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

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Welcome back to the Colonial Real
Estate Podcast.

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I'm your mortgage broker host,
Taylor Atkinson.

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And I'm your real estate agent
host, Matt Glenn.

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What's shaking?
shaking?

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Hey, today we had on Spencer
Harris from PKL Capital.

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These guys are expanding quickly
all over North America, but we

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really wanted to dive into CMHC
lending, specifically on purpose

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-built rental, MLI Select.

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Very hot topic, right?

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With a lot of these purpose -built
rentals going up right now, but

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longer amortization.

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insured cheaper rates, lower loan

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value, or I should say higher.

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It's a really cool product that's

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been around for a little bit now.

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And these guys are a lender that

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really utilize it.

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And the MOI Select is largely

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what's financing all the purpose
-built rentals around Kelowna.

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Select is largely what's financing
all the purpose -built rentals

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around Kelowna.

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Right.

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Like a major portion of it.

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Pretty much.

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You can still finance it
conventionally, but.

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It's what makes these projects
pencil.

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Yeah.

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It's the big catalyst that's

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really like encouraged people to
go that way or developers to go

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that way is because CMHC provides
this really good product that

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helps you get some cash flow out
of something that would not if it

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was conventional.

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Yeah.

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Great to talk to Spencer.

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Obviously, wealth of knowledge.

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It was awesome.

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So I think you can reach out to

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him, his team, go through a
commercial broker to use them,

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whatever, but they do bridge
financing for these types of stuff

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too, construction financing.

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And to tie it all together, when

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we had Justin Smith on about 15
episodes ago, he researched all

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the mortgage funds that he was
investing with his portfolio of

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investors.

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This was one of his top two.

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So pretty cool.

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Yeah.

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Safe moneymaker.

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So yeah.

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All right.

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This episode, like every episode,

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sponsored by Century 21 Assurance
Realty.

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Best brokerage in town.

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Best brokerage in BC.

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The interior anyway.

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We're growing.

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We're everywhere.

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A brokerage that kind of helps

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each other out.

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So if you're an agent, maybe a

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little bit lonely or looking for a
change, give us a call.

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We're ready to grow.

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So give us a call.

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You're going to get a lot of
lonely agents calling you.

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going to get a lot of lonely
agents calling you.

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Hey, Matt, I'm lonely.

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But do not call past 9 p .m.

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Yeah, that was bedtime.

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Yeah.

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Hey, if you are lonely, we have a
wicked opportunity.

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Even if you're not lonely, if you
just want to get around some

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people that have some high energy,
top producers, network a little

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bit, learn a lot.

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We brought on Alex McFadden

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because we wanted to promote what
he's doing coming April.

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He's putting on an awesome event.

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Matt and I are going to go do it.

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Next little segment is us just
having a chat.

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Alex, if you want to get tickets,
like you said, in this blurb, send

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us a note, DM us, and we'll get
you a promo code for it.

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Yeah, give us a promo code.

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a Give us some credit.

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credit.

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I don't think we get anything out

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of this, but just nice to track
the analytics.

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Oh, yeah.

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Yeah.

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It'd be really hard.

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We're a huge analytic tracker

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around here.

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Hey, Matt, how many DMs do you

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got?
I got, yeah.

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Exactly.

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I need a spreadsheet.

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Okay.

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Enjoy the show, you guys.

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Enjoy the show, Okay, Alex
McFadden, thanks for coming on the

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Mortgage Pug.

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How's it going, buddy?

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Welcome back to me, I guess.

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I'm doing great.

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Big event coming up.

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What can you tell us about it?

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Coming up real hot, real quick
here.

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April 3rd, Kelowna's first real
estate business and marketing

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event that I know of.

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I don't think there's ever been

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any of them.

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We're flying in speakers from New

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Orleans.

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from Reno, Nevada, Las Vegas.

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We got people coming from all the
way out in Vancouver, a couple of

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people from Calgary and Toronto,
all to speak and hang out in

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Kelowna, which I'm super stoked
about.

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So it's going to be a lot of fun.

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Awesome.

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So what time does this event
start?

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All day, baby.

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You got to be there from start to

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finish.

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Best believe we'll be running up

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the mountain at 6 a .m.

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No, so the event itself, it's a

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full day event, nine to four.

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And we're doing an after party at

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Pretty Not Bad with our friend
Casey, who's hosting, which is

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going to be fantastic.

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And we're excited for that part.

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But the idea here with this event
is I wanted to bring in people who

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I've met or I've seen speak
personally that have had a

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specific impact on my business,
marketing or communication into

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the town of Kelowna.

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I haven't seen an event.

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like this put on and I wanted to
do something for the real estate

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community and really just open it
up to people to expand their

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marketing, their business and
different opportunities.

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And the neat thing is it's not
just for realtors, like it's real

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estate, mortgage, finance,
insurance, builders.

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We got all sorts of people that
are going to be coming to this.

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So should it mostly be
professionals in the industry or

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like who should be coming to this?
should it mostly be professionals

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in the industry or like who should
be coming to this?

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Yeah, yeah.

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Well, exactly what I said.

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I think our primary focus was to
positively impact people who are

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around or in the real estate
community in some way, shape or

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form.

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So that could be finance, real

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estate or building.

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And so the key at the end of the

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day is if you have a small
business and or you're related to

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any of these industries in any
way, then you're going to have

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success.

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We do have speakers who are in the

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real estate community who are
going to be focusing an element on

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that.

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And we have speakers who are not

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in the real estate community who
are going to share their gifts

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with us that could affect.

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anyone as it relates to marketing

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communication teams all that kind
of fun stuff i love it and where

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can people get tickets online.

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Hopefully you guys have a link on

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your page right here.

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So if you follow me at The

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Mortgage Pug, you've got the
ability to get tickets on there on

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Eventbrite.

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Super easy to get them in there.

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We got 30 % sold in the first two
days, which I'm really excited

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about.

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I'm going to give you guys a promo

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code.

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So any listeners of the podcast

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will get a discount if they stick
in the promo code and prices are

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going to go up every 10 days until
the last day where they're going

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to be 300 bucks and hopefully get
them before that.

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Do people reach out to us for the
promo code or how do they get it

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from you?
Yeah, get people to DM you guys.

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guys directly or DM me and just
say Kelowna Real Estate Podcast

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and I'll send the link their way.

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I love it, man.

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Awesome.

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Well, thank you for putting this

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on and Matt and I will be there.

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We're stoked for it.

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Yeah, this is going to be unreal,
man.

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I'm excited to blow away Kelowna
and hoping this is the first of

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many events just like this.

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So thanks, guys.

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Appreciate you.

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Okay.

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We'll see you there.

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Okay.

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Welcome to the show, Spencer.

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Thanks for joining us, buddy.

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Thanks, Taylor.

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Appreciate you having me.

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Nice to meet you, Matt.

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Definitely.

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Yeah, we kind of like to start our
show with just what's your perfect

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Friday?
You know, what makes you

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productive?
And what do you do for work?

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And then kind of what do you do
for fun going into the weekend?

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Sure.

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I tend to be an early riser, kind

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of wake up at the sunrise.

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You know, that might mean sleeping

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in a little later in the winter,
but... I was going to say, it

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fluctuates.

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It does.

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It really does.

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I'm not joking.

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No, I might sleep until 8 o 'clock
sometimes in the winter, but in

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the summer, it's definitely a 5 a
.m.

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wake -up call.

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Yeah, nice.

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And to be honest, a lot of the
time, it's shower and then great

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to work at the home office.

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So just sort of the nature of our

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business.

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I do kind of like it though,

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because I do line up with...

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Toronto time for my workday

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generally.

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Most of our office is based out of

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Toronto and it's kind of nice to
be able to get a hold of people

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when you need to early in the
morning.

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But other than that, I do try to
get out with my wife, walk the dog

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in the morning as well.

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And then if it's a Friday, you

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know, I try to... you know,
hopefully wind up some work

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meetings during the day.

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Ideally go golfing sometime late

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afternoon.

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Nice.

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In the winter months, it might be
more like going to the gym, but I

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grew up playing competitive golf
and still do a little bit.

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So it's going to invite you to
come golfing with us, but nope.

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I know.

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So was I. I haven't got the invite

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yet.

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Well, yeah, Matt and I are

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competitive, just not with
competitive people.

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Sure.

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I got you.

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I play with anyone.

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But yeah, so maybe playing a local

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golf tournament or, you know, kind
of doing all the classic Okanagan

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things.

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So definitely like to go boating,

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like go wineries and like to hit
the steep slopes as well.

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Nice.

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Awesome.

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Well, yeah, waking up early, I've
been trying to use this alarm

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clock that, you know, it's like
one of those sun alarm clocks.

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I've been trying to use it for
like three years.

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I just can't figure out how to
program it.

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how to program it.

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But that would be my

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recommendation.

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But that would be my

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recommendation.

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00:07:10,690 --> 00:07:12,690
Yeah, my wife has one as well.

264
00:07:12,690 --> 00:07:14,230
my wife has one as well.

265
00:07:14,230 --> 00:07:15,170
But I don't know.

266
00:07:15,170 --> 00:07:18,650
I just for some reason, I just
wake up with the sun every day.

267
00:07:19,110 --> 00:07:19,390
Yeah.

268
00:07:19,550 --> 00:07:20,910
Well, let's talk about P -Kill.

269
00:07:21,050 --> 00:07:23,550
So you guys are a pretty big
lender and you seem to be gaining

270
00:07:23,550 --> 00:07:24,470
a lot of traction recently.

