94: How CMHC Programs Shape Canadian Real Estate with Peakhill Capital's Spencer Harris

Taylor Atkinson: Welcome back to the Colonial Real Estate Podcast. I'm your mortgage broker host, Taylor Atkinson.

Matt Glen: And I'm your real estate agent host, Matt Glen. What's shaking?

Taylor Atkinson: Hey, today we had on Spencer Harris from PKL Capital. These guys are expanding quickly all over North America. But we really wanted to dive into CMHC lending, specifically on purpose built rental, MLI select. Very hot topic, right, with a lot of these purpose built rentals going up right now, but longer amortization, insured cheaper rates, lower loan to value. So I should say higher.
It's a really cool product that's been around for a little bit now. And these guys are a lender that really utilize it.

Matt Glen: So And the MOI Select is largely with financing all the purpose built rentals around Kelowna. Right? Like a major portion of it.

Taylor Atkinson: Pretty much. You can still finance it conventionally, but it's what makes these projects pencil. Yeah. It's a big catalyst that's really, like, encouraged people to go that way or developers to go that way is because CMHC provides this really good product that helps you get some cash flow out of something that would not if it was conventional.

Matt Glen: Yeah. Great to talk to Spencer. Obviously, wealth acknowledged. It was awesome. So I

Taylor Atkinson: think you can reach out to him, his team, go through a commercial broker or use them, whatever, but they do bridge financing for these type of stuff to construction financing. So and to tie it all together, when we had Justin Smith on about fifteen episodes ago, he researched all the mortgage funds that, you know, he was investing with his portfolio of investors. This was one of his top two. So pretty cool.

Matt Glen: Yeah. Safe moneymaker. So yeah. Alright. This episode, like every episode, sponsored by Century twenty one Assurance Realty, best brokerage in town, best provision in BC.
The interior anyway. We're growing. We're everywhere. Brokers that kinda helps each other out. So if you're an agent maybe a little bit lonely or looking for a change, give us a call.
We're ready to grow. So give us a call.

Taylor Atkinson: You're gonna get a lot of lonely agents calling you Hey, Matt. And lonely.

Matt Glen: But do not call past nine PM.

Taylor Atkinson: Yeah. That's a bedtime. Yeah. Hey, if you are lonely, we have a a wicked opportunity. Even if you're not lonely, if you just wanna, you know, get around some people that have some high energy, top producers, network a little bit, learn a lot.
We brought on Alex McFadgen because we wanted to, you know, promote what he's doing coming April. He's putting on a an awesome event. Matt and I are gonna go do it. Next little segment. Is us just having a chat with Alex.
If you wanna get tickets, like you said, in this blurb, send us a no, DM us, and we'll get you a promo code for it.

Matt Glen: Yeah. Give us a promo code to give us some credit. I don't think we can get anything out of this, but Just nice to know to track the analytics.

Taylor Atkinson: Oh, yeah. Yeah. It'd be really harsh.

Matt Glen: A pretty huge analytics tracker around here.

Taylor Atkinson: Hey, Matt. How many DMs do you got? I got yeah. Exactly. I need a spreadsheet.
Okay. Enjoy the rest of your guys. Okay. Alex McFadden. Thanks for coming on, the mortgage pug.
How's it going, buddy?

Alex McFadyen: Welcome back to me,

Taylor Atkinson: I guess.

Spencer Harris: I'm doing great

Alex McFadyen: because I'm doing great.

Taylor Atkinson: Big event coming up. What can you tell us about it?

Alex McFadyen: Coming up real hot real quick here. April third, Kelowna's first real estate business and marketing event that I know of. I don't think there's ever been any of them. We're flying in speakers from New Orleans from Reno, Nevada, Las Vegas. We got people coming from all the way on Vancouver, a couple people from Calgary and Toronto, all to speak and hang out in Kelowna, which I'm super stoked about.
So it's gonna be a lot of fun.

Taylor Atkinson: Awesome.

Matt Glen: So what times does this event start?

Alex McFadyen: All day, baby. You gotta be there from start to finish. Best believe we'll be running up the mountain at six AM AM. No. So the event itself, it's a full day event, nine to four, and we're doing a after party at pretty not bad with our friend Casey who's hosting, which is gonna be fantastic and we're excited for that part.
But The idea here with this event is I wanted to bring in people who I have met or I've seen speak personally that have had a specific impact on my business, marketing, or communication into the town of Kelowna. I haven't an event like this put on, and I wanted to do something for the real estate community and really just open it up to people to expand their their marketing, their business, and different opportunities. And the neat thing is it's not just for realtors, like it's real estate, mortgage, finance, insurance, builders. We got all sorts of people that are gonna be coming to this.

