Case Study

Financing a 24-unit Multi-residential Property

The Situation:

  • Borrower required financing to purchase a 24-unit multi-residential property on a tight timeline
  • Borrower required a loan for 80% of the purchase price, which was above market value.
  • Institutional financing was unavailable, given the condition of the property and below-market rents.
  • Borrower had a separate multi-unit residential property that could be pledged as collateral. At the time of closing, the collateral property was undergoing renovations and was 30% vacant. This would have presented a substantial challenge in getting any institutional funding even if only used as collateral.

The Solution

  • The borrower had a defined plan to improve the property and raise rents to current market rates.
  • By working closely with the borrower and their mortgage broker, and with an understanding of the borrower’s business plan to increase rents we were able to:
    • Meet the tight closing deadline for the purchase (less than 2 week closing from when the file was received).
    • Register a 2nd mortgage against the collateral property which reduced the combined LTV to less than 75%.
  • We were able to structure a loan with a competitive interest rate, allowing the borrower to carry the loan while operating and improving the properties.

multi-residential mortgage

Loan Amount: $2,880,000
Rate: 7.39%
LTV: 80.00% of purchase price
Location: Brantford, ON
Priority: 1st and 2nd mortgages against multi-residential properties

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