271
00:07:24,470 --> 00:07:26,130
And actually, Justin Smith, who we

272
00:07:26,130 --> 00:07:27,950
had on a few months ago, he was
talking about basically he

273
00:07:27,950 --> 00:07:30,490
analyzed and vetted a bunch of
lenders and you were one of the

274
00:07:30,490 --> 00:07:32,730
top choices, which coincidentally,
you know, you and I have kind of

275
00:07:32,730 --> 00:07:32,850
met.

276
00:07:32,850 --> 00:07:33,550
about a year ago or a year and a

277
00:07:33,550 --> 00:07:33,890
half ago.

278
00:07:33,890 --> 00:07:35,190
And we were kind of chatting about

279
00:07:35,190 --> 00:07:35,890
coming on the show anyway.

280
00:07:35,890 --> 00:07:38,680
So it worked out really well.

281
00:07:38,680 --> 00:07:40,760
But yeah, give us the elevator
pitch on Pico.

282
00:07:40,760 --> 00:07:43,440
Yeah, it's always nice to hear
people talk nicely about us.

283
00:07:43,440 --> 00:07:45,680
Our firm's fairly new to
especially Western Canada.

284
00:07:45,860 --> 00:07:48,100
Pico is only about six years old.

285
00:07:48,100 --> 00:07:49,380
And yeah, we're an investment

286
00:07:49,380 --> 00:07:52,160
manager running funds for credit
and equity throughout Canada, the

287
00:07:52,160 --> 00:07:53,920
United States.

288
00:07:53,920 --> 00:07:54,760
Our Canadian debt business is one

289
00:07:54,760 --> 00:07:57,300
of the largest CMHC lenders in
Canada for both term and

290
00:07:57,300 --> 00:07:57,520
construction.

291
00:07:57,520 --> 00:07:59,050
In 2024, we funded about almost

292
00:07:59,050 --> 00:08:00,150
900 deals across Canada, loan
sizes ranging from $2 million to

293
00:08:00,150 --> 00:08:00,330
$200 million.

294
00:08:00,330 --> 00:08:01,410
And we're also a conventional

295
00:08:01,410 --> 00:08:03,270
lender, funding bridge and term
loans on all asset classes.

296
00:08:03,270 --> 00:08:05,710
Those might be industrial deals,
some grocery and retail deals as

297
00:08:05,710 --> 00:08:05,850
well.

298
00:08:05,850 --> 00:08:07,890
We've now grown to a team of over

299
00:08:07,970 --> 00:08:11,790
100 team members across the
country and in the U .S.

300
00:08:11,790 --> 00:08:14,030
So we've had some pretty rapid
expansion, especially in 2024.

301
00:08:14,030 --> 00:08:18,270
We've got physical offices in
Toronto and Montreal and soon to

302
00:08:18,330 --> 00:08:19,850
be out west as well.

303
00:08:19,850 --> 00:08:21,030
We have an equity business that's

304
00:08:21,030 --> 00:08:25,030
also focused on multifamily JV
deals, both in Canada and the

305
00:08:25,580 --> 00:08:26,260
United States.

306
00:08:26,900 --> 00:08:29,080
You know, we're having a lot of

307
00:08:29,080 --> 00:08:31,400
success in local markets as well.

308
00:08:31,400 --> 00:08:33,520
So, you know, I don't think when

309
00:08:33,520 --> 00:08:36,559
Harley Gold, our managing
director, you know, was looking to

310
00:08:36,559 --> 00:08:41,740
add a body out west last year, I
don't think Kelowna was sort of

311
00:08:41,740 --> 00:08:43,220
top of mind maybe, but.

312
00:08:43,220 --> 00:08:46,020
I got in his ear, showed him, you

313
00:08:46,020 --> 00:08:49,310
know, all the projects that were
happening in Kelowna at the time

314
00:08:49,310 --> 00:08:53,550
and showed him our podcast, showed
him your podcast, you know, like

315
00:08:53,550 --> 00:08:56,030
it was a pretty easy sell after
that.

316
00:08:56,030 --> 00:08:56,150
Nice.

317
00:08:56,150 --> 00:08:57,930
We do what we can around here.

318
00:08:57,930 --> 00:08:58,110
Yeah.

319
00:08:58,110 --> 00:09:00,530
So yeah, with the amount of

320
00:09:00,530 --> 00:09:04,010
construction happening in Kelowna,
you know, so much that is CMHC

321
00:09:04,010 --> 00:09:07,070
business as well, that it's pretty
nice to, you know, be on the

322
00:09:07,270 --> 00:09:11,810
ground here and, we you know, not
have myself be, you know, in a big

323
00:09:11,850 --> 00:09:13,870
office tower in Toronto and get to
have boots on the ground.

324
00:09:13,870 --> 00:09:14,570
boots on the ground.

325
00:09:14,570 --> 00:09:16,030
Can I ask one question before we

326
00:09:16,940 --> 00:09:20,020
dive into this is since you're in
the US and Canada, does the US

327
00:09:20,020 --> 00:09:21,020
have like a similar to CMHC
program?

328
00:09:21,020 --> 00:09:21,960
Yeah, they do.

329
00:09:21,960 --> 00:09:23,880
But some of our team members have

330
00:09:24,040 --> 00:09:25,900
some experience in that world,
especially Harley.

331
00:09:25,900 --> 00:09:29,460
But yeah, our focus is definitely
on the debt side is on the CMHC

332
00:09:30,140 --> 00:09:31,360
business in Canada.

333
00:09:31,440 --> 00:09:32,120
Yeah, okay.

334
00:09:32,120 --> 00:09:35,340
We're just starting to get into
the debt business in the United

335
00:09:35,340 --> 00:09:35,460
States.

336
00:09:35,460 --> 00:09:36,960
And you guys do construction,

337
00:09:36,960 --> 00:09:38,400
bridge and like long term?
Yeah.

338
00:09:38,400 --> 00:09:39,640
So we're doing term construction
and bridge deals.

339
00:09:28,680 --> 00:09:41,140
So again, on all asset classes.

340
00:09:41,140 --> 00:09:42,940
So most of our business probably,

341
00:09:42,940 --> 00:09:45,840
you know, 80 to 90 % is CMHC
business, mostly term deals.

342
00:09:45,840 --> 00:09:45,980
Again, some construction as well.

343
00:09:46,520 --> 00:09:47,220
The construction side is

344
00:09:47,220 --> 00:09:49,060
definitely where we have the most
opportunity going forward,

345
00:09:49,060 --> 00:09:49,560
especially in Western Canada.

346
00:09:49,560 --> 00:09:50,800
We have team members in all

347
00:09:50,800 --> 00:09:53,120
different areas of Western Canada.

348
00:09:53,120 --> 00:09:55,920
Now we just brought someone on in

349
00:09:55,920 --> 00:09:58,680
Edmonton and she just brought
someone on in Halifax as well.

350
00:09:58,680 --> 00:10:00,980
a little bit smaller market like
Kelowna.

351
00:10:00,980 --> 00:10:03,780
It's really nice to be able to
have local expertise in all these

352
00:10:04,060 --> 00:10:04,520
different markets.

353
00:10:04,620 --> 00:10:05,820
You know, obviously we've had

354
00:10:05,820 --> 00:10:07,860
people in Vancouver and Calgary
for a while, again, Montreal and

355
00:10:07,860 --> 00:10:15,050
Toronto, but it's nice to get a
little more granular, go to events

356
00:10:15,050 --> 00:10:18,710
like UDI where you get to kind of
meet the people.

357
00:10:18,710 --> 00:10:22,390
I really like Kelowna from the
business world here.

358
00:10:22,390 --> 00:10:24,830
I think it's very easy to connect
with people.

359
00:10:25,290 --> 00:10:29,310
Everyone's kind of, you know, one
and a half degrees of separation

360
00:10:29,310 --> 00:10:29,430
apart.

361
00:10:29,430 --> 00:10:31,430
It's been nice to be known for

362
00:10:31,430 --> 00:10:32,590
what we do here.

363
00:10:32,590 --> 00:10:35,270
You kind of got me excited with

364
00:10:35,270 --> 00:10:36,890
how you guys are growing now.

365
00:10:37,030 --> 00:10:38,530
You kind of got me excited with

366
00:10:38,530 --> 00:10:40,150
how you guys are growing now.

367
00:10:40,150 --> 00:10:42,480
Maybe I could get a job in Kelowna

368
00:10:42,480 --> 00:10:44,600
and you could be West Kelowna.

369
00:10:44,600 --> 00:10:45,420
I don't know.

370
00:10:45,420 --> 00:10:45,540
Sure.

371
00:10:45,540 --> 00:10:45,640
Yeah.

372
00:10:45,640 --> 00:10:46,020
Okay.

373
00:10:46,020 --> 00:10:47,540
All right, Spencer, a high level

374
00:10:47,540 --> 00:10:48,660
question to start this
conversation.

375
00:10:48,660 --> 00:10:49,240
What is CMHC financing?
Sure.

376
00:10:49,240 --> 00:10:52,180
So the Canada Mortgage and Housing
Corporation, CMHC, is a government

377
00:10:52,360 --> 00:10:53,060
-owned corporation that manages
Canada's housing supply.

378
00:10:53,060 --> 00:10:56,080
CMHC's mission is to make Canada's
housing more affordable and

379
00:10:56,080 --> 00:10:56,560
accessible to all Canadians.

380
00:10:56,560 --> 00:10:58,110
They're the only provider of loan

381
00:10:58,110 --> 00:11:00,110
insurance for multi -unit
residential properties in Canada.

