Renovation Financing

If you are an aspiring landlord or a commercial tenant, where do
you get the funds to pay for your renovation work? Or for that matter, your next project?

Here are a few ideas:

-Ontario Renovates provides grants up to $15,000 per door or
unit to help create affordable, visitable, greener units

-ask your mortgage broker to arrange a mortgage +
renovation loan for you; many lenders will provide up to 10% of the purchase price for renos

-ask your contractor to hold some of their invoices until
completion and then pay them off over time kind of like a layaway plan

-you are also allowed to keep 10% of your contract price as a
holdback for 45 days after completion (to ensure your contractor will come back
to fix any problems)

-register yourself as contractor (it costs just $71 to do that
online in Ontario) so you can get contractor pricing on materials; stores
like Lowes, Rona, Home Depot will often give you credit as well as time to pay;
once you are registered as “George Smith Contracting” or “Mary Jones
Property Management”, you can open a bank account in that name and start
accepting payments under that name too

-register for HST (it’s online and free in Canada) so you
can claim (some) of the HST you pay as ITCs (input tax credits)

-don’t forget to go to those DON’T PAY A CENT EVENTs to pick up
your furniture, fridge, microwave, stove, dishwasher

-don’t forget to look for used stuff too on kijiji, craigslist, usedottawa etc

-you can put a 2nd mortgage on your property to help you finance
renovations as long as you have a plan to retire it at some point (like getting
the place reappraised and refinanced with a new (lower rate) 1st mortgage large
enough to take out the old 1st and 2nd)

-arrange for a HELOC, home equity line of credit or a 
personal LOC, line of credit or remortgage your other properties if you have any

-refinance and pull out money from existing property (tax free like Warren Buffett)

-use your credit card(s)

-ask for a low interest STB (seller take back) 2nd mortgage

-get yourself some sponsorship for innovations, equipment etc;
most common sponsors are: suppliers/contractors/designers/manufacturers…
who’ll provide cash and/or in-kind, ie, FREE STUFF

-if you are providing, say, furnished apartments, you can get amazing furniture at little or no cost by looking on Craigslist, Kijiji, UsedOttawa and many other sites–as the population ages, people are dying like flies in developed nations; if you go around neighborhoods with a pickup truck and a friend plus a $1,000 in cash, I’d bet you can pick up grandma’s $25,000 dining set from her heirs for $250 or less–they have to get rid of her stuff since they will have either sold grandma’s home or are getting it ready for sale and need to de-clutter it.

-use financial leasing for: hot water tanks, other equipment,
fireplaces, furnaces, solar installs, computers, photocopiers…

-if you are totally tapped out, you can always bring in
partners/investors using a technique we call “Mad River” financing

-create an operating company (such as a property management firm, a renovation/contracting biz, a flea market, a storage business…) and finance that, then loan the money to buy your next property

-across Canada, renovation grants and
rebates are available from federal and provincial governments and local
utilities, especially for energy-saving renovations; if you qualify, they may
help pay for some of your project’s costs:

CMHC Mortgage Loan Insurance for Energy-Efficient Homes: 10%
CMHC mortgage loan insurance premium refund, and a premium refund for a longer
amortization period (if applicable).
https://www.cmhc.ca/en/co/moloin/moloin_008.cfm
 

ecoENERGY Retrofit — Homes: grants of up to $5,000 to offset the
cost of making energy-efficiency improvements.
https://www.ecoaction.gc.ca/ecoenergy-ecoenergie/retrofithomes-renovationmaisons-eng.cfm

Provincial and Municipal Entities Offering Grants and Incentives
https://www.oee.nrcan.gc.ca/residential/personal/retrofit-homes/provincial-municipal.cfm?attr=0

Rebates and Incentives for Selected ENERGY STAR® Qualified
Products in Canada
https://oee.nrcan.gc.ca/equipment/manufacturers/6661

@ profbruce @ quntum_entity

postscript: if you are building out commercial space, there are some decent alternatives for that too:

-get a leasing inducement from your landlord to help with fitup costs

-get some free rent from your landlord, not just at the beginning of your lease but also later on too to help with your cashflow or a “spruce up” of your space after a few years of wear and tear

-access SBL financing–it’s a federal program administered by chartered banks that can provide up to $350,000 of cash (it’s a loan) to help with your build-out https://www.ic.gc.ca/eic/site/csbfp-pfpec.nsf/eng/h_la02296.html#q2

-find some strategic sponsors to help you like Purrdy Paws did for to help them open a pet spa, https://profbruce.tumblr.com/post/138408174484/downtown-pet-grooming-shop-opening-soon-want-your

-use financial leasing (a form of lease-to-own) for your equipment (anything that has a serial number can usually be leased-to-own, a serial number allows the lender to register a PPSA)

-ask for free stuff from companies that are in your supply chain or from your existing or future customers

-issue script, https://profbruce.tumblr.com/post/139790939014/raising-capital-by-issuing-script

-sometimes you can access your home equity to pay for your commercial improvements