

You might prefer to work with an A-lender (and typically I prefer to work with A-lender with lower interest rate).  Quite frankly, who doesn’t?

But rate isn’t everything.

The amount of down payment required comes into play as well.

Some real estate investors often want to pay themselves “more” salary just so that they can qualify for more mortgages in the future.

With more salary reported, you will have to pay more personal taxes.

Personal taxes aren’t deductible for tax purpose.

But, higher mortgage rate with B-lenders is 100% deductible assuming your property is used for investment purpose.

Something to think about before you make your next purchase.

  1. Who should own my property?

I bought this property in my corporation, using my small business income to fund the purchase.

I qualify for the mortgage directly in the corporation as well.  Because I own the property in the corporation, I’m required to pay an additional 0.25% interest.

But… I’m using my high after-tax small business income to invest.  I’m okay that the bank is charging me slightly higher interest rate.

Everyone’s situation is different, be sure to consult someone that understand your situation before purchasing a property.

A client purchased a pre-construction condo in his personal name years ago.  Now, he wants to setup a corporation and closes in the corporation.

This simple transfer can trigger potential capital gain tax, land transfer tax, and even HST. 

When plans weren’t done right from the beginning, this can pose significant tax impact. 

Be sure to consult with someone at the time of purchase so you can setup the right structure from the get-go.

Until next time, happy Canadian Real Estate Investing.

Cherry Chan, CPA, CA

Your Real Estate Accountant

P.S. I recently started a TFSA video series on my Youtube channel.  If you’re interested in learning more about how to use your TFSA more efficiently, make sure you subscribe to our Youtube channel.

P.P.S.  I’m also going to do a live demo showing everyone how I earn extra income in my TFSA and RRSP account using stock options.  If you’re interested, make sure you sign up for the free demo on August 19. 

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