382
00:11:00,310 --> 00:11:03,390
So CMHC supports the construction,
purchase, and refinancing of a

383
00:11:04,090 --> 00:11:04,970
variety of multi -unit rental
properties.

384
00:11:05,310 --> 00:11:06,530
Anything that we do is five plus
units.

385
00:11:06,530 --> 00:11:09,050
So what they offer is a
certificate of insurance that is a

386
00:11:09,050 --> 00:11:11,050
document issued by the Canada
Mortgage and Housing Corporation,

387
00:11:11,050 --> 00:11:10,370
basically acts as a mortgage loan
insured by CMHC, meaning the

388
00:11:10,370 --> 00:11:11,890
lender is protected against
financial losses if the borrower

389
00:11:11,890 --> 00:11:12,810
defaults on their payments.

390
00:11:12,810 --> 00:11:13,850
So generally, they're not putting

391
00:11:13,850 --> 00:11:18,050
down a lot of money to access this
program as little as 5%.

392
00:11:18,250 --> 00:11:20,470
So there's huge advantages to the
program and what this certificate

393
00:11:20,470 --> 00:11:22,230
of insurance does.

394
00:11:22,230 --> 00:11:25,420
is it protects the lenders who are

395
00:11:25,420 --> 00:11:30,080
issuing the money for those loans?
I guess to oversimplify it, guess

396
00:11:30,080 --> 00:11:34,080
to oversimplify it, there is what
most general public would be aware

397
00:11:34,080 --> 00:11:37,600
of as insured mortgages on
residential houses with less than

398
00:11:37,600 --> 00:11:38,940
20 % down.

399
00:11:38,940 --> 00:11:41,600
Similar process where the borrower

400
00:11:41,600 --> 00:11:44,780
has to pay for that insurance,
right?

401
00:11:44,780 --> 00:11:48,980
So it's much like on these five
units and above, the borrower

402
00:11:48,980 --> 00:11:53,000
would still pay for that insurance
premium, but then in return would

403
00:11:53,000 --> 00:11:56,240
get a... a superior rate, longer
amortizations, less down payment.

404
00:11:56,240 --> 00:12:00,560
Like there's a lot of benefits to
kind of justify the cost of that

405
00:12:00,560 --> 00:12:03,140
insurance premium, right?
You got it.

406
00:12:03,140 --> 00:12:04,140
Yeah, exactly.

407
00:12:04,380 --> 00:12:07,000
So with the MLI Select program in

408
00:12:07,000 --> 00:12:12,800
particular, they can go up to 95 %
loan to value or loan to cost, up

409
00:12:12,800 --> 00:12:15,900
to 50 -year amortizations, as long
as you get things like that

410
00:12:15,900 --> 00:12:18,680
servicing at a minimum of 1 .1.

411
00:12:18,680 --> 00:12:20,680
So there's huge advantages to the

412
00:12:20,680 --> 00:12:21,160
programs.

413
00:12:21,630 --> 00:12:23,530
They've had to adjust a little bit

414
00:12:23,530 --> 00:12:24,230
over time here.

415
00:12:24,230 --> 00:12:25,530
The program's not even three years

416
00:12:25,530 --> 00:12:27,890
old yet, but most developers and
even retail investors are going

417
00:12:27,890 --> 00:12:28,950
that way.

418
00:12:28,950 --> 00:12:29,950
And seeing the benefits going

419
00:12:29,950 --> 00:12:30,910
forward.

420
00:12:30,910 --> 00:12:33,210
Kind of an odd question, question,

421
00:12:33,210 --> 00:12:37,250
but like the market is a bit soft
right now.

422
00:12:37,250 --> 00:12:40,250
This is kind of like the only way
that these projects pencil.

423
00:12:40,250 --> 00:12:43,890
But when the market heats up or
like things get more in line, the

424
00:12:43,890 --> 00:12:47,610
market will this still be a
preferred product for builders

425
00:12:47,610 --> 00:12:50,770
going forward?
Yeah, it's a little bit market

426
00:12:50,770 --> 00:12:52,350
dependent, both on the
construction side and the term

427
00:12:52,350 --> 00:12:52,490
side.

428
00:12:52,490 --> 00:12:54,310
For the MLS Select program in

429
00:12:54,310 --> 00:12:56,140
particular, we've been talking
about.

430
00:12:56,140 --> 00:12:58,660
Basically, there's three ways to
access the program.

431
00:12:58,660 --> 00:13:00,240
It's through affordability,
accessibility, energy efficiency.

432
00:13:00,540 --> 00:13:02,780
Often in markets like the
prairies, we're getting a lot of

433
00:13:02,780 --> 00:13:03,580
the MLI select points.

434
00:13:03,840 --> 00:13:04,860
Basically, you accumulate 100

435
00:13:04,860 --> 00:13:08,500
points is the goal, and then you
can get up to those 50 -year

436
00:13:08,500 --> 00:13:08,720
amortizations.

437
00:13:08,720 --> 00:13:11,360
In prairies, you'll see a lot more

438
00:13:11,360 --> 00:13:14,620
people going on the affordability
route just because the numbers

439
00:13:14,620 --> 00:13:15,620
make sense more there.

440
00:13:15,620 --> 00:13:16,560
Here, traditionally, they've been

441
00:13:16,560 --> 00:13:18,900
shooting more for the energy
efficiency side.

442
00:13:18,900 --> 00:13:22,220
You get up to your 100 points
there.

443
00:13:22,220 --> 00:13:24,780
Last year, they bumped their
energy efficiency back to 50

444
00:13:24,780 --> 00:13:26,180
points, which in turn made
developers having to you know,

445
00:13:26,180 --> 00:13:27,800
either access points from
accessibility or more likely from

446
00:13:27,800 --> 00:13:28,120
the affordability side.

447
00:13:28,120 --> 00:13:29,080
What is accessibility?

448
00:13:29,080 --> 00:13:31,600
Like, is that just elevators?
Like I was trying to figure out

449
00:13:31,600 --> 00:13:34,440
how this works because all the
buildings in Kelowna are all high

450
00:13:34,440 --> 00:13:36,020
density, three or four stories.

451
00:13:36,020 --> 00:13:37,680
Like, is it just elevators?

452
00:13:37,680 --> 00:13:39,980
Like, obviously these are not
walkout ranchers.

453
00:13:39,980 --> 00:13:41,660
Yeah, there's more than that to
it.

454
00:13:41,660 --> 00:13:44,200
I believe it's the Rick Hansen
Foundation that sort of governing.

455
00:13:44,200 --> 00:13:45,400
body for that.

456
00:13:45,440 --> 00:13:47,420
You know, I wish we saw more on

457
00:13:47,420 --> 00:13:49,600
the accessibility side.

458
00:13:50,060 --> 00:13:55,960
I don't want to say it's rare, but

459
00:13:56,320 --> 00:14:00,440
we don't see enough of it for sure
on the accessibility side yet.

460
00:14:00,440 --> 00:14:03,580
And it would be nice if developers
were incentivized more to go to

461
00:14:03,580 --> 00:14:04,720
the accessibility group for
points.

462
00:14:05,240 --> 00:14:07,220
I feel like we're definitely going
to see the accessibility side,

463
00:14:07,220 --> 00:14:09,180
whether developers want it or not,
though, right?

464
00:14:09,180 --> 00:14:12,440
Like building codes changed where
we essentially have to have that

465
00:14:12,440 --> 00:14:12,740
accessibility model.

466
00:14:12,740 --> 00:14:14,740
So does that not align now with

467
00:14:14,740 --> 00:14:16,000
the MLI?
Yeah, it's aligning better.

468
00:14:16,000 --> 00:14:17,780
And I think in some provinces,
it's aligning better.

469
00:14:17,780 --> 00:14:22,470
We just generally still don't see
enough of it so far.

470
00:14:22,470 --> 00:14:22,530
Yeah.

471
00:14:22,590 --> 00:14:22,770
Yeah.

472
00:14:22,770 --> 00:14:25,730
And then affordability is based on
CMHC's data, right?

473
00:14:25,730 --> 00:14:27,470
And that gets reviewed.

474
00:14:27,470 --> 00:14:28,790
Yeah, it's based on the medium

475
00:14:28,790 --> 00:14:29,470
renter income.

476
00:14:29,470 --> 00:14:30,290
So it's not just the medium income

477
00:14:30,290 --> 00:14:30,670
of everyone.

478
00:14:30,670 --> 00:14:32,170
It's just medium renter income.

479
00:14:32,170 --> 00:14:36,510
So it's based on 2019 statistics
right now, probably waiting for an

480
00:14:36,510 --> 00:14:36,710
update soon.

481
00:14:36,710 --> 00:14:38,630
But I believe for Kelowna, the max

482
00:14:38,630 --> 00:14:40,810
renter income to qualify for
affordability is $1 ,188 per

483
00:14:40,810 --> 00:14:40,970
month.

484
00:14:40,970 --> 00:14:43,150
So any units that have to be

485
00:14:43,150 --> 00:14:47,440
dedicated to affordability for 10
plus years would have to be at $1

486
00:14:47,440 --> 00:14:49,200
,188 per month or lower.

487
00:14:49,200 --> 00:14:49,600
Those median renter incomes are

488
00:14:49,600 --> 00:14:50,320
different for every city.

489
00:14:50,320 --> 00:14:51,200
throughout Canada, that's all made

490
00:14:51,200 --> 00:14:52,340
publicly available on CMHC's
website.

491
00:14:52,340 --> 00:14:53,740
based on Yeah.

