CMHC financing on a Multi Family
- Thread starter markl
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CMHC uses very conservative underwriting guidelines .. Thus lending values tend to be capped based on too conservative CAP rates.
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First I heard of it. But could be. Which city ? What value ?
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[quote user=markl]
mentioned that CMHC had capped his per unit value of his building irrespective of income and expenses.
Hi Mark, I understand that is what he said but let me guess - he doesn't have anything from CMHC in writing saying that. as we know there are numerous ways to show a unit is worth x.
by adjusting estimates like vacancy rate expense etc. My short experience with CMHC shows that the most important factor affecting their appraised value is... the purchase price shown in your accepted offer. Not that it's the same but it almost looks like they take the price you got and I bet by trial and error check how to estimate it at say 5% below your negotiated price. Not that I am critisizing the starategy I see how it can protect the bank from their point of view and sometimes their feedback protects the buyer.
A statistical proof is they will never or rarely appraise it as worth above your prucahse price... although it is indeed possible and statistically happens in around 50% of the cases that the price you get is below market value.. by 1 dollar or more!
Regards,
Nir
mentioned that CMHC had capped his per unit value of his building irrespective of income and expenses.
Hi Mark, I understand that is what he said but let me guess - he doesn't have anything from CMHC in writing saying that. as we know there are numerous ways to show a unit is worth x.
by adjusting estimates like vacancy rate expense etc. My short experience with CMHC shows that the most important factor affecting their appraised value is... the purchase price shown in your accepted offer. Not that it's the same but it almost looks like they take the price you got and I bet by trial and error check how to estimate it at say 5% below your negotiated price. Not that I am critisizing the starategy I see how it can protect the bank from their point of view and sometimes their feedback protects the buyer.
A statistical proof is they will never or rarely appraise it as worth above your prucahse price... although it is indeed possible and statistically happens in around 50% of the cases that the price you get is below market value.. by 1 dollar or more!
Regards,
Nir
- Joined
- Aug 30, 2007
- Messages
- 13,881
Complex problems have easy, simple to understand, wrong answers. CMHC insures banks for lending risk, and thus provides low low interest rates for home buyers or apartment building owners to provide affordable housing in Canada. It is a crown corporation, thus not designed to take risks, but insure them. Thus, conservative underwriting guidelines with expenses that are reasonable, vacancies that are reasonable, rents that are a reflection of sustainable market rents and CAP rates that are conservative. Thus, lower LTVs of perhaps 75% or lower.