Taylor Atkinson: So should it mostly be professionals in the industry or, like, who should be coming to this?

Alex McFadyen: Yeah. Yeah. Well, exactly do I say? I think our primary focus was to positively impact people who are around or in the real estate community in some way, shape, or form. So that could be financed real estate or building.
And so the key thing of this is if you have a small business and or you're related to any of these industries in any way, then you're gonna have success. We do have speakers who are in the real estate community who are going to be focusing an element on that, and we have speakers who are not in the real estate community who are going to share their gifts with us that could affect anyone as it relates to marketing, communication, teams, all that kind of fun stuff.

Taylor Atkinson: I love it. And where can people get tickets?

Alex McFadyen: Online. Hopefully, you guys have a link on your page right here. So if you follow me on the mortgage pug, you've got the ability to get tickets on there on Eventbrite, super easy to get them in there. We've got thirty percent sold in the first two days, which I'm really excited about. I'm gonna give you guys have promo codes.
So any listeners of the podcast will get a discount. If they stick in the promo code and prices are gonna go up every ten days until the last day where they're gonna be three hundred bucks and hopefully get them before that.

Taylor Atkinson: Do people reach out to us for the promo code or how do they get it from you?

Alex McFadyen: Get people to DM you guys directly or DM me and just say, Kelowna Real Estate Podcast, and I'll send the link their way. I love it, man.

Taylor Atkinson: Awesome. Well, thank you for putting this on, and Matt and I will be there. We're stoked for it.

Alex McFadyen: Yeah. This is gonna be unreal, man. I'm excited to blow away Corona, and I'm hoping this is the first of many events just like this. So thanks guys. Appreciate you.

Taylor Atkinson: Okay. Thank you. See you there. Okay. Welcome to the show Spencer.
Thanks for joining us, buddy.

Spencer Harris: Taylor. Appreciate you having me. Nice to meet you, Matt. We have you. Definitely.

Taylor Atkinson: Yeah. We kinda like to start our show with just what's your perfect Friday, you know, what makes you productive and what do you do for work and then kinda what do you do for fun going into the weekend?

Spencer Harris: Sure. I tend to be an early riser kinda wake up with the sunrise. You know, that might be sleeping in a little later in the winter, but

Matt Glen: I was gonna say it fluctuates.

Spencer Harris: It does. It really does. I'm not open. No. I might sleep until eight o'clock sometimes in the summer.
It's definitely five AM wake up call. Yeah. Nice. And to be honest, a lot of the time, a shower, and then great to work at the home office. So just sort of the nature of our business, I do kinda like it because I do line up with Toronto time for my work day, generally.
Most of our office is based out of Toronto, and it's kinda nice to be able to get a hold of people when you need to sort of early in the morning. But other than that, I do try to get out with my wife, walk the dog in the morning as well. And then if it's a Friday, you know, I try to, you know, hopefully, wind up some work meetings during the day. Ideally go golfing sometime late afternoon. In the winter months, it might be more like going to the gym.
But I grew up playing better golf and still do a little bit. So it's

Matt Glen: gonna invite you to come golfing with us, but nope.

Taylor Atkinson: I know so as I

Spencer Harris: And I don't I haven't gotten news right now. Good. You know? So

Taylor Atkinson: Well, yeah. Matt and I are competitive just not with competitive people.

Spencer Harris: Sure. I got you. I play with anyone. But, yeah, somebody playing out some of the local golf tournaments or, you know, kinda doing all the classic open noggin things. So definitely like to go boating, like to go wineries, and like to this these folks as well.

Taylor Atkinson: Nice. Awesome. Well, yeah. Wake it up early. I've been trying to use this alarm clock that, you know, it's like one of those sun alarm clocks.
But trying to use it for, like, three years. I just can't figure out how to program it.

Matt Glen: The sun alarm clock But that

Taylor Atkinson: would be my recommendation. Yeah.

Spencer Harris: Yeah. My wife has one as well, but I don't know. I just for some reason, I just wake up with the sun every day.

Matt Glen: Yep. Nice. Yeah.