492
00:14:53,740 --> 00:14:55,560
Developers kind of get a bad name

493
00:14:55,560 --> 00:14:57,700
sometimes, but I think this
program specifically, like why

494
00:14:57,700 --> 00:15:00,680
it's designed this way is to put
units on the market that are

495
00:15:00,680 --> 00:15:02,440
affordable, efficient, accessible.

496
00:15:02,440 --> 00:15:03,220
Like it's a government program

497
00:15:03,300 --> 00:15:04,760
that's driven, right?
To basically solve.

498
00:15:04,760 --> 00:15:07,420
one of the housing issues we have.

499
00:15:07,420 --> 00:15:09,120
So any developers that are using

500
00:15:09,120 --> 00:15:12,920
this shouldn't be like, oh,
they're big, bad developers.

501
00:15:12,920 --> 00:15:15,580
They're playing by the rules to
provide an asset that's

502
00:15:15,580 --> 00:15:17,440
desperately needed right now.

503
00:15:17,440 --> 00:15:17,940
Absolutely.

504
00:15:17,940 --> 00:15:18,340
Yeah.

505
00:15:18,340 --> 00:15:21,440
I mean, the whole idea is to put

506
00:15:21,700 --> 00:15:25,500
more affordable units on the
market, get people in quality

507
00:15:25,640 --> 00:15:25,700
housing.

508
00:15:25,700 --> 00:15:26,920
So I think the developers who

509
00:15:26,920 --> 00:15:30,020
definitely see the best results
are developers who are building

510
00:15:30,020 --> 00:15:31,120
very quality units with the
affordability component,

511
00:15:31,120 --> 00:15:31,400
hopefully.

512
00:15:31,400 --> 00:15:33,760
Again, it's a little harder to

513
00:15:33,760 --> 00:15:36,880
make work in VC on the
affordability side sometimes.

514
00:15:36,880 --> 00:15:39,920
But definitely through the
prairies, we see a lot of great

515
00:15:39,920 --> 00:15:41,620
buildings being built with
affordability components.

516
00:15:41,620 --> 00:15:42,860
$1 ,188.

517
00:15:42,860 --> 00:15:47,360
Is that like a few units have to

518
00:15:47,360 --> 00:15:51,240
be allocated for that or all of
them have to be at that?

519
00:15:51,240 --> 00:15:53,000
have to be at that?
Yeah.

520
00:15:53,000 --> 00:15:57,560
So you have to dedicate a certain
number of units to achieve a

521
00:15:57,560 --> 00:15:59,920
certain number of points.

522
00:15:59,920 --> 00:16:02,100
So based on whether it's new

523
00:16:02,100 --> 00:16:04,040
construction or an existing
building where you can get those

524
00:16:04,040 --> 00:16:04,460
points allocated.

525
00:16:04,460 --> 00:16:05,720
So obviously when... developers

526
00:16:05,720 --> 00:16:10,260
are working with their performas,
they have to sort of see how many

527
00:16:10,260 --> 00:16:15,180
units they can dedicate to
something to still make a pencil,

528
00:16:15,180 --> 00:16:18,100
right?
Yeah, because like that seems like

529
00:16:18,320 --> 00:16:19,720
very hard to pencil.

530
00:16:20,190 --> 00:16:21,450
Yeah, and again, those numbers are

531
00:16:21,450 --> 00:16:22,570
based off 2019.

532
00:16:22,570 --> 00:16:24,030
So we'll see if there's any

533
00:16:24,030 --> 00:16:24,550
updates going forward.

534
00:16:24,630 --> 00:16:24,930
Okay, yeah.

535
00:16:25,010 --> 00:16:26,670
see if there's any updates going
forward.

536
00:16:26,670 --> 00:16:27,230
Okay, yeah.

537
00:16:27,230 --> 00:16:29,370
Okay, and then can you kind of

538
00:16:29,370 --> 00:16:31,670
fill us in and policy changes in
the last six months?

539
00:16:31,670 --> 00:16:35,610
I think it was kind of springtime
that they started to come out with

540
00:16:35,610 --> 00:16:40,110
some policy adaptations to maybe
make the program fit a little bit

541
00:16:40,110 --> 00:16:41,830
better or give more opportunity to
people.

542
00:16:41,830 --> 00:16:46,310
Yeah, so they made major changes
in June and then November as well.

543
00:16:46,310 --> 00:16:48,110
So in June last year, they
extended new construction

544
00:16:48,110 --> 00:16:50,810
amortizations to 50 years from 40
years, which incentivized

545
00:16:50,810 --> 00:16:52,230
developers a little bit.

546
00:16:52,230 --> 00:16:54,250
That was also when they reduced

547
00:16:54,610 --> 00:16:58,590
the energy efficiency component
from a maximum of 100 points back

548
00:16:58,590 --> 00:16:59,210
to 50 points.

549
00:16:59,210 --> 00:16:59,950
Most new construction is

550
00:16:59,950 --> 00:17:00,290
qualifying for energy efficiency,
and it wasn't maybe incentivizing.

551
00:17:00,290 --> 00:17:00,610
enough affordability component
there.

552
00:17:00,710 --> 00:17:02,590
So moving it back to 50 points,
hopefully incentivizing either

553
00:17:02,590 --> 00:17:03,850
some accessibility or
affordability components as well.

554
00:17:03,850 --> 00:17:06,650
One other major change that
happened in September was approved

555
00:17:06,650 --> 00:17:09,130
lenders like P2Kill could
previously have lender

556
00:17:09,130 --> 00:17:11,890
correspondence mortgage brokers
who could submit on the lender's

557
00:17:11,890 --> 00:17:13,369
behalf.

558
00:17:13,550 --> 00:17:16,010
And CMHC decided to take that part

559
00:17:16,010 --> 00:17:16,190
away.

560
00:17:16,190 --> 00:17:17,069
Now all submissions have to go

561
00:17:17,069 --> 00:17:18,150
through lenders like Peak Hill.

562
00:17:18,150 --> 00:17:19,550
The volume of submissions to the

563
00:17:19,790 --> 00:17:21,290
lenders now has gone up
dramatically.

564
00:17:21,290 --> 00:17:25,510
And I think it's been a bit of a
change on the lenders to sort of

565
00:17:25,589 --> 00:17:26,310
beef up our teams and make sure
that we can do these submissions

566
00:17:26,310 --> 00:17:28,630
accordingly and that the quality
of those submissions is at the

567
00:17:28,630 --> 00:17:29,290
highest we can make them.

568
00:17:29,290 --> 00:17:30,890
Yeah, I'm surprised they made that

569
00:17:30,890 --> 00:17:31,110
change.

570
00:17:31,110 --> 00:17:32,630
Why did they do that?

571
00:17:32,630 --> 00:17:33,810
I think it was more for quality
assurance.

572
00:17:33,810 --> 00:17:36,890
When you had different levels of
mortgage brokers submitting things

573
00:17:36,890 --> 00:17:37,570
to CMHC.

574
00:17:37,570 --> 00:17:39,250
Again, on the lender's behalf,

575
00:17:39,250 --> 00:17:41,130
maybe things always more the
quality they should be.

576
00:17:41,130 --> 00:17:44,510
If everything's coming through the
lender, it's all through the same

577
00:17:44,510 --> 00:17:44,670
people.

578
00:17:44,670 --> 00:17:45,730
It's all the same relationships

579
00:17:45,730 --> 00:17:46,170
with CMHC.

580
00:17:46,170 --> 00:17:48,530
And hopefully, you know, get those

581
00:17:48,530 --> 00:17:49,970
certificate insurance insurance
more quickly.

582
00:17:49,970 --> 00:17:53,710
Has the timeframe for you guys
turning around been the same or is

583
00:17:53,710 --> 00:17:58,650
it lagged at all for that?
With PKL, we have a whole team

584
00:17:58,650 --> 00:18:01,530
internally now that's dedicated
just to CMHC submissions.

585
00:18:01,530 --> 00:18:06,210
So we've seen great turnaround
times from CMHC lately.

586
00:18:06,210 --> 00:18:11,920
There was a bit of a backlog in
the last year or two, but yeah,

587
00:18:11,920 --> 00:18:14,180
great turnaround times right now.

588
00:18:14,180 --> 00:18:16,520
And hopefully going forward, you

589
00:18:16,520 --> 00:18:18,140
know, we'll see the same.

590
00:18:18,140 --> 00:18:21,500
So if a developer wanted to access

591
00:18:21,500 --> 00:18:27,120
this, wanted to access this, would
they still call you Taylor or you

592
00:18:27,120 --> 00:18:30,560
just call Spencer?
Yeah, well, I think there's two

593
00:18:30,560 --> 00:18:31,120
points there.

594
00:18:31,530 --> 00:18:33,890
So previously you had to be a

595
00:18:33,890 --> 00:18:35,550
designated approved MLI select
broker, right?

596
00:18:35,550 --> 00:18:37,550
Now they've taken away that
requirement.

597
00:18:37,550 --> 00:18:37,890
Yeah.

598
00:18:37,890 --> 00:18:39,990
So it's kind of funny that they

599
00:18:39,990 --> 00:18:41,430
took that away, but then
everything now has to go through

600
00:18:41,430 --> 00:18:42,590
the lender anyways.

601
00:18:42,590 --> 00:18:42,650
Yeah.

602
00:18:42,650 --> 00:18:45,330
I mean, any broker can still bring
it to the lender, but the lender

603
00:18:45,330 --> 00:18:48,650
has to submit now to CMHC before
the broker could submit as well.

604
00:18:48,650 --> 00:18:49,670
So they can submit directly.

605
00:18:49,750 --> 00:18:51,530
Now the whole file has to be

606
00:18:51,530 --> 00:18:51,990
submitted through the lender
anyways.

