Scaling from 5 to 20 Properties: The Financing Roadmap

A financing roadmap for scaling your real estate portfolio from 5 to 20 properties. Covers conventional to commercial lending, portfolio mortgages, DSCR qualification, entity structuring, and capital recycling.

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Scaling from 5 to 20 Properties: The Financing Roadmap

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You bought your first rental property and it felt like climbing Everest. Properties two through five were hard but doable. You figured out the process, built a relationship with your mortgage broker, and the machine started working.

Then something happened. You hit a wall.

Maybe your bank said no. Maybe the stress test killed your qualification. Maybe you literally ran out of conventional financing options and nobody could tell you what to do next.

Welcome to the financing gap between 5 and 20 properties. Almost every serious investor hits it. The ones who break through it build real wealth. The ones who don’t get stuck at five or six properties for the rest of their investing career.

I’m going to walk you through exactly how to get from 5 to 20, focusing specifically on the financing side, because that’s where 90% of investors get stuck.

Why the Wall Exists at 5 Properties

The Canadian mortgage system wasn’t designed for investors. It was designed for people buying one home to live in. Everything about it, the stress test, the debt-service ratios, the income documentation, is built around the assumption that you have one mortgage on one house with one income.

When you show up with five mortgages, the system starts to struggle. Here’s what typically happens:

Your debt-service ratios max out. Even if every property cash flows beautifully, the way lenders calculate your ratios often doesn’t give full credit for rental income. Some lenders only count 50-80% of rental income. And they add the full carrying cost of every property to your obligations. At five properties, the math often stops working even though you’re making money. Understanding how debt ratios affect your approval is critical at this stage.

The stress test compounds. You don’t qualify at your actual rate. You qualify at the stress test rate (typically your contract rate plus 2%, or the benchmark rate, whichever is higher). Apply that to five mortgages and your “debt” on paper is enormous compared to your income. Learn more about how the mortgage stress test affects your buying power.

Lenders get nervous. Conventional lenders have internal policies about how many properties they’ll finance for one borrower. Some cap it at four or five investment properties. Once you hit their limit, they simply say no, regardless of how strong your application is.

This isn’t a reflection of your ability as an investor. It’s a limitation of the conventional lending system. And the good news is: there are other systems.

The Conventional-to-Commercial Transition

Here’s the mental shift you need to make: you’re not a homebuyer with some rentals anymore. You’re a business owner. And businesses finance themselves differently.

Conventional mortgages (what you’ve been using so far) are assessed primarily on your personal income and credit. Commercial mortgages are assessed primarily on the property’s income and the deal’s fundamentals. That’s a completely different game, and it’s the game that lets you scale.

The transition doesn’t happen overnight. Most investors use a hybrid approach, keeping their conventional mortgages on properties that qualify while using commercial financing for new acquisitions that push past the conventional limits.

Here’s what the transition looks like in practice:

Properties 1-4: Conventional residential mortgages. Best rates, longest amortizations, most straightforward qualification.

Properties 5-8: Mix of conventional (if you can still qualify) and B-lender or alternative financing. Slightly higher rates, but still manageable.

Properties 8-20: Commercial lending, portfolio mortgages, private financing, and creative structures. Different rules, different rates, different opportunities.

This is exactly how to buy unlimited rental properties in Canada—by understanding which financing tools to use at each stage.

DSCR loans let you qualify based on the property’s income, not yours — book a free strategy call with LendCity and we’ll help you figure out if a DSCR loan makes sense for your next deal.

Portfolio Lending: Your New Best Friend

A portfolio lender is a financial institution that keeps mortgages on their own books instead of selling them to CMHC or other insurers. Because they’re not bound by insured mortgage guidelines, they can be more flexible about how they assess your application.

What portfolio lenders look at:

The property’s income. Does this property generate enough rent to cover its costs? That matters more than your personal income at this stage.
Your overall portfolio performance. How are your existing properties performing? A portfolio lender wants to see that your current properties are well-managed and profitable.
Your net worth. What’s your total equity across all properties? A strong balance sheet gives lenders confidence even if your debt ratios look stretched by conventional standards.
Your experience. Having managed five or more properties successfully is actually a selling point with commercial lenders. They’d rather lend to a proven investor than a first-timer.

