Builders Seek Your Cash as CMHC Begins to Fund Favorable Loans

Amidst the ongoing credit crunch and high interest rates, the Canada Mortgage and Housing Corporation (CMHC) has introduced the MLI Select program, offering up to 100% financing for construction loans on 5+ unit projects. This initiative has drastically improved builders' ability to fund development projects, challenging the traditional limits set by major banks, which offered only up to 65% loan-to-value, mainly on the construction loan.

Now, builders or private individuals can apply and qualify for preferred leverage, akin to larger builders, at competitive rates. This reduced out-of-pocket expenses during construction significantly helping manage day-to-day cash flow. Additionally, CMHC's MLI Select employs a point system to offer insurance incentives based on affordability, energy efficiency, and accessibility, further enhancing the appeal of the program for new and existing properties.

However, CMHC's game-changing construction financing still comes at a cost. While CMHC covers most upfront construction costs, builders or individuals are responsible for soft costs plus 5% (e.g., receiving a 95/5% CMHC loan). These soft costs, including design, drawings, permit applications, site preparation etc and must be completed before CMHC approval. Lastly, there is a six-month window to commence project construction ensuring timelines are met for both the loan on-set and the project completion date.

So, what's in it for you?

With as little as $50,000 (with no upper limit), you can provide crucial support for builders or individuals to cover these soft costs. These short-term loans, capped at two to three years, require full repayment within six months of completing the entire project and tenants occupying the units, ensuring quick turnaround and potential reinvestment.

This financing model offers individual investors the opportunity to collaborate with developers on real estate projects with minimal upfront capital. Investors can participate without hands-on involvement, enjoying potential returns of up to 12%. With your money readily available, why not consider this investment opportunity?

How It Works

Investors team up with developers using CMHC’s financing, and Loans are repaid within six months of property completion, producing swift returns. Moreover, the high demand for new housing developments in Ottawa offers substantial opportunity, as the CMHC MLI program can include pre-arranged take-out refinancing agreements before the commencement of the construction loan - win win for all parties involved.

Building Ottawa Together

Ottawa urgently needs new housing to meet growing demand. CMHC’s program supports builders, developers, and community engagement, accelerating construction, increasing housing supply, and stabilizing the real estate market.

No Heavy Lifting Required On Your Part

Investors can earn significant returns without the complexities of direct property management. By partnering with experienced developers or individuals with development land, investors enjoy the financial rewards of real estate without the associated hassles or day to day operations.

Whether you’re a seasoned investor or new to real estate, seize the chance to contribute to the city’s development and capitalize on demand in the purpose-built construction market. 

I'm interested to hear your thoughts on this. Let’s chat! We know builders looking to make the right deal if this sounds like something of interest to you.