Podcast Summary
Build, rent, refinance, and repeat strategy: Canadian investor Natalie Cloutier builds properties, rents them out, refinances, and repeats for a successful rental property portfolio in the active Canadian market
Natalie Cloutier, a French Canadian investor, shares her unique approach to real estate investing through her strategy called BRRR 2.0 or build, rent, refinance, and repeat. This strategy involves building properties from the ground up, holding them long term, and refinancing to repeat the process. The Canadian housing market, where Natalie operates, has seen an increase in inventory due to rising interest rates, but the market is still active with buyers looking for well-priced homes. Unlike the US, 30-year fixed mortgages do not exist in Canada. Despite the current market conditions, Natalie finds success in new construction and building a robust rental property portfolio. Her strategy offers an accessible and potentially profitable alternative to traditional real estate investing methods.
BRRRR 2.0 Strategy in Canadian Real Estate: Investing in new construction through the BRRRR 2.0 strategy allows for more control, simpler deals, and profitability in the Canadian real estate market despite challenges like higher costs, limited inventory, and strict regulations.
Despite the challenges in the Canadian real estate market, including higher housing costs, limited inventory, and strict regulations, the BRRRR 2.0 strategy can still lead to a successful real estate investment portfolio. This strategy, which focuses on new construction, allows investors to have more control over the design, budget, and value creation of their properties. Additionally, creating deals with new construction can be more straightforward than finding properties with enough equity for renovations in markets with strict rental laws. Overall, while the Canadian market presents unique challenges, the BRRRR 2.0 strategy offers a way to overcome them and build a profitable real estate business.
New Construction Investing: Unique Opportunities and Challenges: New construction investing offers potential for high rewards but comes with added risks and challenges. Creative financing methods, reliable lead services, and investing in a private real estate fund can help mitigate risks and maximize profits.
Investing in new construction can offer unique opportunities for creating profitable deals, but it also comes with additional risks and challenges. Traditional financing can be harder to obtain due to the intangible nature of vacant land, but it's not impossible. Natalie, the speaker, has found success through house hacking and other creative financing methods. Another way to mitigate risk is by using services like DealMachine to access reliable and comprehensive contact information for potential leads. Additionally, some companies like Rent to Retirement offer no or low money down options for purchasing new construction rental properties. Lastly, investing in a private real estate fund like PPR Capital Management can provide passive income with the added benefit of an experienced team managing the properties. Overall, while new construction investing may come with more risks, it also offers the potential for high rewards and flexibility.
Communicating effectively with municipalities for real estate projects: Effective communication, building strong relationships, thorough due diligence, hiring a competent team, budgeting for upfront costs, and obtaining accurate appraisals are crucial for successful real estate projects and a solid reputation within the industry.
Effective communication and building strong relationships with municipalities are crucial for real estate investors looking to obtain approvals for their projects. This involves being upfront about plans, seeking their opinions, and maintaining an open and honest dialogue. Furthermore, thorough due diligence and hiring a competent team are essential to ensure a successful project. Regarding the financial aspect, it's important to budget for upfront costs such as permitting fees, surveys, and utility connections. Obtaining accurate appraisals and estimates before submitting for appraisals can help provide a clear picture of costs and potential returns. Remember, the time and effort invested in these processes can ultimately lead to a successful project and a solid reputation within the industry.
Understanding financing options for new construction projects: Consider private lenders or lines of credit for upfront expenses, allowing you to secure traditional financing later.
When considering a new construction project, it's essential to understand the financing options and their requirements. Traditional lenders typically finance 80% of the cost approach, meaning you'll need to cover the remaining expenses upfront. If your cost estimates exceed this limit, you may need to redesign or reassess the project. Private lenders or lines of credit can help cover upfront expenses before securing a loan, allowing you to pay back the funds when you refinance or receive your loan proceeds. This strategy can be particularly useful when dealing with lengthy traditional financing processes or excessive bureaucracy. Natalie, who has extensive experience in new construction, shared her journey in real estate, starting with buying a basement unit condo and later transitioning to new construction projects due to unsatisfactory living conditions in a condo. She emphasized the importance of exploring various financing options and being prepared for potential upfront expenses.
