Semi-commercial Real Estate

A semi-commercial property is characterized by the fact that a commercial portion is accompanied by a determined number of residential units. The financing of semi-commercial income properties is based on the assessment of economic value, but must also consider several other important aspects:

  • The location of the property
  • The quality of tenants
  • The longevity of the term of the leases
  • The type of residential housing (5 1/2, 4 1/2, 3 1/2…)
  • The type of commercial leases in effect (gross, net or triple net)
  • The number of years that tenants occupy the premises
  • The average vacancy rate of the building
  • The physical aspect of the building and its sustained upkeep
  • Your management experiences
  • The number of available parking spaces

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

The possible amortization varies between 15 and 25 years depending on the risk and the quality of the leases.

The documents required by financial institutions are usually:

  • Your personal financial information
  • Financial statements of your business
  • The purchase offer and the appendices (or annexes is valid)
  • Confirmation of your down payment by a bank account statement
  • A market evaluation less than 2 years old
  • A phase 1 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 the banks.  It will be defined according to the risks incurred by the financial institution based on the information provided.

The bank will also impose an acceptance fee and possibly an annual review fee that 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