Taylor Atkinson: Well, let's talk about peak health. So you guys are a pretty big lender, and you seem to be gaining a lot of traction recently. And actually, Justin Smith, who we had on a few months ago, he was talking about, basically, he analyzed, invented a bunch of lenders, and you were one of the top choices, which coincidentally, you know, you and I have kinda met about a year ago or a year and a half ago, and we were kinda chatting about coming on the show anyway. So it it worked out really well. But, yeah, give us the elevator pitch on Peekill.
Yeah.

Spencer Harris: It's always nice to hear people talk nicely about us. Our firm's, you know, fairly new to especially Western Canada. Peekill's only about six years old. And yeah, we're an investment manager running funds for credit and equity through Canada and the United States. Our Canadian Debt business is one of the largest CMHC lenders in Canada for both term and construction In twenty twenty four, we funded about almost nine hundred deals across Canada.
Loan sizes ranging from two million to two hundred million. And we're also conventional lender funding bridge and term loans on all asset classes. You know, those might be industrial deals some grocery anchored retail deals as well. We've now grown to a team of over one hundred team members across the country and in the US. So we've had some pretty rapid expansion, especially in twenty twenty four.
We've got physical offices in Toronto and Montreal, and soon to be a West as well. We have an equity business that's also focused on multifamily JV deals, both in Canada and the United States. We're having a lot of success in local markets as well. So you know, I don't think when Harley Gold, our magic director, you know, was looking to add a audio last last year. I don't think Kelowna was sort of top of mind, maybe, but I got in his ear, showed him, you know, all the projects that were happening, Kelowna at the time and

Matt Glen: showed him our podcast.

Spencer Harris: Showed up your podcast, you know? Like, it was a pretty easy sell after that.

Matt Glen: Nice. You know, we do what we had around here.

Spencer Harris: Yeah. So Yeah. So with the amount of construction happening in Kelowna, you know, so much that is CMHC business as well, that is pretty nice to, you know, be on the ground here and, you know, not have myself be, you know, in a big office tower in Toronto and get to, you know, how big's on the ground.

Matt Glen: Can I ask one question before we dive into this? Since you're in the US and Canada, does the US have, like, a similar to CMHC program?

Spencer Harris: Yeah. They do. But some of our team members have some experience in that world, especially Harley. Yeah. But, yeah, our focus is definitely on the death side.
It's on the CMHC business in Canada.

Matt Glen: Yeah. Okay.

Spencer Harris: We're just starting to get into the debt business in in the United States.

Taylor Atkinson: And you guys do construction bridge and, like, long term MLI selection.

Spencer Harris: Yeah. So we're doing term construction and bridge deals. So, again, all in all asset classes. So most of our business probably eighty percent to ninety percent is CMHC business. Mostly term deals, again, some construction as well.
The construction side is definitely where we have the most opportunity going forward, especially in Western Canada. We have team members in all different areas in Western Canada now. We just brought someone on in Edmonton, and she just brought someone on in Halifax as well. So a little bit smaller market like Kelowna. It's really nice to be able to have local expertise in all these different markets.
Obviously, we've got people in Vancouver. Powder for a while. Again, Montreal and Toronto, but it's nice to get a little more granular. Go to events like UDI where you get to kind of meet the people. I really like Kelona from the business world here.
I think it's very easy to connect with people. Everyone's kind of, you know, one and a half degrees of separation apart. It's been nice to be known for what we do here.

Taylor Atkinson: Yeah. I was you kinda got me excited with how you guys are growing now. Maybe I could get a job in Kelowna and you could be West Kelowna.

Matt Glen: I don't know. Oh, sure.

Spencer Harris: Yeah. You know what I mean? Yeah. Here. Okay.

Matt Glen: Alright, Spencer. Hi. Little question to start this conversation. What is CMHC financing?

Spencer Harris: Sure. So the Canada Mortgage and Housing Corporation, CMHC, is a government owned corporation that manages Canada's housing supply. CMHC's mission is to make kind of this housing more affordable and accessible to all Canadians. They're the only provider of loan insurance for multi unit residential properties in Canada, and so CMHC supports the construction, purchase, and refinancing a variety of multi unit rental properties. Anything that we do is five plus units.
So what they offer is a certificate of insurance that is a document issued by the Canamortgage Housing Corporation basically acts as a mortgage loan insured by CMHC. Meaning, the lender is protected against financial losses if the borrower defaults on their payments. So generally, they're not putting down a lot of money to access this program as little as five percent. So there's huge advantages to the program. And what this certificate of insurance does is it protects the lenders who are issuing the money for those loans.