Portfolio lenders typically offer:

Interest rates 0.5-2% higher than conventional
Amortizations of 20-25 years (sometimes 30)
Loan-to-value up to 75-80% for purchases
Less emphasis on the stress test
More flexibility on income documentation

The trade-off is clear: you pay a bit more in interest, but you get access to capital that would otherwise be unavailable. And that access is what lets you keep growing.

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Blanket Mortgages: One Loan, Multiple Properties

A blanket mortgage covers multiple properties under a single loan. Instead of having ten separate mortgages with ten different lenders, you could have one blanket mortgage covering five or ten properties.

Why this matters for scaling:

Simplified management. One payment, one lender, one relationship. Less administrative headache.
Better negotiating power. When you’re bringing $2 million in mortgages to one lender, you have more leverage to negotiate rates and terms.
Cross-collateralization. The lender uses equity in your stronger properties to support weaker ones. This can let you finance properties that might not qualify on their own.

The downsides:

You’re tied together. If you want to sell one property, you need to restructure the blanket mortgage. This can be complicated and expensive.
Release clauses. Make sure your blanket mortgage includes a release clause that lets you remove individual properties without refinancing the entire portfolio.
Concentration risk. If one lender holds all your mortgages and they change their policies or call the loan, you’ve got a big problem.

Blanket mortgages aren’t for everyone. But for investors with five or more similar properties in the same market, they can be a powerful tool for simplifying and scaling.

If you want to scale without hitting income qualification walls, DSCR financing is worth exploring — schedule a free strategy session with us to see what rates and terms are available.

DSCR Qualification: How Commercial Lenders Think

DSCR stands for Debt Service Coverage Ratio. It’s the commercial lending world’s equivalent of the residential GDS/TDS ratios, but it focuses on the property, not you.

The formula is simple:

DSCR = Net Operating Income / Annual Debt Service

A DSCR of 1.0 means the property’s income exactly covers its mortgage payments. A DSCR of 1.2 means income exceeds payments by 20%. Most commercial lenders want a minimum DSCR of 1.1 to 1.25.

Here’s why this matters: if a property generates $60,000 per year in net operating income and the annual mortgage payments would be $48,000, the DSCR is 1.25. The lender doesn’t care (as much) about your personal income, your other debts, or the stress test. The property qualifies on its own merits. This is the core of qualifying for mortgages based on property cash flow.

This is the key that unlocks scaling. Instead of being limited by your personal income, you’re limited by the quality of your deals. Find properties with strong rental income relative to their price, and you can keep buying.

To improve your DSCR:

Buy properties with strong rent-to-price ratios
Put more money down (lower mortgage = lower debt service = higher DSCR)
Increase rents where possible before applying for financing
Choose longer amortizations to reduce annual debt service
Negotiate the purchase price aggressively

Entity Structuring: When and Why

At some point between 5 and 20 properties, the question of corporate structure comes up. Should you hold properties personally or in a corporation? Maybe a holding company? A trust?

There’s no one-size-fits-all answer, but here are the general considerations:

Holding personally:

Simpler and cheaper to set up
You can claim the principal residence exemption if applicable
Easier to get conventional mortgage financing (some lenders don’t lend to corporations)
Capital gains are taxed personally at your marginal rate

Holding in a corporation:

Limited liability (protects your personal assets if something goes wrong)
Tax deferral opportunity (corporate tax rates on investment income are lower than top personal rates in some provinces)
Easier to bring in partners or transfer ownership
More complicated and expensive to set up and maintain
Can’t claim the principal residence exemption
Harder to get conventional financing; usually requires commercial lending

Hybrid approach:

Hold your first few properties personally (better financing options)
Start a corporation for properties beyond conventional lending limits
Use a holding company structure to manage multiple property corporations

Talk to an accountant who specializes in real estate investing before making this decision. The wrong structure can cost you tens of thousands in unnecessary taxes and professional fees. The right structure can save you significantly as you scale. For more, read about how to structure your real estate investment properties.

