Sign up via our FREE e-mail subscription service to receive notifications when new INTEREST RATE information is available. Lenders are constantly changing their rates, or offering us special deals. Let us do the leg work for you, and keep you up to date on Interest Rate changes.

Get Email Updates · Ask a Question · Apply Now

Archive for the ‘Commercial Mortgages’ Category

Buying a Rental Property

Friday, March 19th, 2010

Are you consider purchasing a Rental Residental property with 1-4 units?

I have been investing in Rental properties for the past 7 years. I would like to share with you at this time HOW I evaluate a residential rental property that I am considering buying.

I will use the following property as an example: 319 Broadway Ave, Orangeville Ontario as listed on 519Property

(See my calculations below). What I look for:

a) property should be cash flow positive

b) Return on Investment; I like to be higher than 10%, the calculations below do not include ROI for increase in property value; which would increase the ROI even more

c) there is room for a second mortgage so that I do not need to come up with the entire 20% down payment

Based on this evaluation; this is an excellent investment. Other things to consider when buying a rental property;

-who pays the utilities; tenant or landlord?

-what is the “Curb” appeal of the property (how it looks from the outside can have a great impact on quality of tenants)

-is it currently rented and if so what are the terms of the leases (one year, month to month)

CMHC is implementing new regulations in April that are tightening up lending on Rental Properties. They will not insure a mortgage more than 80% loan to value, and they are only going to use 50% of the rental income to qualify the debt ratios. There are other options available to Investors than going through CMHC insurance. I would be happy to talk to you on how you can still buy a property with less than 20% down. If there is a property that you are interested in I will prepare free of charge a complete analysis like the one below for you.

sarah@dropmyrate.ca

319 Broadway Supplimentary Mortgage Information
Monthly Annual
Rental Income $ 3,100 $ 37,200
Less Expenses:
Insurance $ 250 $ 3,000
Prop Tax $ 300 $ 3,600
Net Income $ 2,550 $ 30,600
Mortgage Info:
DownPayment 20% $ 83,800
Mortgage amount 80% $ 335,200
Interest Rate 4%
Monthly Pmts (35 yr am) $ 1,484
***OAC
Monthly Cash Flow $ 1,066
Annual Cash Flow $ 12,792
Annual ROI 15.26%

Tags: , ,

Mortgages for Commercial Property

Friday, March 5th, 2010

Commercial lending can be a very challenging arena to enter. There are a limited number of Lenders that will consider Commercial deals. A deal is generally considered to be commercial if it is a Multi-residential building with more than 4 units, an office or retail building, industrial condo’s or buildings, and any other type of income generating property that is NOT residential.

Once a Property is considered Commercial, a few things change when looking into Financing the property. Generally you will require more money as a down payment. Anywhere from 15% to 50% depending on the type of property. The interest rate on the Mortgage will be higher than current posted Residential Rates. And you may require private lending as opposed to a traditional bank.

Your best approach to financing a commercial property is to work with a Mortgage Broker who has access to Multiple Lenders, and will have experience placing many different types of commercial properties. Mortgage Brokers usually have contacts in private lending also, that may give you some flexibility. For example if a Lender on an office building is only willing to loan up to 65% Loan to Value, your Mortgage broker may be able to find Private funds for a second mortgage up to 75% or even 85% so you need to invest less of your own funds.

If the building is being purchased by a corporation, generally the lender will require the Personal Gaurantee of the principals behind the Corporation.

To apply for a commercial mortgage the following information will be reviewed:

Typical Information Required to Obtain Detailed Loan Proposal
• Loan Amount Required and Purpose
• Rent Roll or Leases
• Project Operating Statements
• Ownership Details
• Pictures / Property Description
• Details of Registered Debt or Purchase and Sale Agreement

For more information about Commercial Lending please contact us by using our contact page or the comment form below, and one of our Licensed Mortgage Agents will be in touch with you within 24 hours.

Tags: , , ,