Interactive model
The Spinning Wheel Calculator
Start with one suited house in Fort St. John at C$565,000, the same house as every page on this site. Let the tenants pay down the mortgage while the value grows, then borrow against that growth at renewal to fund the next down payment. Move the settings to see what one contribution can become, and what happens when the wheel works against you.
Your C$152,125, if sold at year 15
$0
Spinning Wheel
a year, after selling costs
your money back
cash flow a month, final year
Same rules, no refinancing
a year, after selling costs
your money back
cash flow a month, final year
What you'd walk away with, year by year
If everything were sold that year, after selling costs, plus cash on hand and cash already taken out.
Spinning Wheel
No refinancing
A house bought
Stress check: the same settings in a real downturn
Spinning Wheel:
No refinancing:
The rule of thumb. Each turn of the wheel adds roughly (amount moved ÷ your original cash) × (what the next property earns − what the borrowed money costs). When the properties earn more than the mortgage rate, every turn adds. When they earn less, every turn subtracts. Recycling equity doesn't change what a property earns. It changes how much property each original dollar controls.
How this model works
- Starting point: one C$152,125 contribution, never topped up: C$113,000 down (20%) on a C$565,000 newer suited house, about C$14,125 in closing costs, about C$10,000 to set the house up for its manager, and a C$15,000 cash reserve that's never spent on a purchase.
- Rent and costs: rent of 0.9% of price a month (C$5,085), rising 2.5% a year; 3% vacancy; running costs 30% of collected rent (management, taxes, insurance, maintenance), rising 3% a year.
- Mortgages: 80% purchase loans over 30 years at the rate you set, on the term you choose.
- Refinancing: only at renewal, up to your limit, and only if rent covers the new payment 1.35 times, and still covers it at a rate two points higher. Each refinance costs C$4,000.
- Buying: a new house only when the cash covers its down payment, closing, setup and its own reserve, and its rent covers its mortgage 1.25 times on day one. New houses cost that year's price; their rent starts at 0.9% of the original price, grown with rents, so faster price growth makes the next house harder to justify.
- Cash: reserves earn 2.4%, other cash 4.5%. Spending means taking the monthly cash flow; interest stays in the account.
- No-refinancing comparison: identical rules, but equity is never borrowed against. Reinvested cash flow can still buy houses.
- Selling: results assume everything is sold in the final year at 3.3% selling costs.
- Downturn case: values fall 5% in each of years 2 and 3, then flat to year 5, then grow 2% a year; vacancy 10% in years 2 to 5; running costs up 10% from year 2; renewals at 7%.
- Not included: income tax on rent, capital gains tax and CCA recapture, extended vacancy, major uninsured repairs, and changes to lending rules. Figures are nominal and pre-tax.
What could go wrong
- Rates rise at renewal. Payments climb on every mortgage at once. The model holds your rate constant, so test a higher one.
- Values stall or fall. The refinance capacity disappears for years, and purchases get pushed back. A falling market delays the wheel; being forced to sell is what breaks it.
- Lenders tighten. Qualifying for more mortgages gets harder as a portfolio grows, whatever the numbers say.
- More debt, thinner margins. Each refinance leaves the original property carrying more debt. Keep reserves outside this model.
Want the full 15-year report?
Year-by-year numbers for every path and scenario, on this same house, sent personally. I'm happy to talk through how the settings fit your situation.
eric@ericcoulombe.com · 604-764-8620