Getting a signed lease before completion

Brennan

New Forum Member
REIN Member
Dec 12, 2017
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#1
Hi everyone,

I'm working towards purchasing my next rental property in Edmonton and one of the conditions my lender is requesting is a signed lease agreement for the property BEFORE completion. This would mean having a signed agreement even before I have possession of the property, though I'm not even sure if I'd be able to show the property to potential tenants unless the seller is willing.

Has anyone had any experience with this and know how to go about satisfying these financing conditions?

Thanks in advance!
 

kfort

Senior Forum Member
REIN Member
Sep 1, 2010
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#3
If there is an existing lease in place they will ask for it. Always negotiate access to show prospective tenants and contractors after removing conditions. I managed to squeeze through signed acknowledgments of rent and damage deposit in place of leases with a disorganized seller on one occasion.


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Devin Roberts

Devin Roberts - Brent Roberts Realty
REIN Member
Nov 17, 2015
95
40
18
#4
Hi everyone,

I'm working towards purchasing my next rental property in Edmonton and one of the conditions my lender is requesting is a signed lease agreement for the property BEFORE completion. This would mean having a signed agreement even before I have possession of the property, though I'm not even sure if I'd be able to show the property to potential tenants unless the seller is willing.

Has anyone had any experience with this and know how to go about satisfying these financing conditions?

Thanks in advance!
You could put in a clause in the agreement allowing you access to show the property with 24 hours notice


Devin Roberts — Brent Roberts Realty
Vancouver REIN Member
Cell: 604-354-7160
Email: Devin@DevinRoberts.ca
 

Alvaro Sanchez

Ottawa-Gatineau Investor
Registered
Jun 5, 2009
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Ottawa
AlvaroSanchez.ca
#5
Just closed on a property on Monday (Yesterday) where bank requested a proof that I can lease it at x rent. So I did the following... in my offer, I requested the ability to show the unit prior to closing with 24 hrs advance notice to seller. Search for letter of intent to lease (Non-Binding letter of intent to lease).

I had a person from another province who wanted to secure a unit prior to arriving to the city. I pitch the idea of the non-binding letter of intent to lease to him which effectively put him on top of the pile from any rental applications. Besides the letter, I also requested a completed rental application.

Since the letter is non-binding, if he did not like the property on showing date then he was not obligated to lease it. If he confirm his interest up on seeing the property then I would just process rental application. If rental application is no approved, I was not obligated to rent to him so its a win-win-win scenario. (candidate was happy, bank was happy and I was happy).
 

Michel Lafleur

Frequent Forum Member
REIN Member
Apr 30, 2015
136
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#6
There are a couple of ways to do this.... its a good idea to write into your offer the right to access the property prior to closing for the purpose of showing it to prospective tenants, managers & tradespeople. If you are buying their property, sellers should be happy to cooperate if you want to show it to potential tenants.
I've had a few scenarios lately where an appraiser is sent to the property to do a market rent evaluation. Basically the bank wants to know what your debt coverage ratios will be - you need to show that this will be positive cashflow before they give you a mortgage on the property.
 
Likes: Brennan

kfort

Senior Forum Member
REIN Member
Sep 1, 2010
1,523
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#7
If existing leases do exist, clearly put in the offer that you require them within 48hr of accepted offer. Emphasize this with your realtor and theirs. Always use a tight time frame to avoid getting docs required for financing at the last hour (or never)..


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Likes: Brennan