Taylor Atkinson: I guess to oversimplify it, there is, you know, what most general public would be aware of as, you know, insured mortgages on residential houses with less than twenty percent down. Similar process where, you know, the borrower has to pay for that insurance. Right? So it's much like on these five units and above. The borrower would still pay for that insurance premium.
But then in return, would get a a superior rate, longer amortizations, less down payment. Like, there's a lot of benefits to kinda justify the cost of that insurance premium rate.

Spencer Harris: You got it. Yeah. Exactly. So, you know, with the analyze select program in particular, they can go up to ninety five percent loan to value, loan to cost, up to fifty year amortizations as long as, you know, you get things like debt servicing at a minimum of one point one. So there's huge advantages to the programs.
They've had to adjust a little bit over time here. The program's not even three years old yet, but most developers and even, you know, retail investors are going that way. And seeing the benefits going forward.

Matt Glen: Kind of a non question. But, like, the market is a bit soft right now. This is kind of like the only way that these projects pencil. But when the market heats up, like, things get more in line, will this still be a preferred product for builders going forward?

Spencer Harris: Yeah. It's a little bit market dependent both on the construction side and the term side. For the MLI Select program in particular, we can talk about, basically, there's three ways to access the program. It's through affordability, accessibility, energy efficiency. So often in markets like the prairies, we're getting a lot of the MOI select points.
Basically, you accumulate a hundred points is the goal, and then you can get up to those fifty year amortizations. And priorities, you'll see a lot of current people going on the affordability route just because the numbers make sense more there. Here, you know, traditionally, they've been shooting more for the energy efficiency side, get up to your hundred points there. Last year, they bumped their energy efficiency back to fifty points which, you know, in turn may developers having to, you know, either access points from accessibility or more likely from the affordability side.

Matt Glen: What is accessibility? Like, is that just elevators? Like, I was trying to figure out how this works? Because all the buildings in Kelowna are all high density, three or four stories? Like, is it just elevators?
Like, obviously, these are not walk over ranches.

Spencer Harris: Yeah. There's more than that

Matt Glen: to it. I believe it's

Spencer Harris: a Rick Hanson foundation that's sort of a governing body for that. You know, I wish we saw more on the accessibility side. I don't wanna say it's rare, but we don't see enough of it for sure on the accessibility side yet. And it would be nice if developers more incentivized and more to go the accessibility route for points.

Taylor Atkinson: I feel like we're definitely going to see the accessibility side whether developers want it or not. They're right. Like building codes changed where essentially we have to have that accessibility model. So does that not align now with the MLI?

Spencer Harris: Yeah. It's aligning better, and I think in some provinces, it's aligning better. We just generally still don't see enough of this so far. Yeah.

Taylor Atkinson: Yep. And then affordability is based on CMHC's data. Right? And that gets

Spencer Harris: Yeah. It's based on the medium renter income. So it's not just the medium income, but it's just medium renter income. So it's based on two thousand nineteen statistics right now, probably waiting for an update soon. But I believe for Kelowna, the max renter income to qualify for affordability is one thousand one hundred and eighty eight dollars per month.
So any units that have to be dedicated to affordability over ten plus years would have to be at one thousand one hundred and eighty eight dollars per month or lower Those medium rental incomes are different for every city throughout Canada. That's all being publicly available on Sumitomo's website.

Taylor Atkinson: Yeah. Developers kinda get a bad name sometimes, but I think this program specifically, like, why it's designed this way, is to put units on the market that are affordable, efficient, accessible. Like, it's a government program that's driven, right, to basically solve one of the housing issues we have. So any developers that are using this shouldn't be like, oh, they're big bad developers. It's they're playing by the rules to provide an asset that's desperately needed right now.

Spencer Harris: So Absolutely. Yeah. I mean, the whole idea is to put more affordable units on the market, get people in quality housing. So I think the developers who definitely see the best results are developers who are building very quality units with affordability component, hopefully. Again, it's a little harder to make work in BC on the affordability side sometimes, but definitely through the priorities we see a lot of you know, great building's being built with affordability components.

Matt Glen: Eleven hundred and eighty eight dollars. Is that, like, a few units have to be allocated for that or all of them have to be at that?

Spencer Harris: Yeah. So you have to dedicate a certain number of units to achieve a certain number of points. So based on whether it's new construction or an existing building where you can get those points allocated. So, obviously, when developers are working with their pro formas, they have to sort of see how many units they can dedicate to something to still make needed effort. Right?

