- Joined
- Aug 26, 2010
- Messages
- 380
Hi, we own an 18 unit, tried to sell property last year, highest offer was 2.5 mill. Current total debt is 2.1 million. Rent roll is about 20500, almost always full, very lean operating costs for utilities on paper but high maintenance and insurance costs due to the fact it is 5 structures housing the 18 units and has exposure to strong winds. At least 50K of capital expenditures expected in next few years. At least, could be 100K.
Since then partner has been bought out and plan is to put 5 yr CMHC mortgage on it, hopefully pull out a little equity, and hold til the mortgage paydown has happened.
Just found out from broker his underwriting to CMHC is at 3.2 mill with possible mortgage as high as 2.6 mill. Pointed out to him we couldn't sell anywhere near 3 mill but the big numbers work for DCR and cashflow according to CMHC criteria and todays low cap rates.
So for you experienced folks out there - what is your opinion on overleveraging a property and holding a big cash reserve vs not taking all the cash available and holding a smaller reserve? From cashflow perspective the CMHC refinance lowers monthly mortgage cost from 14K to sub 11K even at high debt level. From cash in hand perspective, could net as much as 4-500K in hand from the refi, assuming CMHC approves a somewhat lower request than 2.6 mill mtg.
Tempted to take the money if it appears but nervous at the thought of a sale in 5 years where we might possibly have to write a cheque to exit the deal.
cheers
Since then partner has been bought out and plan is to put 5 yr CMHC mortgage on it, hopefully pull out a little equity, and hold til the mortgage paydown has happened.
Just found out from broker his underwriting to CMHC is at 3.2 mill with possible mortgage as high as 2.6 mill. Pointed out to him we couldn't sell anywhere near 3 mill but the big numbers work for DCR and cashflow according to CMHC criteria and todays low cap rates.
So for you experienced folks out there - what is your opinion on overleveraging a property and holding a big cash reserve vs not taking all the cash available and holding a smaller reserve? From cashflow perspective the CMHC refinance lowers monthly mortgage cost from 14K to sub 11K even at high debt level. From cash in hand perspective, could net as much as 4-500K in hand from the refi, assuming CMHC approves a somewhat lower request than 2.6 mill mtg.
Tempted to take the money if it appears but nervous at the thought of a sale in 5 years where we might possibly have to write a cheque to exit the deal.
cheers