RRSP Fund
- Thread starter rlimoges
- Start date
- Joined
- Aug 30, 2007
- Messages
- 13,879
An RRSP is a basket of eligible investments, but direct real estate ownership is not permitted in an RRSP, it has to be indirect through an RRSP eligible investment [based on real estate], such as bonds, shares, REIT units, trust units or mortgages !
You could lend money to others, you could invest in a variety of private
or public firms centered around real estate, or you could give yourself
a mortgage under certain circumstances, such as CMHC insured at market
rates, at arms-length, up to trustee dependent loan-to-values [OlympaTrust, TD, Laurentian B2B Trust, CWT, ... to name a few of the trustees that allow mortgages or private shares/trust units]
You could lend money to others, you could invest in a variety of private
or public firms centered around real estate, or you could give yourself
a mortgage under certain circumstances, such as CMHC insured at market
rates, at arms-length, up to trustee dependent loan-to-values [OlympaTrust, TD, Laurentian B2B Trust, CWT, ... to name a few of the trustees that allow mortgages or private shares/trust units]
- Joined
- Aug 26, 2010
- Messages
- 380
A great way to get cash out of your RRSP and avoid taxes is to find someone, preferably friend or family, who has a low LTV on their residence typically but it could be a rental, and have them borrow it from you at today's mortgage rates using their property as collateral. Then they give they money back to you, you buy the property and you both force value appreciation while the cash flow ideally pays off the 2nd mortgage payments. Then you re-fi and pay back the RRSP loan plus a nice bonus for their time etc. Your money has worked (way) harder, they got a bonus, everyone's happy. The two main risks I see come if you can't execute and then they are on the hook to the plan trustee in case of default [very bad for the relationship 
] or if the money can't be taken out in a short time horizon ("dead money") and then they can't do something they would have liked to with the equity in their property as it has a mortgage registered against it.
I've dealt with TD doing 2nd mortgage lending and found them surprisingly flexible, although poor on their paperwork side. They let me write a 2nd mortgage for a small business owner buying a SFH I was selling that went up to 95 % LTV, interest only, but where the buyer could make an annual lump sum payment of 15 % of principle due to her irregular cash flow stream. The nice thing about the system above is that assuming you've properly analyzed your deal, you remove the primary risk of 2nd mortgage lending - that the borrower defaults and you need a large cash reserve to take the property back and sell. You are the borrower via somebody else. And it isn't mortgage fraud - I've been very upfront in telling TD this is what I"m doing. The only thing they care about is the quality of collateral ie your family or friend's low LTV property.
Good luck.
] or if the money can't be taken out in a short time horizon ("dead money") and then they can't do something they would have liked to with the equity in their property as it has a mortgage registered against it.I've dealt with TD doing 2nd mortgage lending and found them surprisingly flexible, although poor on their paperwork side. They let me write a 2nd mortgage for a small business owner buying a SFH I was selling that went up to 95 % LTV, interest only, but where the buyer could make an annual lump sum payment of 15 % of principle due to her irregular cash flow stream. The nice thing about the system above is that assuming you've properly analyzed your deal, you remove the primary risk of 2nd mortgage lending - that the borrower defaults and you need a large cash reserve to take the property back and sell. You are the borrower via somebody else. And it isn't mortgage fraud - I've been very upfront in telling TD this is what I"m doing. The only thing they care about is the quality of collateral ie your family or friend's low LTV property.
Good luck.