Matt Glen: Yeah. Because, like, that seems like very hard to pencil.

Spencer Harris: Yeah. And, again, those numbers are based off two thousand nineteen. So we'll see if there's any updates going forward.

Matt Glen: Okay. Yeah.

Taylor Atkinson: Okay. And then can you kind of fill us in and policy changes in the last six months? I think it was kind of springtime that they started to come out with some policy certifications to maybe make the program fit a little bit better or give more opportunity to people?

Spencer Harris: Yeah. So they made major changes in June and then November as well. So in June last year, they set a new construction amortizations to fifty years from forty years, which incentivized developers a little bit. That was also when they reduced the energy efficiency component from a maximum of one hundred points back to fifty points. Most new construction is qualifying for energy efficiency, and it wasn't maybe incentivizing enough affordability component there.
So when we get back to fifty points, hopefully incentivizing either some accessibility or affordability components as well. One other major change that happened in September was approved lenders like Pete Kill could previously have lender correspondence mortgage brokers who could submit on the lender's behalf. And see if she decides to take that part away. Now all submissions have to go through lenders like Key Hill. The volume of submissions to the lenders now has gone up dramatically.
And I think it's been a bit of a change on the lenders to sort of beef up our teams and make sure that we can do these submissions accordingly and that the quality of those submissions is a highest we can make them.

Taylor Atkinson: Yeah. I'm surprised they made that change. Why did they do that?

Spencer Harris: I think it was more for quality assurance. When you had different levels of mortgage brokers submitting things to CMHC. Again, on the lender's behalf, maybe things always weren't the quality they should be. If everything's coming through the lender, it's all through the same people. It's all the same relationships with CMHC.
And hopefully, you know, get those certain good assurance more quickly.

Matt Glen: Has the time frame for you guys for turning around been the same? Or is it lighted all of that?

Spencer Harris: Or with PKL, we have a whole team internally now that's dedicated just to CMHC submission. So we've seen great turnaround times from CMHC lately. Was a bit of a backlog in the last year or two, but, yeah, great turnaround times right now. And, hopefully, going forward, you know, we'll see the same.

Matt Glen: So if a developer wants to access this, would they still call you Taylor or you just caller Spencer.

Taylor Atkinson: Yeah. Well, I think there's two points there. So previously, you had to be designated approved MLI Select broker. Right? Now they've taken away that report.

Spencer Harris: Response. Yeah.

Taylor Atkinson: Yeah. So it's kind of funny that they took that away, but then everything now has to go through the lender anyways.

Spencer Harris: Yeah. I mean, any broker can still bring it to the lender, but the lender has to submit now to CMHC before the broker could submit as well. So they can submit directly. Now the whole file has to be submitted through the lender anyways. Again, it's been a good process, and we got a whole team dedicated to this now.
There's like I said, we've did almost nine hundred loans last year, and those are a lot of files to get through.

Taylor Atkinson: Yeah. Well, I guess, what sets Peak Hill apart from other lenders? Like, where's your guys' niche? Where's your value add?

Spencer Harris: You know, like I said, we're approved seamlessly lender. We're dedicated to that program, and that's our expertise. So the goal is to, you know, be one of the largest seamlessly lenders in Canada, which we already are and focus on multifamily. Know, obviously, we don't wanna have all our eggs in one basket either. Hence why we also do conventional loans, construction, industrial, and retail as well.
We've gotten equity division as well now. So, you know, we're definitely spreading out and diversifying what our capabilities are. We're bringing on great people with great experience, again, right across North America. Our equity team in the States has done huge JV deals in places like Miami, New York. I believe Dallas, they're definitely spreading their wings.
And, you know, we wanna be the best of what we do. We wanna be the best CVC lender and the best, you know, conventional lender across Canada, provide different types of solutions to all different types of developers whether it's developers that focus on industrial or, you know, strictly multifamily.

Taylor Atkinson: Yeah. Kind of to go back to the policy changes, you know, maybe a year ago, I was looking at these programs quite a bit thinking the restrictive part was that you couldn't, you know, refinance, take the equity, and basically do what you want. You had to redeploy it back into real estate, which makes sense for the program. Right? They're trying to put units on the market.
So a lot of larger developers would, you know, build up these massive portfolios, and then, you know, the only way to basically cash out is sell them off to, like, a REIT. But since they've changed that recently where, you know, it gives more autonomy for developers to deploy that money, It seems like this program will kind of keep that momentum going. Like, it just gives more flexibility. But, yeah, have you had much feedback from, I guess, anyone in the industry? Like, has that changed been a bit of a catalyst to keep things moving along?

