This is for educational purposes only; it does not guarantee future performance or serve as financial or tax advice.
Building and scaling your real estate portfolio in Toronto doesn’t have to be overwhelming—it’s all about having the right strategy. Whether you’re just starting out or aiming to grow from zero to 13 doors, success isn’t about luck. It’s about taking the right steps to get there faster than you think.
The Key to Growth: Cash Flow and Value-Add
When starting out, cash flow should be your priority. If your property isn’t generating enough income, it’ll be harder to get approved for more mortgages. But if you find properties that not only cash flow but also have value-add potential, you can renovate, increase the value, and refinance to pull out cash for your next investment.
To make refinancing work, focus on stable markets. In volatile areas, price fluctuations can wipe out your gains. In more stable areas, it’s easier to predict future values, making it simpler to refinance and reinvest.
Another strategy is to invest in bigger cities where property appreciation is stronger. For example, a $900K Toronto property that you renovate for $200K might jump to $1.3M in value. A smaller-market property, on the other hand, may only rise from $450K to $750K after the same $200K investment. The bigger your gains, the more equity you can pull out to fund your next project.
House Hacking: A Fast-Track Strategy
House hacking—living in one unit of a multi-unit property while renting out the others—can help speed up your growth. It lowers your living costs and allows you to qualify for better mortgage terms. It’s a short-term sacrifice that can fast-track your portfolio expansion.
Why Refinancing Beats Selling
You don’t need to sell properties to scale. Refinancing allows you to access equity without paying capital gains tax and selling fees. Even though you can’t pull out 100% of the equity, you’ll often end up with more reinvestable cash than if you sold the property outright.
A Real Example: Growing to 13 Doors
The journey to scaling your real estate portfolio starts with a solid plan. Here’s how you can strategically grow from one property to a multi-unit portfolio in Toronto.
It all begins with the first property—a triplex purchased for $950K. To get started, you’ll need $190K for the down payment and another $100K for renovations, bringing the total initial investment to $320K. Once the upgrades are complete, the property’s value rises to $1.15M, adding $100K in equity. By refinancing at 90% loan-to-value (LTV), you can pull out $275K in cash while still maintaining a positive cash flow of $400 per month.
With this newly accessed capital, the next step is to add a garden suite. The $275K can be used to construct the additional unit in the backyard, increasing both rental income and overall property value. After completion, another refinance allows you to pull out $450K, strengthening your cash position while further boosting monthly cash flow.
Now, it’s time to reinvest in a second property. This time, you acquire a house for $1M and invest $200K in renovations. Once completed, the property’s value jumps to $1.4M, and another refinance unlocks $460K in equity. With this capital, you can build a second garden suite, adding another income stream to your portfolio.
As your portfolio grows, you move on to larger projects. The next step involves purchasing a property for $1.3M and investing $300K to convert it into a four-unit rental. Once the renovations are complete, the property is valued at $1.9M. Another refinance allows you to access more equity, which can then be used to fund yet another garden suite, maximizing the property’s rental potential and cash flow.
By following this strategy—leveraging renovations, refinancing, and reinvesting—you can steadily grow your portfolio without constantly needing to save for new down payments. This method allows you to scale efficiently while keeping your capital working for you.
When to Move to Commercial Financing
As you scale, you’ll eventually hit the limit of residential mortgages. That’s when commercial financing becomes an option. Instead of using your personal income to qualify, commercial loans are based on the property’s rental income. This keeps the loan off your personal credit and allows for further growth.
However, commercial refinancing is different. Instead of being based on comparable sales, lenders may use total project costs or cap rates to determine how much you can borrow. While CMHC’s MLI Select program has been an option, recent changes mean it’s no longer as predictable for big projects.
Is Commercial Financing the End Goal?
Not necessarily. If you want to scale quickly, it’s a good option. But if you’re comfortable with a smaller portfolio, you might prefer sticking with residential financing for as long as possible.
The key takeaway? Use refinancing strategically to pull out equity so you can reinvest—without selling properties or saving up for every new deal. Scaling your real estate portfolio isn’t about having unlimited cash; it’s about using the assets you already own to build wealth faster.
How We Can Help
Real estate isn’t one-size-fits-all—it’s about finding the right fit for your goals, budget, and risk tolerance. Whether you’re after a turnkey investment or ready to tackle a conversion project, there’s a strategy that works for you.
Here’s what it’s like to start as a client with us:
- Initial Consultation: We’ll talk with you to understand your needs and teach you how to invest wisely in Toronto real estate.
- Market Search & Purchase: We’ll search the market to find the perfect property for you.
- Renovation Support: If the property needs renovations, our trusted contractors are ready to help, and we’ll coach you as you manage the project.
- Leasing and Management: If you need help renting out and managing your property, our leasing and management team is here for you.
Ready to get started? Click on the link below, and let’s start working together!
What Toronto Real Estate Investment Is Right For You?
Check out our complete Toronto real estate investment guide for all the details and real-life examples. If you’re ready to dive in, just book a call with us!
