Commercial Income Properties

The financing of commercial income properties is mainly based on the economic value of the property, but also on the following aspects:

  • Location
  • Quality of tenants
  • The remaining term of the leases
  • The type of lease in force (gross, net, or triple net)
  • The number of years that tenants occupy the premises
  • The average vacancy rate of the building
  • The physical appearance of the building and its sustained maintenance over the years
  • Your experience as a property manager

The percentage of funding varies by financial institution and can range from 65% to 85% of the lesser cost or market value.

The amortization envisaged may vary depending on the risk, the quality of the tenants and the expiry of the leases. It varies in between 15 and 25 years.

The documents required by financial institutions are usually:

  • Your personal financial information
  • Financial statements of your business
  • The purchase offer and the appendices
  • Confirmation by the statement of a bank account of your down payment
  • A market evaluation less than 2 years old
  • An environmental assessment of less than 3 years (depending on the amount of the loan and the risk)
  • Inspection report (sometimes required)
  • A structure report (sometimes required for buildings in less good physical condition)
  • History of renovations to the property
  • The tenant register
  • Copy of leases and renewals
  • A statement of the income and expenses of the building
  • Municipal and school tax statement
  • The annual statement of energy expenses assumed by the owner
  • Copy of the building’s insurance policy
  • A certificate of location less than 10 years old

As for the interest rate, you can choose a term varying between 1 and 10 years. The rate for this type of financing is not displayed by banks. It will be defined according to the risks incurred by the financial institution based on the information provided.

The bank will charge you an acceptance fee and sometimes an annual review fee which we will negotiate for you.


Your mortgage broker

Your mortgage broker will be your ally in order to obtain:

  • The highest percentage of financing to reduce your down payment
  • The longest amortization to reduce the impact on your cash-flow
  • The lowest possible application fees
  • Negotiating the best financing conditions on the market