Spencer Harris: From a lender perspective, we're generally still gonna wanna see that equity going into more projects. It's always at our discretion at the end if we're gonna lend the money on. So, you know, we wanna make sure it's going to something valuable or at least story makes sense. Right? Why someone's doing something with the money?
But, you know, most of these changes they're making have been good and they you know, they've been flexible and there's definitely a reason behind them. You know, one of the other changes that was made recently was regarding construction, something called rental achievement holdback. So you had a lot of these developers getting analyzed, like, construction loans up to ninety five percent loan cost. What they've done is they've scaled that back now in certain situations to seventy five percent. And it's based on maybe geographic location, strength developer, and other factors.
But it basically requires the borrowers to achieve a minimum project equity of twenty five percent And based upon the rental achievement, they can get potentially up to ninety five percent or whatever the certificate of insurance says. So there's a little bit more requirement now on the equity side for these construction projects. We do have solutions to maybe get to higher leverage for some of these developers going forward. We're just starting to see a trickle in analysis. It was a recent change.
We're just sort of moving where the needle goes, I can say.

Matt Glen: So with the rental home box, like, are you waiting for, like, a vacancy rate or, like, we're looking further?

Spencer Harris: Yeah. So basically, we're looking for the rental achievement to be met. So they need to reach certain qualifications on lease up and where they can achieve there. So once they reach a certain threshold, the rest of those funds will be distributed. And, again, they can get up to whatever they qualify for on the restrictive insurance.

Taylor Atkinson: That makes sense to me. Honestly, this is one of the programs that I feel that the changes that they're making are evolving with it, and they're actually pretty good. Where are you guys seeing geographically most of these fundings for you, like across the

Spencer Harris: country. I mean, we're like I said, we're right across the country. In terms of lending, we'll go down to two million or even one million dollars on a term loan. So we see a ton of deals throughout the prairies. We get a lot of you know, let's call them retail investor.
They might just be looking to buy a few apartment buildings or, you know, maybe buy some new stock and maybe that loan is two or three million dollars. It's qualifies for the MOI Select program. They can potentially get up to their ninety five percent financing on acquisitions. So You see a lot of that in the prairies. In the Okanagan, it's a little different story.
Obviously, a lot of major developers here. We see major developers starting to trickle in, you know, from Vancouver and elsewhere and throughout Alberta. Again, like you said, it's hard to make the numbers work here sometimes. So those people tend to be very good at what they do. And we'll see how things go.
Like, you know, I listened to your podcast last week with Dev Hancock probably gonna be rising vacancy with so many new units coming into the market. Yeah. So what will be interesting to see how developers adapt, whether they sort of stick with the CDC programs, whether they, you know, go to some conventional financing move forward, or maybe do they pivot back to some kind of projects as well. Yeah.

Taylor Atkinson: That's interesting. Yeah. Yeah. We did talk, like, pretty in-depth and, yeah, his data on that was wild, but I agree. Like, it looks like there may be some more opportunity to stratify.
Some of these units and do resale. There's also a lot of resale new construction coming online as well.

Matt Glen: Well, I think that was started a few years ago. Like, there's not that many new starts right now. So, like, no.

Taylor Atkinson: Yeah. So how do you guys generally fund these? Like, where's the capital coming from? How does that side of it work?

Spencer Harris: Sure. So, basically, we have various institutional pension funds, pension plans and family offices as investors. Everything's on our own balance sheet, and we manage it. We did about five point three billion dollars in loans last year. That's including CMHC loans, bridge loans, and other conventional loans.
So we have a whole team dedicated to the investor relations side of it. Yeah. I'm sort of glad I'm not on that side of business. It's much more fun than probably being on the developer side.

Taylor Atkinson: Yeah. I

Matt Glen: think it'd be kind of fun to go into those meetings and, listen, I need a billion dollars. This is why.

Taylor Atkinson: Matt asked me that question every day. Yeah.

Spencer Harris: That's the news you like. Yeah.