607
00:18:52,110 --> 00:18:54,250
Again, it's been a good process
and we've got a whole team

608
00:18:54,250 --> 00:18:55,450
dedicated to this now.

609
00:18:55,450 --> 00:18:58,920
There's, like I said, we did

610
00:18:59,060 --> 00:19:02,360
almost 900 loans last year and
those are a lot of files to get

611
00:19:02,560 --> 00:19:02,900
through.

612
00:19:02,900 --> 00:19:03,320
Yeah.

613
00:19:03,320 --> 00:19:05,840
Well, I guess what sets Peek Hill
apart from other lenders?

614
00:19:06,100 --> 00:19:09,040
Like where's your guys' niche?
Where's your value add?

615
00:19:09,040 --> 00:19:12,160
You know, know, like I said, we're
an approved CMHC lender.

616
00:19:12,520 --> 00:19:14,420
We're dedicated to that program
and that's our expertise.

617
00:19:14,420 --> 00:19:17,360
So the goal is to, you know, be
one of the largest CMHC lenders in

618
00:19:17,360 --> 00:19:19,700
Canada, which we already are, and
focus on multifamily.

619
00:19:19,700 --> 00:19:24,120
You know, obviously we don't want
to have all our eggs in one basket

620
00:19:24,380 --> 00:19:24,640
either.

621
00:19:24,640 --> 00:19:25,580
Hence why we also do conventional

622
00:19:25,580 --> 00:19:26,740
loans, construction, industrial
and retail as well.

623
00:19:26,920 --> 00:19:28,940
We've got an equity division as
well now.

624
00:19:29,140 --> 00:19:31,200
So, you know, we're definitely
spreading out and diversifying

625
00:19:31,200 --> 00:19:32,630
what our capabilities are.

626
00:19:32,630 --> 00:19:33,750
We're bringing on great people

627
00:19:33,750 --> 00:19:34,310
with great experience, again,
right across North America.

628
00:19:34,310 --> 00:19:38,250
Our equity team in the States has
done huge JV deals in places like

629
00:19:38,250 --> 00:19:40,210
Miami, New York, I believe Dallas.

630
00:19:40,210 --> 00:19:41,150
They're definitely spreading their

631
00:19:41,150 --> 00:19:41,490
wings.

632
00:19:41,490 --> 00:19:45,810
And, you know, we want to be the

633
00:19:45,810 --> 00:19:47,630
best at what we do.

634
00:19:48,070 --> 00:19:49,970
We want to be the best CMHC lender

635
00:19:49,970 --> 00:19:51,870
and the best, you know,
conventional lender across Canada,

636
00:19:51,870 --> 00:19:54,070
all different types of developers,
whether it's developers that focus

637
00:19:54,070 --> 00:19:55,050
on industrial or strictly
multifamily.

638
00:19:55,050 --> 00:19:55,150
Yeah.

639
00:19:55,150 --> 00:19:57,150
Kind of to go back to the policy

640
00:19:57,150 --> 00:20:01,040
changes, maybe a year ago, I was
looking at these programs quite a

641
00:20:01,040 --> 00:20:03,760
bit thinking the restrictive part
was that you couldn't refinance,

642
00:20:03,760 --> 00:20:06,220
take the equity and basically do
what you want.

643
00:20:06,400 --> 00:20:08,240
You had to redeploy it back
into... real estate, which makes

644
00:20:08,240 --> 00:20:10,500
sense for the program, right?
They're trying to put units on the

645
00:20:10,500 --> 00:20:11,300
market.

646
00:20:11,300 --> 00:20:13,600
So a lot of larger developers

647
00:20:13,600 --> 00:20:14,420
would, you know, build up these
massive portfolios.

648
00:20:14,420 --> 00:20:19,400
And then, you know, the only way
to basically cash out is sell them

649
00:20:19,600 --> 00:20:21,080
off to like a REIT.

650
00:20:21,220 --> 00:20:22,580
But since they've changed that

651
00:20:22,580 --> 00:20:24,060
recently, where, you know, it
gives more autonomy for developers

652
00:20:24,060 --> 00:20:28,420
to deploy that money, it seems
like this program will kind of

653
00:20:28,420 --> 00:20:29,800
keep that momentum going.

654
00:20:29,960 --> 00:20:30,720
Like it just gives more

655
00:20:30,720 --> 00:20:30,780
flexibility.

656
00:20:30,780 --> 00:20:32,400
But yeah, have you had much

657
00:20:32,400 --> 00:20:34,740
feedback from, I guess, anyone in
the industry?

658
00:20:35,020 --> 00:20:36,760
Like, has that changed?
been a bit of a catalyst to keep

659
00:20:36,760 --> 00:20:38,480
things moving along?
From the lender perspective, we're

660
00:20:38,480 --> 00:20:44,380
generally still going to want to
see that equity going into more

661
00:20:44,380 --> 00:20:44,500
projects.

662
00:20:44,500 --> 00:20:45,380
the lender perspective, we're

663
00:20:45,380 --> 00:20:48,900
generally still going to want to
see that equity going into more

664
00:20:48,900 --> 00:20:49,360
projects.

665
00:20:49,360 --> 00:20:50,880
It's always at our discretion at

666
00:20:50,880 --> 00:20:54,380
the end if we're going to lend the
money on it.

667
00:20:54,660 --> 00:20:58,300
So, you know, we want to make sure
it's going to something valuable

668
00:20:58,300 --> 00:21:00,160
or that at least...

669
00:21:00,160 --> 00:21:02,580
The story makes sense, right?

670
00:21:02,580 --> 00:21:04,500
Why someone's doing something with
the money.

671
00:21:04,500 --> 00:21:05,820
But most of these changes they're
making have been good and they've

672
00:21:06,060 --> 00:21:06,220
been flexible.

673
00:21:06,220 --> 00:21:07,800
And there's definitely a reason

674
00:21:07,800 --> 00:21:08,440
behind them.

675
00:21:08,440 --> 00:21:10,420
One of the other changes that was

676
00:21:10,420 --> 00:21:15,160
made recently was regarding
construction, something called

677
00:21:15,440 --> 00:21:16,660
rental achievement holdbacks.

678
00:21:16,660 --> 00:21:20,500
So you had a lot of these

679
00:21:20,800 --> 00:21:22,960
developers getting MLIs like
construction loans up to 95 % loan

680
00:21:23,160 --> 00:21:23,740
cost.

681
00:21:23,740 --> 00:21:24,840
What they've done is they've

682
00:21:24,840 --> 00:21:27,040
scaled that back now in certain
situations to 75%.

683
00:21:27,040 --> 00:21:30,820
And it's based on maybe
geographic.

684
00:21:30,820 --> 00:21:33,760
traffic location, strength of
developer, and other factors.

685
00:21:33,760 --> 00:21:36,100
But it basically requires the
borrowers to achieve a minimum

686
00:21:36,100 --> 00:21:38,080
project equity of 25%.

687
00:21:38,080 --> 00:21:39,200
And based upon the rental

688
00:21:39,200 --> 00:21:40,840
achievement, they can get
potentially up to 95 % or whatever

689
00:21:40,840 --> 00:21:42,040
the certificate of insurance says.

690
00:21:42,040 --> 00:21:44,120
So there's a little bit more

691
00:21:44,120 --> 00:21:46,280
requirement now on the equity side
for these construction projects.

692
00:21:46,280 --> 00:21:49,480
And we do have solutions to maybe
get to higher leverage for some of

693
00:21:49,480 --> 00:21:50,680
these developers going forward.

694
00:21:50,680 --> 00:21:52,520
We're just starting to see a

695
00:21:52,600 --> 00:21:53,000
trickle in now.

696
00:21:53,000 --> 00:21:54,940
So this was a recent change.

697
00:21:54,940 --> 00:21:58,080
We're just sort of moving where
the needle goes, I'd say.

698
00:21:58,080 --> 00:22:01,740
So with the rental holdbacks, what
are you waiting for, like a

699
00:22:01,820 --> 00:22:03,620
vacancy rate or are we looking for
there?

700
00:22:03,620 --> 00:22:03,760
Yeah.

701
00:22:03,960 --> 00:22:05,600
So basically we're looking for the

702
00:22:05,600 --> 00:22:07,880
rental achievement to be met.

703
00:22:07,880 --> 00:22:09,080
So they need to reach certain

704
00:22:09,080 --> 00:22:12,880
qualifications on lease up and
where they can achieve there.

705
00:22:12,880 --> 00:22:16,220
So once they reach a certain
threshold, the rest of those funds

706
00:22:10,360 --> 00:22:11,260
will be distributed.

707
00:22:11,260 --> 00:22:13,560
And again, they can get up to

708
00:22:13,560 --> 00:22:16,820
whatever they qualify for on the
certificate of insurance.

709
00:22:16,820 --> 00:22:17,980
That makes sense to me.

710
00:22:17,980 --> 00:22:18,460
makes sense to me.

711
00:22:18,460 --> 00:22:21,360
Honestly, this is one of the
programs that I feel that the

712
00:22:21,360 --> 00:22:23,660
changes that they're making are
evolving with it and they're

713
00:22:23,660 --> 00:22:24,440
actually pretty good.

714
00:22:24,440 --> 00:22:26,240
Where are you guys seeing

715
00:22:26,380 --> 00:22:28,000
geographically most of these
fundings for you?

716
00:22:28,000 --> 00:22:28,580
Like across Canada?
Canada?

717
00:22:28,580 --> 00:22:31,140
I mean, again, like I said, we're
right across the country.