Relationship Banking: Why It Matters Now

When you had one or two properties, your mortgage was a transaction. At 10 or 15 properties, your mortgage relationships are partnerships.

Building strong relationships with the right financial institutions changes the game:

You get better rates. Lenders offer preferential pricing to their best clients.
You get faster approvals. When a lender knows you and your portfolio, deals move faster.
You get creative solutions. Relationship bankers will find ways to make deals work that transactional lenders won’t.
You get early access. Some lenders offer their relationship clients first crack at new mortgage products or special promotions.

How to build these relationships:

Consolidate where it makes sense. Don’t spread your business across ten lenders. Pick two or three and give them meaningful volume.
Keep your accounts there. Hold your operating accounts, savings, and business accounts at the same institution where you have your mortgages.
Be a good borrower. Pay on time, every time. Provide documents promptly when requested. Don’t be the client who takes three weeks to return a phone call.
Meet your banker in person. Schedule an annual meeting to review your portfolio and discuss your plans. Let them know where you’re headed so they can plan with you.

A good commercial banker who understands your portfolio and goals is worth their weight in gold. Finding that person takes effort, but it pays dividends for years.

Capital Recycling: The Engine of Scaling

Capital recycling is the concept of pulling equity out of existing properties and redeploying it into new acquisitions. It’s how investors go from 5 to 20 properties without needing a massive personal savings account.

The cycle works like this:

Buy a property with a down payment
Add value through renovations, better management, or rent increases
Refinance to pull out some or all of your original down payment
Use that capital for the next down payment
Repeat

This is the BRRRR strategy (Buy, Renovate, Rent, Refinance, Repeat) applied at scale. The faster you cycle capital, the faster you grow. Explore investment property mortgage solutions to find the right financing for each stage.

But here’s the catch at scale: refinancing becomes harder when you have many properties. You need commercial lenders who understand what you’re doing and are willing to refinance based on the improved value. You need properties that genuinely increase in value through your improvements, not just market appreciation.

And you need patience. Each cycle takes 6-12 months. At scale, you might have multiple properties in different stages of the cycle simultaneously, which requires serious organizational skill and capital management.

The Financing Stack: What 20 Properties Actually Looks Like

Here’s a realistic breakdown of how a 20-property portfolio might be financed:

Properties	Financing Type	Typical Rate Premium	Notes
1-4	Conventional (A-lender)	Best available rates	Standard residential mortgages
5-7	B-lender / Credit union	+0.25% to +0.75%	More flexible qualification
8-12	Portfolio / Commercial	+0.50% to +1.50%	DSCR-based qualification
13-16	Commercial / Blanket	+0.75% to +2.00%	Relationship-dependent
17-20	Private / Creative	+1.50% to +3.00%	Short-term bridge or JV structures

Your blended cost of capital goes up as you scale. That’s the trade-off. But your total cash flow, equity, and wealth-building capacity go up much faster if you’re buying the right properties.

The key is understanding that not every property needs the best rate. Sometimes a property financed at 7% that cash flows well is a better deal than a property you can’t buy at all because your conventional lender said no.

Common Mistakes Between 5 and 20

Mistake 1: Trying to force conventional financing. If you’ve maxed out conventional options, stop banging on that door. Move to the next financing tier.

Mistake 2: Ignoring cash flow for growth. Scaling fast with properties that don’t cash flow is a recipe for disaster. Every property needs to carry itself, especially at scale.

Mistake 3: Not having reserves. At 20 properties, things break all the time. Roofs, furnaces, pipes, tenants. You need a war chest. Budget $5,000-$10,000 per property in reserves.

Mistake 4: Going it alone. At this scale, you need a team: mortgage broker, accountant, lawyer, property manager, and ideally a few investor friends who’ve been through the same journey. Learn about how to get money to buy multiple rental properties.