Taylor Atkinson: Well, yeah, I mean, yeah, we've been talking a lot about this the last little while, but there seems to be either midway through the project or projects that are being finished and a lot of these kind of land assemblies or, you know, what we talked about a a few weeks ago on the show with City of Kelowna, you know, their fast track program and having that now open up, like, five doors and above, kinda open sharp MOI for the average person. Yeah. Obviously, like, that's a a huge piece of the market for you if you're doing loans, you know,

Spencer Harris: on Definitely. Yeah. And again, that's a lot of what we see in Alberta right now. Do we see kind of those five to twelve units? Maybe you have a builder building them and somebody coming along and say, hey, I'm gonna purchase those units, rent them out.
Going forward, I think we'll see a lot more of that in Kelowna here next. And it's nice to have some of those nice infill projects, you know, that look beautiful and people can make them work as investments. It really adds to the quality here in Kelowna. I definitely set, you know, internal being in Kelowna for a long time. And hopefully, there is a family here and such and, you know, going forward, Kelowna means a lot.
You know, I'm from Winnipeg originally too. Reduce the business there. But, you know, those are two places that I care deeply about and going back there next week. But it's nice to be passionate with places where you live as well.

Matt Glen: Yeah. It's funny when you talk about this like how the incentive because, like, for years, last five, six years in Columbus has been all four plex, four plex, four plex. And now this zoning allows five and six, which obviously now falls into your kind of

Spencer Harris: in our bucket. Yeah.

Matt Glen: Yeah. Exactly. But, like Yeah. I wonder if, like, just even two lot land assemblies where you build an eight plex instead of just a fourplex that would be super beneficial for for sale.

Spencer Harris: Yeah. We have a small construction loan program generally. We're seeing loan amounts for those above five million dollars. We try to get it. So in that five to fifteen range, obviously, we work on large construction right up to a hundred million dollars with large developers.
Yep. So, yeah, there's a lot of incentive for small time developers to build these beautiful units and about how we're going about financing those. You know, it could be us. It could be, you know, a credit union or somebody else, some other source of capital. But the goal is generally always gonna be to achieve CMHC financing on those bills.

Matt Glen: Yep.

Spencer Harris: And they can certainly come to a lender like us even if they do the construction with somebody else they can come to us after and do the term take out on those loans.

Matt Glen: So, like, let's get too specific here, but, like, if a person wanted to go build, let's say, a ten unit, they have two lots. They wanna build ten units. Where are they looking at? Where do they need to have, like, a certain amount of debt payment, instruction experience?

Taylor Atkinson: That's asking for a friend.

Matt Glen: Yeah. Yeah. Like, also, my PIN's ready. So no.

Spencer Harris: Yeah. Yeah. So, yeah, there's basically some basic requirements that I kind of let people know what's required to at least qualify. First would be a net worth requirement. So to qualify for a c m c loan, you have to have a twenty five percent net worth requirement.
But if everything in that net worth has to be validated, through bank statements, mortgage statements, etcetera. I would say the lenders are pretty strict on that about, you know, what's actually qualifies as net worth. So, you know, you've got a, let's say, a four million dollar loan, you need a million dollars net worth whether it's construction or not, we're probably gonna wanna see a liquidity requirement as well. Usually, that ranges from ten percent to twenty percent. That's just sort of, you know, free cash or accessible cash on hand that, obviously, if the project has challenges or whatever else comes up that can be dealt with.
So yeah. I mean, the small developer looking to do a project. It could be through CMHC financing. It could be through conventional financing again with somebody else. But the goal is generally always to get to the CMHC term takeout.
And make the numbers pencil there.

Taylor Atkinson: Well, that's a big one that's forgotten about a lot when clients come to me. It's, like, the twenty five percent of the mortgage balance. It can be pretty hefty, you know. Are you

Matt Glen: talking about net worth or liquidity?

Spencer Harris: That's on the net worth side. Yeah. Twenty five percent. Exactly. So another area we've been able to help out a lot too is on the acquisition of existing buildings or even new buildings.
So Yep. You know, you might get someone who has a tight close or maybe has someone who wants to purchase a building and do some renovations to it, maybe get rents up, then switch it to CMHC financing. So that's where our bridge program comes into that effect. Generally, what we're looking to do there is seventy five percent loan purchase price or loan cost loans on those acquisitions. And those are, you know, usually three to twelve months and then switch it to the CMHC financing after just a short term solution to acquire the property you know, the CMHC submission process can take three to six months.
It may be quicker, but it takes some time. Right? It's not things that happen right away, and seller might not be willing to give that amount of time to the buyer to, you know, get their financing in line. Right? So we get the bridge loan for them.
And help them do this. You may see take out after.

