Real Estate Investing School Podcast Episode 241: Mortgage Secrets Every Investor Should Know with Jason Henneberry Release Date: March 3, 2025

In this insightful episode of the Real Estate Investing School Podcast, host Joe Jensen welcomes Jason Henneberry, the co-founder and CEO of Tango Financial, Canada’s largest mortgage broker. With over two decades of experience in the real estate industry, Jason shares his profound knowledge on mortgage strategies, the nuances of the Canadian market, and innovative investment techniques that every real estate investor should consider.

1. Introduction to the Canadian Real Estate Market

Joe Jensen opens the conversation by highlighting the differences between the Canadian and U.S. real estate markets. He observes that Canadian homes are perceived as more expensive with stricter financing options compared to the U.S.

Joe Jensen [01:28]:

"You've kind of touched every side of real estate, Jason... how real estate looks in Canada and how you look at real estate in the United States. What are the pros and cons?"

Jason confirms these differences, emphasizing the tighter regulatory environment in Canada, which makes entering the real estate market more challenging today than a decade ago.

Jason Henneberry [02:37]:

"We probably have a little bit of a tighter regulatory environment up here in terms of like the lending products and things like that. So it is harder today than it was 10 years ago to get into real estate."

2. Impact of the 2008 Financial Crisis in Canada

The discussion transitions to the 2008 financial crisis, exploring its effects on the Canadian market compared to the U.S.

Jason Henneberry [05:54]:

"If you owned and held real estate through the end of 2009, then you were fine... our market is pretty solid from that perspective."

Jason explains that while the crisis did impact Canada, the resilience of Canadian homeowners—only 50% of whom have mortgages—helped stabilize the market. This high equity ownership meant fewer forced sales, keeping home prices relatively steady, especially outside major metropolitan areas like Toronto and Vancouver.

3. Mortgage Structures: Canada vs. U.S.

Joe and Jason delve into the differences in mortgage structures between the two countries. In Canada, mortgage terms are typically shorter, with the longest being 10 years, compared to the ubiquitous 30-year fixed rates in the U.S.

Jason Henneberry [07:24]:

"The longest you can get is a 10-year. I don't know anybody that takes them because they're priced out of the market."

This means Canadian homeowners face interest rate risks sooner, as their mortgages come up for renewal more frequently. Currently, a significant wave of mortgage renewals poses both challenges and opportunities for lenders in Canada.

4. Jason’s Personal Real Estate Journey

Jason shares a candid account of his personal investment journey, highlighting both successes and setbacks.

Jason Henneberry [12:21]:

"I had 20, 25 doors when I was 30 years old."

However, a massive marketing investment in 2006-2007 backfired when the market crashed in 2008. This led to financial ruin, including selling his house and restructuring his business. Despite this, Jason's resilience and strategic pivot to rent-to-own models facilitated his recovery and eventual success.

5. Rent-to-Own Strategies Explained

A significant portion of the conversation centers around the rent-to-own model—a strategy Jason employed to rebuild his portfolio after financial setbacks.

Jason Henneberry [19:35]:

"There’s a lot of wins for people in a rent owned situation... it's a multi-transaction type thing... everyone gets upside in the deal."

Jason outlines how rent-to-own agreements can benefit all parties involved:

• Tenant Buyers: Gain immediate occupation with the goal of eventual ownership.
• Investors: Reduce risk by ensuring steady cash flow and having committed tenants.
• Realtors and Finance Companies: Facilitate transactions and leverage their roles to support the process.

He emphasizes the importance of executing these deals during down markets to maximize appreciation potential and ensure mutual benefits.

6. Investment Metrics: The 816 Rule vs. The 1% Rule

Joe introduces the 816 rule, which Jason elaborates on, comparing it to the commonly known 1% rule in real estate investing.

Jason Henneberry [42:08]:

"The 816 rule... if the monthly rent is between 8 and 16 times the value of the property, it’s likely to cash flow positively."

Joe Jensen [45:18]:

"The 1% rule is exactly the middle ground on the 816 rule."

By annualizing the rent, the 816 rule provides a broader range to assess cash flow viability, accommodating variations in property taxes and insurance that the 1% rule might not fully capture. This nuanced approach allows investors to better evaluate potential investments across different markets.

7. Final Q&A: Insights and Advice

In the concluding segment, Joe poses four questions to Jason, offering listeners deeper insights into his philosophy and strategies.

Question 1: A Message to Everyone Jason Henneberry [48:27]:

"Don't take yourself too seriously. Take your time... that opportunity comes around again."

Question 2: Book or Podcast Recommendation Jason candidly admits he hasn’t read a new book recently due to his busy schedule managing multiple businesses. Instead, he emphasizes practical experience and maintaining energy through balanced living.

Question 3: Most Expensive or Interesting Mistake Jason reflects on his aggressive marketing strategy that led to financial ruin during the 2008 crisis, underscoring the importance of prudent expansion and risk management.

Question 4: One Word or Short Phrase for Real Estate Investing Jason Henneberry [59:28]:

"Inflation adjusted returns."

He highlights real estate’s ability to provide predictable, inflation-protected cash flow, ensuring long-term financial stability and growth.

Key Takeaways

• Market Differences: The Canadian real estate market is more regulated with higher equity ownership, leading to greater stability during economic downturns.

• Mortgage Terms: Shorter mortgage terms in Canada mean homeowners face interest rate renewals more frequently, impacting both borrowers and lenders.

• Personal Resilience: Jason’s journey underscores the importance of adaptability and innovative strategies like rent-to-own in overcoming financial setbacks.

• Investment Strategies: Rent-to-own and the 816 rule offer nuanced approaches to real estate investing, enabling investors to assess and maximize their returns effectively.

• Practical Wisdom: Emphasizing the importance of focusing on core business activities, maintaining energy, and building sustainable investment practices over chasing rapid growth through external resources like books and seminars.

For more insights from Jason Henneberry and to connect with him, please visit his social media profiles or visit Tango Financial’s website.

Notable Quotes:

• Jason Henneberry [00:00]:

  "That opportunity that you think is like, I gotta jump on it now, I promise you, man, it comes around again."

• Jason Henneberry [48:27]:

  "Don't take yourself too seriously... that opportunity comes around again."

• Jason Henneberry [59:28]:

  "Inflation adjusted returns."

This episode provides a comprehensive look into the intricacies of the Canadian real estate market, innovative investment strategies, and the personal resilience required to succeed in the dynamic world of real estate investing. Whether you're a seasoned investor or just starting, Jason Henneberry's experiences and insights offer valuable lessons for navigating the complexities of mortgage financing and property investment.