Financing Property #6, #7, and Beyond: Portfolio Strategies for Serial Investors in Canada

Scaling a real estate portfolio beyond the first few properties is the point where the "accidental landlord" becomes a professional investor. It is also the point where the traditional banking system often stops being a partner and starts being a barrier. If you have hit the "5-mortgage wall," you are not alone. Traditional "A" lenders in Canada operate with rigid exposure limits that often cap a single borrower at four or five financed properties, regardless of their net worth or the positive cash flow of their portfolio. Breaking through this ceiling requires a strategic shift in how you navigate the financial threshold. You must move from qualifying based on your personal income (GDS/TDS) to qualifying based on Lender Diversification and Equity-Based Financing.

The Exposure Limit: Understanding Why the Wall Exists

Before you can break the wall, you need to understand how it is built. Lenders manage risk through "exposure limits," which generally fall into two categories:

1. Door Count Limits: Many major banks have a hard cap on the number of "doors" or properties they will finance for one individual. This is often set at 5 properties.

1. Dollar Amount Limits: Even if you haven't hit the door count, a lender may have a maximum total mortgage balance they will extend to any one client across their entire portfolio.

The reason is simple: concentration of risk. Banks want a diversified loan book. From their perspective, a borrower with 10 mortgages is a systemic risk if a single economic event (like a localized job market crash or a specific tax change) hits that borrower's ability to pay.

The Strategic Passage: Lender Diversification

The first step in crossing the threshold for Property #6 and beyond is diversifying your lender pool. Professional investors rarely keep all their debt with a single institution.

1. Moving to "B" Lenders and Credit Unions

While "A" lenders (the Big Six) have the lowest rates, they also have the tightest exposure rules. Credit unions and "B" lenders (Trust Companies) often have more flexible policies. They still look for strong credit and income, but they may allow for higher property counts or more flexible rental income "offsets."

2. Private Capital for Strategic Speed

When traditional and alternative lenders reach their limits, private capital becomes the bridge to further growth. Private lenders are primarily equity-based. They underwrite based on:

• The Property's Value: Ensuring a safe Loan-to-Value (LTV) ratio (typically 65-75%).

• The Exit Strategy: How you plan to eventually return to conventional financing.

• Investor Track Record: Your experience managing a growing portfolio.

By focusing on the asset rather than just your personal T4 income, private lending allows you to secure that 6th or 10th property while your conventional files are being structured for long-term takeout.

Crossing into Commercial: 5+ Unit Properties

Once you move into properties with five or more units, you have officially crossed from residential into commercial financing. This is a significant strategic passage that opens up new capital pools, including CMHC MLI Select. The MLI Select program is currently one of the most powerful tools for Canadian investors. By meeting specific criteria for affordability, energy efficiency, or accessibility, you can access:

• Amortizations up to 50 years

• Loan-to-Value (LTV) up to 95%

• Lower debt coverage requirements

6 Steps to Financing Your Next Property When the Bank Says No

1. Audit Your Current Exposure: Map out every mortgage, lender, and total balance. Identify which lenders are at their "door limit" for you. Check our Real Estate Investor Hub for common scenario breakdowns.

1. Position Your Exit: Every private or alternative loan needs a clear path back to conventional financing.

1. Use Corporate Structures: Holding properties within a corporation can help isolate debt and, with the right lender, bypass personal exposure limits.

1. Leverage Existing Equity: Use a Strategic Equity Take-Out on a low-leverage property to fund the 20-25% down payment required for your next acquisition.

1. Diversify Your Lending Relationships: Don't wait until you're declined to speak with alternative and private lenders.

1. Partner with a Strategic Broker: Navigating the alternative and private space requires access to lenders who specialize in "un-bottlenecking" portfolios.

Strategic FAQ for Serial Investors

Can I finance more than 5 investment properties in Canada?

Yes. While individual banks may cap you at 5, there is no legal limit to how many properties you can own. You must simply move beyond traditional "A" lenders to "B" lenders, credit unions, and private capital.

What is the minimum down payment for Property #6?

Expect to put down at least 20% to 25%. Since most "A" lenders won't touch Property #6, you will be using alternative or private lenders who prioritize a strong equity position.

Should I hold my properties in a corporation?

For investors scaling beyond 5 properties, holding in a corporation is often a strategic necessity. It allows for better tax planning and can make it easier to access commercial lending products that look at corporate balance sheets rather than just personal tax returns.

What is Equity-Based Lending?

It is a form of financing where the lender prioritizes the value of the property and the borrower's equity stake above traditional income verification. This is common in private lending and is a key tool for investors whose portfolios have outsized their personal income.

How does the "door count" limit work?

Lenders count and limit the number of properties you have *any* mortgage on, including your primary residence. If you have a primary residence and 4 rentals, you have hit most banks' 5-property threshold.

Summary: The Path Forward

Scaling a real estate portfolio is about navigating transitions. The threshold between 5 properties and 10 isn't just about more buildings—it's about more sophisticated financing. By understanding exposure limits and leveraging lender diversification and equity-based products, you can maintain your momentum and build a truly resilient portfolio. For more answers, visit our Investor FAQ.