Taylor Atkinson: Maybe it's a good transition into some of her wrap up questions. And this doesn't have to be related to the investor hat. But if you could buy one property in the next twelve months in the Okanagan, what would it be?

Spencer Harris: Sure. You know what? My wife and I bought hopefully, you know, maybe our forever home last year in West Kelowna, which was very exciting. And I'd say, you know, pretty content on that side. Obviously, you know, if you live in Kelowna, I'd say, generally, the dream is to have a place on the lake.
But in terms of investment. I don't know. Being on the lending side, this is what I do for a living. You know, I leave the investors to do the investing, I'd say.

Taylor Atkinson: Fair enough. Yeah.

Spencer Harris: I'm happy to finance the investments, though. Yeah.

Taylor Atkinson: You can tell us off air. It's okay. Yeah.

Matt Glen: That's awesome. Alright, Spencer. If you could give your twenty year old self any piece of advice, what would you say?

Spencer Harris: Sure. Probably not much different than what I did growing up, but I'd say, you know, try a lot of things take some risks and probably move from your hometown for a little bit, you know, whether that's for a short time or a long time.

Matt Glen: Yeah. Yeah.

Spencer Harris: I think what happens is we get siloed a little bit to a one way of thinking. It's you know, whether we stay in the same geographic location or stay on the same people for a long time, whether leaving home or traveling can bring fresh perspectives to people, you know, I didn't move away permanently until I think it was thirty or thirty one and coming to Kelowna, having to meet new people, you know, I got here during COVID or just before COVID. So, you know, it definitely had its challenges and it's probably maybe stronger for it and having to, you know, go and meet new people and people like yourselves.

Matt Glen: Good for you.

Taylor Atkinson: Yeah. That's great advice. What's your favorite charity or how to get back?

Spencer Harris: Sure. I mean, you know, being with PKL and I've been with them for about a year now. They are always giving back whether it's through some of their financing initiatives or volunteering with a program called Youth Hotel, Toronto based nonprofit that provides housing and resources to homeless youth. So they funded one of their properties. They've done several volunteer missions, whether it's serving meals or otherwise to some of their youth there.
They've also, you know, worked with the Trellis Society in Calgary. It's a Calgary based nonprofit. That provide successful and affordable housing for underserved communities. And, you know, through that initiative, they raised over sixty thousand dollars. We did an employee match program during the holidays this year.
Where, you know, myself and all my other colleagues, we could donate whatever we wanted to any charity within Canada, and the company would match. So, you know, I donate it to a local group here. Pete Hill matched it, which is very kind of them. And yeah. So, you know, it's an ongoing thing, you know, we're sponsoring events.
You know, we're trying to get involved very locally as well, you know, even on the business side, it's, you know, sponsoring events with UDI and and things like that as well. So we're trying to get very granular local, and I think people are appreciating that.

Taylor Atkinson: Nice. Sounds like a two birds with one stone. You could sponsor the Colonial State podcast. We are also a little bit like a charity sometimes.

Matt Glen: I would also speak directly to your audience. So Yeah. Certainly not.

Taylor Atkinson: That's awesome, man. That's nice to see, like, larger companies doing that, you know, if they have the ability, like, go after it. So good for you guys. Yeah. We appreciate that.

Matt Glen: How can Taylor or I or our podcast or listener help you out? What can we do for you?

Spencer Harris: You know what? Just being here and introducing myself to the community is more than enough. Yep. Happy to get in touch with people as they need to see fit. And, yeah, you know what?
And like I said, I really like the Kelowna community. I feel like it's very easy to get to know people here. And even across BC and Western Canada as well, sort of doing business all across Western Canada, it's great, but, you know, certainly love the local Colombian community.

Taylor Atkinson: Hey, yeah. We should mention you guys have a pretty good newsletter that goes out as well. So if the centers are interested in that, then Yeah.

Spencer Harris: We'll try you know, keep people updated on what's going on in the industry and happy to send that out as people need it.

Matt Glen: That's awesome.

Taylor Atkinson: Right on.

Matt Glen: Yeah. Thanks a lot, Benjamin. I got a ton of help.

Taylor Atkinson: Appreciate your insight today. And, yeah, I'd love to have you back on in the future.

Spencer Harris: Fantastic. Yeah. We'll we'll keep you updated on what we're doing and hopefully be back on the yearly thing.

Matt Glen: Yeah. That'll be awesome.

Taylor Atkinson: Yeah. Sounds great.