718
00:22:31,140 --> 00:22:35,260
In terms of lending, we'll go down
to $2 million or even $1 million

719
00:22:35,260 --> 00:22:36,760
on a term loan.

720
00:22:36,760 --> 00:22:40,080
So we see a ton of deals

721
00:22:40,080 --> 00:22:41,520
throughout the prairies.

722
00:22:41,740 --> 00:22:43,820
You get a lot of, you know, let's

723
00:22:43,820 --> 00:22:46,240
call them retail investor.

724
00:22:46,240 --> 00:22:48,320
They might just be looking to buy

725
00:22:48,500 --> 00:22:51,220
a few apartment buildings or, you
know, maybe buy some new stock.

726
00:22:51,220 --> 00:22:53,980
And maybe that loan is $2 or $3
million.

727
00:22:53,980 --> 00:22:56,690
It qualifies for the MLI Select
program.

728
00:22:57,010 --> 00:23:00,250
They can potentially get up to
their 95 % financing on

729
00:23:00,250 --> 00:23:00,870
acquisitions.

730
00:23:00,870 --> 00:23:05,370
So we see a lot of that in the

731
00:23:05,370 --> 00:23:05,790
prairies.

732
00:23:05,790 --> 00:23:08,010
In the Okanagan, it's a little

733
00:23:08,010 --> 00:23:08,230
different story.

734
00:23:08,230 --> 00:23:09,670
Obviously, a lot of major

735
00:23:09,670 --> 00:23:10,270
developers here.

736
00:23:10,270 --> 00:23:12,130
We've seen major developers

737
00:23:12,130 --> 00:23:13,830
starting to trickle in from
Vancouver and elsewhere and

738
00:23:13,830 --> 00:23:14,410
throughout Alberta.

739
00:23:14,410 --> 00:23:16,490
Again, like you said, it's harder

740
00:23:16,490 --> 00:23:18,390
to make the numbers work here
sometimes.

741
00:23:18,390 --> 00:23:21,830
So those people tend to be very
good at what they do.

742
00:23:21,830 --> 00:23:22,930
And we'll see how things go.

743
00:23:22,930 --> 00:23:23,810
I listened to your podcast last

744
00:23:23,810 --> 00:23:25,130
week with Jeff Hancock.

745
00:23:25,130 --> 00:23:25,890
Probably going to be rising

746
00:23:25,890 --> 00:23:29,630
vacancy with so many new units
coming into the market.

747
00:23:29,850 --> 00:23:31,470
It'll be interesting to see how
developers adapt, whether they

748
00:23:31,470 --> 00:23:34,560
sort of stick with the CBHC
programs, whether they go to some

749
00:23:34,560 --> 00:23:37,040
conventional financing moving
forward, or maybe do they pivot

750
00:23:37,040 --> 00:23:39,000
back to some condo projects as
well.

751
00:23:39,000 --> 00:23:39,820
Yeah, it's interesting.

752
00:23:39,820 --> 00:23:40,500
Yeah.

753
00:23:40,500 --> 00:23:42,580
Yeah, we did talk pretty in depth.

754
00:23:42,580 --> 00:23:44,460
And yeah, his data on that was

755
00:23:44,460 --> 00:23:44,560
wild.

756
00:23:44,560 --> 00:23:45,060
But I agree.

757
00:23:45,060 --> 00:23:47,460
It looks like there may be some
more opportunity to stratify some

758
00:23:47,460 --> 00:23:49,020
of these units and do resale.

759
00:23:49,020 --> 00:23:50,000
There's also a lot of resale, new

760
00:23:50,000 --> 00:23:50,960
construction coming online as
well.

761
00:23:50,980 --> 00:23:52,540
Well, it's not that was started a
few years ago.

762
00:23:52,540 --> 00:23:54,540
There's not that many new starts
right now.

763
00:23:54,540 --> 00:23:54,940
No.

764
00:23:54,940 --> 00:23:55,220
Yeah.

765
00:23:55,220 --> 00:23:57,120
So how do you guys generally fund
these?

766
00:23:57,120 --> 00:24:01,360
Where's the capital coming from?
How does outside of it work?

767
00:24:01,360 --> 00:24:01,560
Sure.

768
00:24:02,000 --> 00:24:03,220
So basically, we have various

769
00:24:03,220 --> 00:24:04,440
institutional pension funds,
pension plans, and family offices

770
00:24:04,440 --> 00:24:04,820
as investors.

771
00:24:04,820 --> 00:24:06,340
Everything's on our own balance

772
00:24:06,460 --> 00:24:07,500
sheet and we manage it.

773
00:24:07,500 --> 00:24:09,420
We did about $5 .3 billion in

774
00:24:09,420 --> 00:24:10,700
loans last year.

775
00:24:10,700 --> 00:24:11,620
That's including CMHC loans,

776
00:24:11,620 --> 00:24:12,760
bridge loans, and other
conventional loans.

777
00:24:13,000 --> 00:24:15,260
So we have a whole team dedicated
to the investor relations side of

778
00:24:15,480 --> 00:24:15,560
it.

779
00:24:15,560 --> 00:24:16,920
Yeah, I'm sort of glad I'm not on

780
00:24:16,920 --> 00:24:18,520
that side of business.

781
00:24:18,520 --> 00:24:20,260
It's much more fun probably being

782
00:24:20,520 --> 00:24:21,220
on the developer side.

783
00:24:21,220 --> 00:24:23,660
Yeah, I think it'd be kind of fun

784
00:24:23,660 --> 00:24:26,460
to go into those meetings and
listen, I need a billion dollars.

785
00:24:26,460 --> 00:24:27,660
This is why.

786
00:24:27,660 --> 00:24:29,960
Matt asked me that question every

787
00:24:29,960 --> 00:24:30,060
day.

788
00:24:30,060 --> 00:24:32,560
Yeah, well, I mean, yeah, we've

789
00:24:32,560 --> 00:24:35,820
been talking a lot about this the
last little while, but there seems

790
00:24:35,820 --> 00:24:37,040
to be either.

791
00:24:37,040 --> 00:24:38,280
midway through the project or

792
00:24:38,280 --> 00:24:44,280
projects that are being finished
and a lot of these kind of land

793
00:24:44,280 --> 00:24:48,200
assemblies or you know what we
talked about a few weeks ago on

794
00:24:48,200 --> 00:24:51,280
the show with city of Kelowna you
know their fast track program and

795
00:24:51,280 --> 00:24:54,520
having that now open up like five
doors and above kind of opens up

796
00:24:54,520 --> 00:24:57,660
MLI for the average person yeah
obviously like that's a huge piece

797
00:24:57,660 --> 00:25:01,580
of the market for you if you're
doing loans you know definitely

798
00:25:01,580 --> 00:25:06,920
yeah and again that's a lot of
what we see in Alberta right now

799
00:25:06,920 --> 00:25:10,640
we see kind of those five to
twelve units yeah and again that's

800
00:25:10,640 --> 00:25:15,280
a lot of what we see in Alberta
right now we see kind of those

801
00:25:15,280 --> 00:25:18,520
five to twelve units Maybe you
have a builder building them and

802
00:25:18,520 --> 00:25:22,020
somebody coming along and say,
hey, I'm going to purchase those

803
00:25:22,020 --> 00:25:23,900
units, rent them out going
forward.

804
00:25:23,900 --> 00:25:27,540
I think we'll see a lot more of
that in Kelowna here next.

805
00:25:27,540 --> 00:25:30,940
And it's nice to have some of
those nice infill projects that

806
00:25:30,940 --> 00:25:33,020
look beautiful and people can make
them work as investments.

807
00:25:33,020 --> 00:25:36,500
It really adds to the quality here
in Kelowna.

808
00:25:36,500 --> 00:25:39,500
I definitely intend on being in
Kelowna for a long time and

809
00:25:39,500 --> 00:25:40,540
hopefully raise a family here and
such.

810
00:25:40,540 --> 00:25:43,350
And going forward, Kelowna means a
lot.

811
00:25:43,350 --> 00:25:46,090
I'm from Winnipeg originally too.

812
00:25:46,090 --> 00:25:47,490
We do some business there.

813
00:25:47,490 --> 00:25:50,630
But, you know, those are two
places that I care deeply about.

814
00:25:50,770 --> 00:25:52,370
I'm going back there next week.

815
00:25:52,370 --> 00:25:55,430
But it's nice to be passionate

816
00:25:55,430 --> 00:25:58,750
about the places where you live as
well.

817
00:25:58,750 --> 00:25:59,090
Yeah.

818
00:25:59,210 --> 00:26:00,550
It's funny when you talk about

819
00:26:00,550 --> 00:26:03,890
this, like how the incentive,
because like for years, last five,

820
00:26:03,890 --> 00:26:04,870
six years in Kelowna, it's just
been all fourplex, fourplex,

821
00:26:04,870 --> 00:26:05,150
fourplex.

822
00:26:05,370 --> 00:26:06,730
And now this only allows five and

823
00:26:06,730 --> 00:26:09,910
six, which obviously now falls
into your kind of our bucket.

824
00:26:09,910 --> 00:26:10,070
Yeah.

825
00:26:10,070 --> 00:26:10,250
Yeah, exactly.

826
00:26:10,250 --> 00:26:13,690
But like, yeah, I wonder if like
just even two lot land assemblies

827
00:26:13,690 --> 00:26:14,850
where you build an eightplex.

828
00:26:14,850 --> 00:26:21,610
Instead of just a fourplex, it

829
00:26:21,610 --> 00:26:22,870
would be super beneficial for
resale.

