Investment in Commercial property in Waterloo

[mokles]

Hi All,
I am trying to buy a commercial property in Waterloo. It will be a VTB transaction of around $1.2m. It is my first real estate investment ( I have owned a rental townhouse for one year before). The cap rate is 10. interest rate could be around prime rate. I will be able to pay around 18% down, taken out of my primay residence by remortgaging. The selling agent said, the current tenants may sign long term tenancy agreement.

I will discuss with an experienced real estate agent and an accountant before making the transaction.
I am asking for any comment on the transaction from real estate investors. What caution should I take, if I am taking too much risk etc?

Thanks for your advice,
Mokles

 

[Anonymous]

A few points if I may:


QUOTE I am trying to buy a commercial property in Waterloo. It will be a VTB transaction of around $1.2m.

What are the details of the financing (high level of course?)


QUOTE The cap rate is 10.

What is the prevailing cap rate for this type of building?


QUOTE interest rate could be around prime rate.

For the 1st or VTB and is it interest only or P/I?


QUOTE I will be able to pay around 18% down, taken out of my primay residence by remortgaging. The selling agent said, the current tenants may sign long term tenancy agreement.

Please have your lawyer review the lease and make sure that it is signed for the long term before you wave conditions. In addition, make sure the tenant signs your lease, not theirs. In fact, I often put in my offers that the current landlord / pm team is not allowed to rent any units without my approval and on my paperwork.


QUOTE I will discuss with an experienced real estate agent and an accountant before making the transaction.

Please include a lawyer also.


QUOTE What caution should I take, if I am taking too much risk etc?

This is totally your call and your investor`s call.

 

[mokles]

QUOTE A few points if I may:

What are the details of the financing (high level of course?)

What is the prevailing cap rate for this type of building?

For the 1st or VTB and is it interest only or P/I?


Thanks Mark for the tips. The payment will be on P/I. The cap rate is on the higher side, I think. I will have some positive cash flow. The VTB sould be for around 5 years, after that I will have to find financing. That concerns me a bit.

Mokles

 

[grhutchings]

As someone who has been investing in Residential Real Estate and considering Commercial, I would like to thank you Mark for replying to this thread. The info that you gave to take into consideration is certainly very helpful.

Its great to be able to post on here and have other knowledgeable investors help one another out.

George Hutchings
www.sellmeyourhomefast.com
Hutchings Investments