Mistake 5: Skipping the plan. Random acquisition is not a strategy. Know what you’re buying, where, why, and how it fits into your existing portfolio before you make an offer.

The Bottom Line

Scaling from 5 to 20 properties is absolutely possible. Thousands of Canadian investors have done it. But it requires a shift in how you think about financing.

You’re moving from the consumer lending world to the commercial lending world. From personal qualification to property qualification. From individual mortgages to portfolio strategies. From transactional banking to relationship banking.

The investors who make this transition successfully are the ones who educate themselves on the options, build the right team, and approach each new acquisition with a clear financing plan, not just a hope that someone will lend them the money.

The capital is out there. Your job is to build the track record, the relationships, and the deal quality that makes lenders want to give it to you.

Frequently Asked Questions

How many conventional mortgages can I have in Canada?

There's no hard legal limit, but most A-lenders have internal policies that cap the number of financed properties at four to six per borrower. Some lenders are more flexible, and certain credit unions or monoline lenders will go higher. Your mortgage broker can identify which lenders have the most room for investors with multiple properties.

What credit score do I need for commercial mortgage financing?

Commercial lenders place less emphasis on credit score than conventional lenders, but most still want to see 650 or above. The bigger factors are the property's income (DSCR), your overall net worth, and your track record as an investor. A strong deal with a 660 credit score will often get approved when a weak deal with a 780 score won't.

Do I need to incorporate before scaling past five properties?

Not necessarily. Many investors hold ten or more properties personally. The decision to incorporate depends on your tax situation, liability concerns, and financing strategy. Some commercial lenders actually prefer lending to individuals rather than corporations. Talk to your accountant before incorporating, and don't do it just because someone on a podcast said you should.

What is a blanket mortgage release clause and why does it matter?

A release clause lets you remove individual properties from a blanket mortgage without refinancing the entire loan. Without this clause, selling one property could trigger a full refinance of all properties under the blanket mortgage, which is expensive and disruptive. Always negotiate a release clause before signing a blanket mortgage.

How much more expensive is commercial financing compared to conventional?

Expect to pay 0.50% to 2.00% more than the best conventional rates, depending on the lender, the deal, and your relationship. So if conventional rates are at 4.50%, you might pay 5.00% to 6.50% on the commercial side. Private lending can be even higher at 7-12%. The higher cost is the price of access to capital that conventional lenders won't provide.

Can I use rental income from existing properties to qualify for more mortgages?

Yes, but how much of that income counts depends on the lender. Conventional lenders typically count 50-80% of gross rental income. Commercial lenders look at actual net operating income and are generally more favorable in how they assess rental revenue. Having strong, documented rental income from your existing portfolio is one of the best tools for qualifying for additional financing.

What is DSCR and what ratio do lenders typically require?

DSCR (Debt Service Coverage Ratio) measures whether a property's net operating income can cover its mortgage payments. A DSCR of 1.0 means income exactly equals payments. Most commercial lenders require a minimum DSCR of 1.1 to 1.25, meaning the property must generate 10-25% more income than required to service the debt. Higher DSCR means the property has more cushion and is a safer loan for the lender.

How do I find a commercial lender that works with small portfolio investors?

The best route is through a mortgage broker who specializes in investment properties. They'll have relationships with commercial lenders, credit unions, and portfolio lenders who actively work with investors in the 5 to 20 property range. Local credit unions and smaller banks are often more flexible than the Big Five banks for this type of lending. Networking with other investors in your market can also lead to lender referrals.

Disclaimer: LendCity Mortgages is a licensed mortgage brokerage, and our team includes experienced real estate investors. While we are qualified to provide mortgage-related guidance, the broader financial, tax, and legal information in this article is provided for educational purposes only and does not constitute financial planning, tax, or legal advice. For matters outside mortgage financing, we recommend consulting a Chartered Professional Accountant (CPA), licensed financial planner, or qualified legal advisor.

Written by

LendCity

Published

January 30, 2026

Reading Time

13 min read