830
00:26:22,870 --> 00:26:23,930
Yeah, we have a small construction
loan program.

831
00:26:23,930 --> 00:26:27,200
Generally, we're seeing loan
amounts for those above $5

832
00:26:27,200 --> 00:26:27,380
million.

833
00:26:27,380 --> 00:26:28,560
We try to keep it.

834
00:26:28,560 --> 00:26:28,640
Yeah.

835
00:26:28,640 --> 00:26:30,360
So there's that five to 15 range.

836
00:26:30,360 --> 00:26:33,060
Obviously, we work on large
construction right up to $100

837
00:26:33,060 --> 00:26:34,040
million with large developers.

838
00:26:34,040 --> 00:26:34,260
Yeah.

839
00:26:34,260 --> 00:26:35,380
So, yeah, there's a lot of
incentive for.

840
00:26:35,380 --> 00:26:38,080
small time developers to, you
know, build these beautiful units

841
00:26:38,080 --> 00:26:41,280
and about how we're going about
financing those, you know, it

842
00:26:41,280 --> 00:26:45,060
could be us, it could be, you
know, a credit union or somebody

843
00:26:45,060 --> 00:26:47,120
else, some other source capital,
but the goal is generally always

844
00:26:47,120 --> 00:26:50,580
going to be to achieve CMHC
financing on those builds.

845
00:26:50,580 --> 00:26:53,400
And they can certainly come to a
lender like us, even if they do

846
00:26:53,400 --> 00:26:50,580
the construction with somebody
else, they can come to us after

847
00:26:50,580 --> 00:26:51,800
and do the term takeout on those
loans.

848
00:26:51,800 --> 00:26:55,890
So like, not to get too specific
here, but like, if a person wanted

849
00:26:55,890 --> 00:26:58,690
to go build, let's say, a 10 unit.

850
00:26:58,690 --> 00:26:59,410
They have two lots.

851
00:26:59,510 --> 00:27:00,190
They want to build 10 units.

852
00:27:00,190 --> 00:27:01,730
What are they looking at?

853
00:27:01,730 --> 00:27:03,930
What do they need to have?
Like a certain down payment

854
00:27:03,930 --> 00:27:06,350
instruction experience?
Matt's asking for a friend.

855
00:27:06,350 --> 00:27:06,670
down Yeah.

856
00:27:06,670 --> 00:27:06,830
Yeah.

857
00:27:06,830 --> 00:27:07,970
Like also my pen's ready.

858
00:27:07,970 --> 00:27:08,450
Yeah.

859
00:27:08,450 --> 00:27:10,170
Like also my pen's ready.

860
00:27:10,170 --> 00:27:10,770
So go.

861
00:27:10,770 --> 00:27:10,910
Yeah.

862
00:27:10,910 --> 00:27:12,670
So yeah, there's basically some

863
00:27:12,670 --> 00:27:16,090
basic requirements that I kind of
let people know about what's

864
00:27:16,090 --> 00:27:17,650
required to at least qualify.

865
00:27:17,650 --> 00:27:19,530
First would be a net worth

866
00:27:19,530 --> 00:27:19,630
requirement.

867
00:27:19,630 --> 00:27:21,970
So to qualify for a CMHC loan, you

868
00:27:21,970 --> 00:27:24,030
have to have a 25 % net worth
requirement.

869
00:27:24,490 --> 00:27:26,250
Everything in that net worth has
to be validated.

870
00:27:26,310 --> 00:27:27,270
through bank statements, mortgage
statements, et cetera.

871
00:27:27,270 --> 00:27:30,510
I would say the lenders are pretty
strict on that about what actually

872
00:27:30,510 --> 00:27:31,750
qualifies as net worth.

873
00:27:31,750 --> 00:27:33,270
So if you've got, let's say, a $4

874
00:27:33,510 --> 00:27:34,590
million loan, you need $1 million
net worth.

875
00:27:34,650 --> 00:27:37,750
Whether it's construction or not,
we're probably going to want to

876
00:27:37,830 --> 00:27:38,630
see a liquidity requirement as
well.

877
00:27:38,630 --> 00:27:40,710
Usually that ranges from 10 % to
20%.

878
00:27:40,710 --> 00:27:44,330
That's just sort of free cash or
accessible cash on hand that

879
00:27:44,330 --> 00:27:46,690
obviously if the project has
challenges or...

880
00:27:46,910 --> 00:27:49,050
Whatever else comes up, that can
be dealt with.

881
00:27:49,050 --> 00:27:52,810
So yeah, I mean, a small developer
looking to do a project, it could

882
00:27:53,600 --> 00:27:54,500
be through CMHC financing.

883
00:27:54,500 --> 00:27:55,920
It could be through conventional

884
00:27:55,920 --> 00:27:58,200
financing, again, with somebody
else.

885
00:27:58,300 --> 00:28:02,080
But the goal is generally always
to get to the CMHC term takeout

886
00:28:02,080 --> 00:28:04,400
and make the numbers pencil there.

887
00:28:04,400 --> 00:28:06,120
Well, that's a big one that's

888
00:28:06,120 --> 00:28:08,180
forgotten about a lot when clients
come to me.

889
00:28:08,180 --> 00:28:10,320
It's like the 25 % of the mortgage
balance.

890
00:28:10,320 --> 00:28:12,600
It can be pretty hefty.

891
00:28:13,000 --> 00:28:14,060
You're talking about net worth or

892
00:28:14,060 --> 00:28:16,090
liquidity?
worth or liquidity?

893
00:28:16,090 --> 00:28:18,110
That's on the net worth side.

894
00:28:18,110 --> 00:28:18,650
Yeah, 25%.

895
00:28:18,650 --> 00:28:19,210
Exactly.

896
00:28:19,210 --> 00:28:20,910
Another area we've been able to

897
00:28:20,910 --> 00:28:23,530
help out a lot too is on the
acquisition of existing buildings

898
00:28:23,630 --> 00:28:24,450
or even new buildings.

899
00:28:24,450 --> 00:28:26,550
So you might get someone who has a

900
00:28:26,770 --> 00:28:28,970
tight close or maybe you have
someone who wants to purchase a

901
00:28:28,970 --> 00:28:32,930
building and do some renovations
to it, maybe get rents up, then

902
00:28:32,930 --> 00:28:34,310
switch it to CMHC financing.

903
00:28:34,310 --> 00:28:35,890
So that's where our bridge program

904
00:28:35,890 --> 00:28:36,490
comes into effect.

905
00:28:36,490 --> 00:28:37,450
Generally, what we're looking to

906
00:28:37,450 --> 00:28:40,130
do there is 75 % loan to purchase
price.

907
00:28:40,510 --> 00:28:42,170
or loan to cost loans on those
acquisitions.

908
00:28:42,170 --> 00:28:45,870
And those are usually three to 12
months and then switch it to the

909
00:28:45,870 --> 00:28:46,610
CMHC financing after.

910
00:28:46,610 --> 00:28:47,450
Just a short -term solution to

911
00:28:47,450 --> 00:28:48,030
acquire the property.

912
00:28:48,390 --> 00:28:49,070
The CMHC submission process can

913
00:28:49,170 --> 00:28:49,550
take three to six months.

914
00:28:49,550 --> 00:28:51,330
It may be quicker, but it takes

915
00:28:51,330 --> 00:28:54,550
some time, right?
It's not things that happen right

916
00:28:54,790 --> 00:28:56,370
away and seller might not be
willing to give that amount of

917
00:28:56,370 --> 00:28:59,870
time to the buyer to get their
financing in line, right?

918
00:28:59,870 --> 00:29:02,050
So we get the bridge loan for
them.

919
00:29:02,050 --> 00:29:03,650
and help them do the CMHC takeout
after.

920
00:29:03,650 --> 00:29:07,290
Maybe it's a good transition into
some of our wrap -up questions.

921
00:29:07,290 --> 00:29:10,230
And this doesn't have to be
related to the investor hat, but

922
00:29:10,230 --> 00:29:14,670
if you could buy one property in
the next 12 months in the

923
00:29:15,260 --> 00:29:17,020
Okanagan, what would it be?
Sure.

924
00:29:17,180 --> 00:29:19,440
You know what?
My wife and I bought, hopefully,

925
00:29:19,440 --> 00:29:23,840
maybe our forever home last year
in West Kelowna, which was very

926
00:29:24,000 --> 00:29:24,100
exciting.

927
00:29:24,100 --> 00:29:25,620
And I'd say pretty content on that

928
00:29:25,620 --> 00:29:25,780
side.

929
00:29:25,780 --> 00:29:27,460
Obviously, if you live in Kelowna,

930
00:29:27,460 --> 00:29:29,600
I'd say... generally the dream is
how it plays on the lake.

931
00:29:29,600 --> 00:29:33,020
But in terms of investment, I
don't know, being on the lending

932
00:29:33,020 --> 00:29:35,240
side, this is what I do for a
living.

933
00:29:35,240 --> 00:29:39,120
You know, I leave the investors to
do the investing, I'd say.

934
00:29:39,120 --> 00:29:39,880
Fair enough.

935
00:29:39,880 --> 00:29:40,520
Yeah.

936
00:29:40,520 --> 00:29:42,740
I'm happy to finance the
investments though.

937
00:29:42,740 --> 00:29:42,860
Yeah.

938
00:29:42,860 --> 00:29:44,800
You can tell us off air.

939
00:29:44,800 --> 00:29:45,160
It's okay.

940
00:29:45,160 --> 00:29:45,620
That's awesome.

