5 unit multi family financing

13 Replies

Hello everyone .

I am struggling to avoid a commercial loan, my local broker is not having any luck with a residential loan (he has 2 lenders that are still looking) on a 5plex and the fees are so that a commercial loan looks unprofitable, however, there is much room for optimization of the income with this particular complex. Any suggestions or has anyone come across this situation? 

Any help is appreciated.


@Keith Cox you are wasting your time and the time of the broker. It is a commercial loan.

If a commercial loan makes the deal look unprofitable, that is because it is a bad deal. Walk away. 

Originally posted by @Ned Carey :

@Keith Cox you are wasting your time and the time of the broker. It is a commercial loan.

If a commercial loan makes the deal look unprofitable, that is because it is a bad deal. Walk away. 

Yep . If the margins are that thin it is a lousy deal anyway 

 

Thank you for the replies; my broker had this out to 11 lenders as, in his experience, a residential loan can be done up to 6 units, however, location comes to play and this is a community of circa 5,000 and this may be the limiting factor. 

Upward on onward.

Keith 



@Keith Cox

You're stuck with Commerical on anything over 5+ units. Yes, the rates aren't as attractive, but you'll be working with banks who can offer a lot more flexibility than traditional residential lenders

You are going to have a very hard time finding a lender to do a residential mortgage on a 5 plex.

I've been finding that the difference between a residential mortgage and a commercial mortgage can make or break a lot of deals. That 1-1.5% difference can be the difference between $400 a month cashflow or just breaking even.

You are either going to need to get creative to make it work, or find something that works better.

Originally posted by @Devin Solberg :

@Keith Cox

Hi Keith,

Try getting ahold of an RBC mortgage specialist in your area. They are the only bank in Canada I know that’s doing 5 and 6 plex properties on a residential mortgage.

Both RBC and CIBC will underwrite a 5-unit building as residential.

 

@Roy N.

Hi Roy,

I’ve seen your response to that before here as well. My CIBC contact may be wrong, but I recently spoke to her and she mentioned with the tightening of their policies they weren’t doing this anymore. I could be wrong though. Just thought I’d pass that along in case it interferes with a future deal of yours!

Originally posted by @Devin Solberg :

@Roy N.

Hi Roy,

I’ve seen your response to that before here as well. My CIBC contact may be wrong, but I recently spoke to her and she mentioned with the tightening of their policies they weren’t doing this anymore. I could be wrong though. Just thought I’d pass that along in case it interferes with a future deal of yours!

Must be a very recent, or perhaps regional, policy shift as we have 5-6 unit properties under residential financing with CIBC and RBC  

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