Best multi-family mortgage rates right now?

Jeremy Barham

New Forum Member
Registered
Hi! I'm looking to refinance a multi-family that is free and clear, and wondering what kind of mortgage rates are possible right now. It's an 8 unit in NB. I'm trying to figure out how much equity I can pull out to reinvest, and need to know what repayments my cashflow could comfortably sustain. I don't want to mess with CMHC - it's not worth the extra hassle. So I guess without them I'm looking at 65 or 70% max LTV and wondering what rates are out there and what lenders are good to work with?

Any recent experience or advice appreciated! Thanks.
 

RE123RE

Inspired Forum Member
Registered
Hi,
I think with TD for example you can get 75% LTV. It shouldn't be 65% unless you are a foreign investor.
Commercial mortgage interest rate is very good now around 3% if you can go to one of the big banks like RBC, TD, CIBC, BMO.
Thanks
 

E

Inspired Forum Member
REIN Member
Hi Jeremy it depends on the debt servicing coverage ratio as long as the property can cover 1.3 times the mortgage you should be able to get a 75% conventional loan we recently got an industrial loan for 3% on the first 11.2 million and then 3.7% on an additional 735,000 for the same property however we did use the operating businesses income to qualify for the mortgage and not the properties net operating income
 

RE123RE

Inspired Forum Member
Registered
Hi Jeremy it depends on the debt servicing coverage ratio as long as the property can cover 1.3 times the mortgage you should be able to get a 75% conventional loan we recently got an industrial loan for 3% on the first 11.2 million and then 3.7% on an additional 735,000 for the same property however we did use the operating businesses income to qualify for the mortgage and not the properties net operating income
Hi,
Interesting deal.
Operating businesses income?
Can you elaborate a bit? Where? why you purchased?
Thanks
 

RE123RE

Inspired Forum Member
Registered
We did a 70% LTV in Calgary at 2.36% a few weeks ago, five year fixed, 25 year am.
Hi,
3 years term or 5 years?
Apartment building > 6 units, or up to 4 units? with CMHC?
If apartment building without CMHC, then it sounds like commercial financing conditions are currently not worse than residential(!?)
Thanks
 

Thomas Beyer

Senior Forum Member
REIN Member
Hi,
3 years term or 5 years?
Apartment building > 6 units, or up to 4 units? with CMHC?
If apartment building without CMHC, then it sounds like commercial financing conditions are currently not worse than residential(!?)
Thanks
yes MF. 5 years. no CMHC. 120 units. from an insurance firm via mortgage broker.

Loans are cheaper the bigger they get. A small sub $2M loan is over 3% usually.
 
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Matt Crowley

Senior Forum Member
REIN Member
^ That looks good. I just am a bit surprised that's all. I was under the impression the Alberta Advantage was gone? Maybe I am reading my own interpretation into your posts.

What did you use for rents? (How much did you deflate 2015 rents to reach valuation)
 

Thomas Beyer

Senior Forum Member
REIN Member
^ That looks good. I just am a bit surprised that's all. I was under the impression the Alberta Advantage was gone? Maybe I am reading my own interpretation into your posts.

What did you use for rents? (How much did you deflate 2015 rents to reach valuation)
Yes Alberta Advantage is gone gone gone, but people still eat, drive, have jobs, buy stuff, make babies and ... drum roll please: rent apartments. Not everyone has left. New homes still being built, albeit fewer than last year, but with lower labor costs and sold for lower prices.

Banks use actual rents, down about 10-15% on re-rentals. Likely in a year loan amount would have been 10% lower. We'll sit tight and manage assets impeccably, pay mortgage down, upgrade minimally, preserve cash-flow and sail through the rougher seas. Many an inexperienced captain may sink a boat, though. Debris already visible and more sharks in the water.
 

Matt Crowley

Senior Forum Member
REIN Member
^ Yes. No doubt. And we are looking too.

But I'm sure you are not buying for the cap rate yield in the next rough waters period. Cash reserves only to get more crunched in short term. When do you see rents going back up?
 

Thomas Beyer

Senior Forum Member
REIN Member
When do you see rents going back up?
With oil sustainably over $55 and NDP gone or PST / deficit issue resolved as today no party has a credible answer to fix Alberta's budget hole.. so 2019 .. rents down this year and a bit more in 2017 .. then flat .. then up slightly is my "crystal" (fog) ball !

Calgary won't go anywhere and neither do buildings .. so flat is good for a while. Mortgage qualifications for your own house or condo will get tougher and tougher so rental demand continues to be there in all markets including Alberta.

Still, no rent control, so one can go up fast once market becomes tight again.

Other markets are not a slam dunk either: US has similar cap rates now but far higher mortgage rates, plus US/Can$ exchange rate unknown, ON and BC better right now but with rent control and pretty high prices / low CAP rates too .. in general people have to be satisfied with overall lower returns in a slow growth cheap money world flirting with recessions, negative interest rates and weak GDP growth.
 
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Developer

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Registered
We are in the process of re-financing a building of ours (38 units in Calgary) and are going with CMHC - 65% ltv, 25 year amort with either a 5 or 10 year term (still deciding). Talked to our mortgage broker yesterday and he told us the rate yesterday for a 10 year term was 2.3%. Pretty cheap money
 

Thomas Beyer

Senior Forum Member
REIN Member
Don't go ten years as it reduces your chance to sell or refi in 5 years. Rates will be low for ten or likely more years.
 

Thomas Beyer

Senior Forum Member
REIN Member
I have done two 10 year mortgages and regretted both as it limits your options, for refi or sale, and is more expensive by 0.4-0.5%.

Unless you want to truly do nothing for ten years and cash-flow without any thought.
 

Developer

New Forum Member
Registered
We did a 10 year term 2 years ago and I regret doing it also. I agree with your prediction of interest rates staying low for long
 

Thomas Beyer

Senior Forum Member
REIN Member
CMHC gets you a better rate by about 0.4-0.5% but I costs you 2.5-3.5% upfront

So no , not really worth it unless you can get a higher LTV which is also hard today

In almost all cases today therefore conventional is better but shop around

Money is very fungible !
 
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