• Commercial Mortgages – What? Why? and How?

  • Commercial mortgages can be daunting and confusing but not if you have the right mortgage professional on your side – someone who can ask important questions like:

    • Do you understand the lender's various terms and conditions? For instance, what if a lender requires 30-35% down due to the nature or risk associated with a deal but you only have 20%?
    • Do you know the difference between residential and commercial financing?
    • Do you understand the difference between an equity lender and debt lender and know which is appropriate to your deal?
    • Do you want to know how best to move from residential to commercial investing – including apartment buildings, commercial plazas or medical buildings?
    • Do you want to learn about joint ventures or syndications?

    As an experienced residential and commercial mortgage broker, located in Newmarket, Ontario, and with commercial clients throughout Canada and the US, I know the questions to ask and where to get answers.

    I'm also familiar with the various lenders in the marketplace and I understand their appetites for specific property types, giving you a better chance of securing the financing you need.

    I can also help, wherever you happen to be or want to invest:

    • York Region and the GTA – Commercial real estate buyers and sellers can access the best rates and terms through my vast network of lenders, including banks, alternative lenders and even private lenders.
    • Ontario, Albert and British Columbia – Want to purchase property in another province? As a licensed mortgage broker, I can co-broker with other mortgage professionals across Canada.
    • Continental US – Are you a Canadian planning to buy commercial property stateside? My bank and private lender contacts can assist you with financing.
  • Case Study 1: Mixed-Use Commercial, Montreal, Quebec

  • The client owned a multi-level, mixed-use property in downtown Montreal. His nutrition company rented out the bottom floor and two other units were rented as residential two-bedroom apartments at less-than-market rent, as the property needed renovations.

    Goal: Secure a refinance for better terms and rates than currently available to him through the bank.

    Problem: Client was stated income (declared less than he actually made so he could reduce amount of payable taxes) so the bank would no longer provide him with a mortgage on his renewal.

    Solution: I was able to refinance his property for 60% LTV, which allowed him to renovate the two units and expand his nutritional company.

    Result: A happy client and the refinancing took just over 3 months to complete!

    Property value (based on appraisal)  $415,000
    Refinance LTV 60%    $250,000
    Legal fees $800
    Appraisal cost   $1,000
    Lender fee - 1% of loan    $2,490
    Broker fee  - 1% of loan  $2,490
    First mortgage  4.80% fixed
    Term 3 years
    Amortization 25 years
    Monthly mortgage $1,432.49

     

  • Whаt's the difference between residential and commercial mortgages?

    In a residential mortgage, the lender is primarily looking to see if you, the borrower, has the ability to pay the mortgage. With a commercial mortgage, it's the property's ability for cash flow that first provides the case for financing, then the borrower.

  • Why both?

    Lenders must make sure that payments are covered by tenants. However, if there's a shortfall in rent payments or a long vacancy, the borrower must be able to cover the mortgage.

    The other major difference is the time it takes to get a commercial mortgage funded. Due to the paperwork required and due diligence in underwriting, it can take anywhere from 3 months to over a year.

    A rule of thumb is to always expect the unexpected when it comes to commercial mortgage financing – lenders are never satisfied! However, as a seasoned professional, I can make the process as streamlined and stress-free as possible.

  • Whаt types of properties are commercial?

    • Mixed-Use is typically as a storefront on the bottom with apartments on top
    • Multi-Residential can be a home with 6 separate units or an apartment building with many floors and many individual units
    • Office is a multi-unit building where units are leased to tenants (other businesses)
    • Commercial Retail is typically a retail plaza or shopping mall
    • Industrial Mall contains commercial condominiums, typically inhabited by businesses.

    This can also include warehouses and factories.
    Other types of properties:

    • Nursing Homes
    • Gas Stations
    • Places of Worship
    • Golf Courses
  • Want to go green?

    As of 2020, all commercial building in Canada will need to be Gold Leed Certified, so don’t delay as this will be a government mandate.  By working with my partners at Green Soil, we can do an LED lighting eco-retrofit to analyze energy expenses, see where we can save you money and take advantage of incentives available to owners. I can help by securing financing against the lighting equipment with no charge against the property, thus not impacting your current mortgage financing.

  • Case Study 2: Commercial Warehouse, Toronto, Ontario

  • The client owned a commercial warehouse for his manufacturing business in North York.

    Goal: Investigate how much the client could save by converting his property, currently running on fluorescent blurbs, to LED Lighting.

    Problem: The client had a 1st mortgage that did not allow him to refinance for the expense of an LED retrofit.

    Solution: By conducting a Green Soil retrofit report, we were able to show the client his potential savings over 5-10 years, without impacting his current financing. Financing was secured solely against the LED lighting cost and the client has low interest-only payments until he is able to refinance and repay the loan in another year.

    Result: A happy client with just over 4 months to complete from report to financing.

    Property value   $2,500,000
    Existing mortgage $1,500,000
    Eco report cost      $15,000 (included in financing cost)
    Eco financing $300,000
    Rate     7%
    Term Open
    Monthly payment  $1,725
  • How do you obtain a commercial mortgage?

    Thе bеѕt wау іѕ tо uѕе thе services оf a licensed mortgage broker whо саn hеlр prepare your documentation tо suit the needs of the lender.

  • How can I help?

    Whеn applying fоr a commercial mortgage, I'll help you do уоur homework аnd build a strong business case tо demonstrate уоur ability tо repay.

    As your licensed mortgage broker, I will not only work diligently to understand your specific needs, represent you and strengthen your case. I also hаvе familiarity and access tо a wide range оf lenders, I understand thеre criteria fоr lending and I саn undertake a targeted search, increasing уоur chances оf finding a suitable loan.

    I know the questions to ask and the vendors to deal with to secure your next commercial mortgage.
    Call me today at 416 697-5443 or email me at [email protected] and let's get the financing you need!