SEEKING ADVICE - NEED CREATIVE FINANCING FOR BIG DEAL
Good News: We've got a sweet deal lined up - $1,275,000 for an 18-unit residential building in Eastern Ontario.
Bad News: Sadly, financing is an issue. We need to come up with about $700,000 that we don't have in order to secure the remaining balance through a CMHC insured mortgage at about 2.75%. The owner of the property hasn't raised the rents since 2007 so, essentially, the deal looks like crap on paper!
We've looked at options for financing the full amount ($1.3 M) through private lenders, but the fees and interest rates are crazy...
We've got faith that we can turn this place around within a couple of years, so we really want to make this deal happen!
Looking for some creative advice here :)
Any insight would be incredibly appreciated!
Thanks in advance!
Most Popular Reply
I ran into this on my last MF. We assumed the seller's existing mortgage, put down a larger than normal down payment, increased rents + decreased expenses and are in the process of refinancing to get our DP back out. This was not, however, in ON.
The challenge with Ontario is that it's tenant friendly; there is a cap on annual rent increases, so you can't catch up to market rent unless tenants change over.
I would question if it's a sweet deal if you can't secure financing. If it looks like crap on paper, what makes it sweet? How can you increase NOI with rent control in place?