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Dummy lease for mortgage quotes

aqorps

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May 6, 2009
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Hi

Well we are looking to buy this retail unit as few lenders have given us verbal quotes but for a written quote they want the Lease agreement signed by the tenant..
The unit is expected to ready by dec 2009..( nothing started yet...) How can sombody lease a unit showing a bare naked land.
Now my Mortgage broker says we can furnish a dummy lease...
. just to fill up the paper work.
Its too early for anyone to get a tenant before the building is ready.Don`t they( BANKS..) know this or are they trying to say NO to a written quote.

Our concern is we don`t want to play games we can afford the unit even if we don`t lease for 5 years.
What options do we have.. go for a dummy lease ..
.. Change the Mortgage broker.
... wait till the unit is ready and get a tenant.... ( might be too late then....)

This is our first deal. your suggestions guys, very much appreciated

Thanks in advance.
 
QUOTE (aqorps @ Jun 9 2009, 07:28 PM) Hi

Well we are looking to buy this retail unit as few lenders have given us verbal quotes but for a written quote they want the Lease agreement signed by the tenant..
The unit is expected to ready by dec 2009..( nothing started yet...) How can sombody lease a unit showing a bare naked land.
Now my Mortgage broker says we can furnish a dummy lease...
. just to fill up the paper work.
Its too early for anyone to get a tenant before the building is ready.Don`t they( BANKS..) know this or are they trying to say NO to a written quote.

Our concern is we don`t want to play games we can afford the unit even if we don`t lease for 5 years.
What options do we have.. go for a dummy lease ..
.. Change the Mortgage broker.
... wait till the unit is ready and get a tenant.... ( might be too late then....)

This is our first deal. your suggestions guys, very much appreciated

Thanks in advance.

First off, I have to make sure of something - when you say `dummy lease`, do you mean a fake lease that states that some made-up person is going to rent it? As in, a legal document that Archie Andrews will pay you $2000 every month? Because if that`s the case, my first reaction is that you should ask your mortgage broker how often he`s going to visit you when you`re in jail for bank fraud....

Now, I could be wrong here, and god knows I`m no legal expert, but this just seems wrong on so many levels. I`d say, ditch the broker and find one that is used to dealing with these kinds of matters. You know, the kind that doesn`t advise you to break the law.

Have a good one!

JohnS
 
No question!!!
RUN FROM THIS MORTGAGE BROKER even if it’s your brother. You need to operate your business in professional manner and always sign documents that are 100% true. It may cost you a few dollars. But I`d rather a few dollars than 1000`s and 1000`s of dollars.
 
Thanks John,

I know thats not legit and appreciate your reply .... Now my concern is still the same...Why would the Bank ask for a lease agreement when there`s nothing constructed...

Thanks
 
QUOTE (GaryMcGowan @ Jun 9 2009, 06:28 PM) No question!!!
RUN FROM THIS MORTGAGE BROKER even if it’s your brother. You need to operate your business in professional manner and always sign documents that are 100% true. It may cost you a few dollars. But I`d rather a few dollars than 1000`s and 1000`s of dollars.


Yes I`m on the run .... but can someone further point on this case how to get a written mortgage quote

Thanks in advance poperty is in orangeville any mortgage broker recomendations I know distance does`nt matter in today`s times.
 
I know of Kevin who works in Orangville and is REIN member.

Kevin Boughen, AMP (The Mortgage Centre) - Ph: (416) 509-4047 Toll Free: 1-866-585-0999
 
QUOTE (GaryMcGowan @ Jun 9 2009, 09:55 PM) I know of Kevin who works in Orangville and is REIN member.

Kevin Boughen, AMP (The Mortgage Centre) - Ph: (416) 509-4047 Toll Free: 1-866-585-0999

Thanks a lot I`ll get in touch with him..... very much apreciated.
 
It is easier to get financing on stuff that is already built. There is lots on the market that is already built and FOR SALE. Lots of older affordable stuff, lots of newer stuff. Tons- actually. Maybe look for something that is NEW and rented and built if you are keen on new. You might have a much easier time getting financing plus you will have all new stuff and it will require less maintenance and might have warantees.

Good luck and all the best!

P.S. A Dummy lease sounds kinda "grey" to me. I doubt a bank is going to like anything called "Dummy".
 
QUOTE (JulieHoffman @ Jun 9 2009, 10:35 PM) P.S. A Dummy lease sounds kinda "grey" to me. I doubt a bank is going to like anything called "Dummy".

Thanks Julie.

We are looking around for built stuff.....too, just want to keep in orangeville let`s see
further ...."Dummy lease" was brokers idea just to get the written quote .... Bank will still see as a true lease.....and when the unit is ready we could present the new/ True lease....


I`ll try Mortage center and see what mu options are

Thanks for the reply we are exploring as this is the first Comercial property surely a steep learning curve
 
Kevin Boughen (416) 509-4047 )is best suitable for your need. Highly recomended. Thanks
 
I am a little confused. It is still just a lot but will be completed in 6 months (Dec 2009).
It will be almost impossible for a traditional institution to offer you a mortgage without a tenant. If the reason for a commercial unit is compelling in this location a private lender may be interested in providing a mortgage until you have a tenant and can get a traditional mortgage.
 
Even on a new property most banks will not require a lease. With most lenders, they will rely on the statement of economic rent from the appraiser. If you happen to be getting a really high rental rate for your unit, the bank really wants to know what the market rent is.

I wouldn`t even consider providing a `dummy lease`. Is short words, it`s fraud.
 
Please report the mortgage broker to the provincial authorities. It is that kind of activity that is causing a lot of lenders to look at their policy in the way they deal with brokers. Brokers and competition cause low rates and that is good for us all. Any thing "dummy" is a lie and therefore fraud this business can be very profitable and it can be done legal.
 
QUOTE (manojsingh @ Jun 10 2009, 01:10 AM) Kevin Boughen (416) 509-4047 )is best suitable for your need. Highly recomended. Thanks

Thanks I`ll get in touch with him this monday
 
QUOTE (rforgiel @ Jun 12 2009, 06:31 AM) I am a little confused. It is still just a lot but will be completed in 6 months (Dec 2009).

Yes its just a VACANT LAND right now construction to begin soon and expected completion dec 2009

I`ll update you guys with the new broker

Thanks
 
QUOTE (RobMacdonald @ Jun 12 2009, 10:55 AM) Even on a new property most banks will not require a lease. With most lenders, they will rely on the statement of economic rent from the appraiser. If you happen to be getting a really high rental rate for your unit, the bank really wants to know what the market rent is.

I wouldn`t even consider providing a `dummy lease`. Is short words, it`s fraud.

Thanks Robmacdonald, I have checked out the lease rates in the area its $20/sqft as of today and thats pretty much I`m using for my calculations.... Yeh I`m strictly against anything illegal that`s way I wanted to ask here is it a normal industry practice ....as this being my first commercial property.

Thanks for the feedback much appreciated.
Raj
 
QUOTE (MikeMcCrae @ Jun 12 2009, 03:10 PM) Please report the mortgage broker to the provincial authorities. It is that kind of activity that is causing a lot of lenders to look at their policy in the way they deal with brokers. Brokers and competition cause low rates and that is good for us all. Any thing "dummy" is a lie and therefore fraud this business can be very profitable and it can be done legal.

You are right Mike that`s why US is in deep recession just cos of people who twist matters for their profit.
Thanks for valuable comments

Raj
 
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