Turning a stressful situation into an opportunity through real estate investing: Keep it simple, efficient, and within budget when building a rental property to save costs and still make it look nice.
Building a new house or investing in real estate can be an affordable venture with careful planning and execution. Natalie shared her experience of turning a stressful situation into an opportunity by building a rental property and later realizing it was real estate investing. She advised keeping the design and structure simple to save costs, and suggested being the project manager to save on hiring a professional. Building a rental property doesn't mean sacrificing aesthetics; it's all about using textures and keeping it new to make it look nice. Remember, the key is to keep it simple, efficient, and within budget.
Creating beautiful and functional affordable housing: Through intelligent designs and cost-effective construction, affordable housing can be both beautiful and functional. Communication with designers is essential, and about half of land is purchased through MLS, requiring effective due diligence and negotiation.
Affordable housing does not have to be ugly or cheap. The use of intelligent designs and cost-effective construction systems can result in beautiful and functional rental properties. Communication with designers is crucial to ensure that their ideas align with the practical needs of a rental property. About half of the land for their projects is purchased through the Multiple Listing Service (MLS), while the other half comes from their network. Effective due diligence and negotiation are essential when buying land through MLS, especially during market fluctuations. Staying informed and adaptable to market changes, such as the increase in developer activity during the COVID-19 pandemic, is also important for securing solid land deals.
Partnering with successful companies for smart investments: BAM Capital's track record of high returns and capital preservation makes them a trusted investment partner. Ebay Motors offers a wide range of car parts for enthusiasts. Redfin simplifies real estate transactions, and First American Exchange Company facilitates tax strategies for rental property investors.
When it comes to making smart investments, partnering with a trusted and successful company can make all the difference. BAM Capital, with their impressive track record of delivering high returns and capital preservation, is an excellent example. Meanwhile, for car enthusiasts, Ebay Motors offers a wide range of parts to keep their rides running smoothly, while Redfin's real estate platform helps buyers and sellers navigate the process with ease. And for those looking to grow their rental property portfolio, understanding tax strategies like 1031 exchanges, as facilitated by First American Exchange Company, can help maximize profits. Overall, these companies provide valuable solutions to help individuals make informed decisions and achieve their financial goals.
Careful planning and flexibility are key in real estate investing, especially new construction: Maximize rents, understand due diligence, have an exit strategy, consider house hacking for beginners, and establish a solid foundation through designing and building your dream home with income from a secondary unit.
Successful real estate investing, especially in new construction, requires careful planning and flexibility. Due diligence is crucial to understanding what you're getting into and having an exit strategy in place. With uncertain economic conditions, such as higher interest rates, it's essential to maximize rents to increase property value and potentially break even. For beginners, house hacking is a recommended starting point, as it makes financing easier and creates a precedent for future projects. By designing and building your dream home while also generating income from a secondary unit, you can establish a solid foundation for your real estate investing career.
House hacking new construction properties: Consider house hacking new construction projects for a low-risk learning opportunity. Find deals with additional lots and build only on land acquired for free or cheap to mitigate risks. Build-for-rent strategies can be profitable and successful in the current market.
House hacking, a popular strategy for new investors, can also be applied to new construction projects. Natalie shared her experience of house hacking a new construction property in Canada, emphasizing its potential as a low-risk learning opportunity. Henry, who started new construction investing six years into his career, added that finding deals with additional lots and building only on land acquired for free or cheap can help mitigate risks. The conversation highlighted the relevance of build-for-rent strategies, which seem to be profitable and successful in the current market. If you're interested in new construction investing, consider using BiggerPockets Agent Finder to connect with investor-friendly agents for guidance. Remember, the goal of real estate investing is financial freedom, and it's essential to educate yourself and make informed decisions with the help of experts.