941
00:29:45,620 --> 00:29:48,940
All right, Spencer, if you could
give your 20 year old self any

942
00:29:48,940 --> 00:29:51,160
piece of advice, what would you
say?

943
00:29:51,300 --> 00:29:51,380
Sure.

944
00:29:51,380 --> 00:29:52,940
Probably not much different than

945
00:29:52,940 --> 00:29:54,260
what I did growing up, but.

946
00:29:54,260 --> 00:29:57,200
I'd say, you know, try a lot of

947
00:29:57,200 --> 00:29:59,380
things, take some risks and
probably move from your hometown

948
00:29:59,380 --> 00:30:00,120
for a little bit.

949
00:30:00,120 --> 00:30:01,340
You know, whether that's for a

950
00:30:01,340 --> 00:30:03,480
short time or a long time.

951
00:30:03,480 --> 00:30:04,120
Yeah, yeah.

952
00:30:04,120 --> 00:30:06,420
I think what happens is we get
siloed a little bit into one way

953
00:30:06,420 --> 00:30:07,360
of thinking.

954
00:30:07,360 --> 00:30:07,460
Yes.

955
00:30:07,460 --> 00:30:12,590
You know, whether we stay in the
same geographic location or stay

956
00:30:12,590 --> 00:30:15,430
around the same people for a long
time, whether leaving home or

957
00:30:15,430 --> 00:30:17,550
traveling can bring fresh
perspectives to people.

958
00:30:17,550 --> 00:30:22,290
You know, I didn't move away
permanently until I think I was 30

959
00:30:22,290 --> 00:30:22,810
or 31.

960
00:30:22,810 --> 00:30:24,070
and coming to Kelowna, having to

961
00:30:24,070 --> 00:30:25,010
meet new people.

962
00:30:25,010 --> 00:30:27,530
You know, I got here during COVID

963
00:30:27,530 --> 00:30:28,950
or just before COVID.

964
00:30:28,950 --> 00:30:30,750
So, you know, it definitely had

965
00:30:30,750 --> 00:30:34,050
its challenges and it's probably
made me stronger for it and having

966
00:30:34,050 --> 00:30:39,580
to, you know, go out and meet new
people and people like yourself.

967
00:30:39,580 --> 00:30:40,440
Good for you.

968
00:30:40,440 --> 00:30:42,540
Yeah, that's great advice.

969
00:30:42,540 --> 00:30:45,420
What's your favorite charity or
how do you get back?

970
00:30:45,420 --> 00:30:45,960
Sure.

971
00:30:45,960 --> 00:30:48,000
I mean, you know, being with Peak

972
00:30:48,000 --> 00:30:51,560
Hill, I've been with them for
about a year now.

973
00:30:51,560 --> 00:30:54,840
are always giving back, whether
it's through some of their

974
00:30:55,000 --> 00:30:56,240
financing initiatives or
volunteering with a program called

975
00:30:56,240 --> 00:30:56,880
Youth Without Shelter.

976
00:30:56,940 --> 00:30:57,920
It's a Toronto -based nonprofit

977
00:30:57,920 --> 00:30:59,660
that provides housing and
resources to homeless youth.

978
00:30:59,660 --> 00:31:00,680
So they funded one of their
properties.

979
00:31:00,680 --> 00:31:03,100
They've done several volunteer
missions, whether it's serving

980
00:31:03,100 --> 00:31:05,320
meals or otherwise to some of
their youth there.

981
00:31:05,320 --> 00:31:05,660
They've also...

982
00:31:05,660 --> 00:31:07,090
Worked with the Trellis Society in

983
00:31:07,090 --> 00:31:07,190
Calgary.

984
00:31:07,190 --> 00:31:08,790
It's a Calgary -based nonprofit

985
00:31:08,790 --> 00:31:10,290
that provides accessible and
affordable housing for underserved

986
00:31:10,290 --> 00:31:10,530
communities.

987
00:31:10,530 --> 00:31:11,670
And, you know, through that

988
00:31:11,670 --> 00:31:12,590
initiative, it raised over $60
,000.

989
00:31:12,590 --> 00:31:14,790
We did an employee match program
during the holidays this year

990
00:31:14,790 --> 00:31:17,050
where, you know, myself and all my
other colleagues, we could donate

991
00:31:17,050 --> 00:31:20,390
whatever we wanted to any charity
within Canada and the company

992
00:31:20,650 --> 00:31:21,530
would match.

993
00:31:21,530 --> 00:31:23,930
So, you know, I donated to a local

994
00:31:24,150 --> 00:31:25,370
group here.

995
00:31:25,370 --> 00:31:27,810
Peak Hill matched it, which was

996
00:31:27,810 --> 00:31:29,070
very kind of them.

997
00:31:29,270 --> 00:31:31,090
And yeah, so it's an ongoing

998
00:31:31,190 --> 00:31:31,410
thing.

999
00:31:31,410 --> 00:31:32,870
We're sponsoring events.

1000
00:31:32,870 --> 00:31:34,210
We're trying to get involved very
locally as well.

1001
00:31:34,510 --> 00:31:36,810
Even on the business side, it's
sponsoring events with UDI and

1002
00:31:36,810 --> 00:31:37,770
things like that as well.

1003
00:31:37,770 --> 00:31:38,670
So we're trying to get very

1004
00:31:38,830 --> 00:31:39,150
granular and local.

1005
00:31:39,150 --> 00:31:40,270
And I think people are

1006
00:31:40,270 --> 00:31:40,830
appreciating that.

1007
00:31:40,970 --> 00:31:44,090
Sounds like two birds with one

1008
00:31:44,090 --> 00:31:44,290
stone.

1009
00:31:44,290 --> 00:31:46,030
You could sponsor the Colonial

1010
00:31:46,170 --> 00:31:46,850
Real Estate Podcast.

1011
00:31:46,850 --> 00:31:51,710
We are also a little bit like a

1012
00:31:52,210 --> 00:31:52,670
charity sometimes.

1013
00:31:52,730 --> 00:31:53,490
We're also speaking directly to

1014
00:31:53,490 --> 00:31:54,010
your audience.

1015
00:31:54,010 --> 00:31:55,030
also speaking directly to your

1016
00:31:55,030 --> 00:31:55,130
audience.

1017
00:31:55,130 --> 00:31:56,190
You certainly are.

1018
00:31:56,190 --> 00:31:57,710
That's awesome, certainly are.

1019
00:31:57,710 --> 00:31:58,610
That's awesome, man.

1020
00:31:58,610 --> 00:32:01,320
That's nice to see like larger
companies doing that.

1021
00:32:01,320 --> 00:32:04,140
You know, if they have the
ability, like go after it.

1022
00:32:04,140 --> 00:32:07,660
So good for you guys.

1023
00:32:07,660 --> 00:32:08,560
Yeah, we appreciate that.

1024
00:32:08,560 --> 00:32:11,380
How can Taylor or I or our podcast
or our listener help you out?

1025
00:32:11,380 --> 00:32:14,900
can Taylor or I or our podcast or
our listener help you out?

1026
00:32:14,900 --> 00:32:17,760
What can we do for you?
You know, just being here and

1027
00:32:17,760 --> 00:32:19,580
introducing myself to the
community is more than enough.

1028
00:32:19,580 --> 00:32:21,640
being here and introducing myself
to the community is more than

1029
00:32:21,640 --> 00:32:21,940
enough.

1030
00:32:21,940 --> 00:32:22,280
Yeah.

1031
00:32:22,280 --> 00:32:25,840
Happy to get in touch with people
as they need to see fit.

1032
00:32:25,840 --> 00:32:30,100
And yeah, you know, like I said, I
really like the Kelowna community.

1033
00:32:30,100 --> 00:32:33,140
I feel like it's very easy to get
to know people here and even

1034
00:32:33,140 --> 00:32:35,040
across BC and Western Canada as
well.

1035
00:32:35,240 --> 00:32:36,780
Sort of doing business all across
Western Canada.

1036
00:32:36,780 --> 00:32:39,600
It's great, but, you know,
certainly love the local Cologne

1037
00:32:39,600 --> 00:32:39,780
community.

1038
00:32:39,780 --> 00:32:41,180
Hey, yeah, we should mention you

1039
00:32:41,180 --> 00:32:43,340
guys have a pretty good newsletter
that goes out as well.

1040
00:32:43,340 --> 00:32:45,380
So if listeners are interested in
that, then...

1041
00:32:45,380 --> 00:32:47,480
Yeah, Yeah, we're trying to, you
know, keep people updated on

1042
00:32:47,480 --> 00:32:49,380
what's going on in the industry
and happy to send that out as

1043
00:32:49,380 --> 00:32:49,760
people need it.

1044
00:32:49,760 --> 00:32:51,480
That's awesome.

1045
00:32:51,480 --> 00:32:52,080
Right on.

1046
00:32:52,080 --> 00:32:53,340
Yeah, thanks a lot.

1047
00:32:53,340 --> 00:32:55,660
It's been a ton of fun.

1048
00:32:55,660 --> 00:32:57,320
Appreciate your insight today.

1049
00:32:57,320 --> 00:33:00,420
And yeah, I'd love to have you
back on in the future.

1050
00:33:00,420 --> 00:33:00,820
Fantastic.

1051
00:33:00,820 --> 00:33:03,000
Yeah, we'll keep you updated on

1052
00:33:03,000 --> 00:33:06,560
what we're doing and hopefully be
back on maybe a yearly thing.

1053
00:33:06,720 --> 00:33:07,860
Yeah, that'd be awesome.

1054
00:33:07,860 --> 00:33:08,960
Yeah, sounds great.

1055
00:33:08,960 --> 00:33:09,100
great.