Multi-unit Property with 5 Units or More

Commercial Multi-Prêts

Financing multi-unit properties is based on evaluating the economic value of a property, specifically the income-generating capacity of a revenue property. Several factors will be important, including:

• The location of the property
• The type of housing (5 1/2, 4 1/2, 3 1/2…)
• The number of years that tenants have occupied the premises
• The average vacancy rate of the building
• The physical aspect of the building and its sustained upkeep
• Your management experiences
• The available parking and storage spaces
• Various ratios such as the aggregate discount rate (ADR), the gross income multiplier (GIM) and the net income multiplier (NIM). The price per door may be considered in certain situations.

The percentage of financing varies by financial institution and could reach up to 95% of the lower of the purchase price, market value, or economic value.

In conventional financing, the amortization period is limited to 25 years (sometimes 30 years under certain exceptions). In the case of a loan insured by CMHC and Genworth (APH), the amortization period can range from 30 years to 50 years.

The documents typically required by financial institutions include:

• Your personal financial information (personal balance sheet, tax report, notice of assessment, proof of assets, etc.)
• Financial statements of your business
• The purchase offer and the appendices
• Confirmation by the statement of a bank account of your down payment for the last 3 months
• A market evaluation less than 2 years old for conventional loans and less than 6 months for CMHC insured loans
• A phase 1 environmental assessment of less than 1 year
• Inspection report (sometimes required)
• A structure report (sometimes required for buildings in less good physical condition)
• History of renovations to the property
• The tenant registry
• 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 dated less than 10 years old

Regarding the interest rate, you can choose a term ranging from 1 to 10 years. Please note that if your financing is insured by CMHC, you must choose a minimum first term of 5 years (3 years based on exceptions). The interest rate for this type of financing is not typically displayed by most banks. The interest rate will be determined based on the risks assessed by the financial institution according to the information provided.

The bank may also impose acceptance fees, and possibly annual review fees, which we will negotiate on your behalf.