Refinancing with Canadian banks within 3 years

[Mike Hamson]

Hi BP Canada,

I've run into this scenario a couple of times recently and I keep getting vague and inconsistent answers from le banc. Any insight or clarity would be greatly appreciated.

Buy a property off market at a serious discount -> rehab-> new tenants at increased rents etc. Then we go to refi through the same bank and they look at appraisal, debt servicing and purchase price and lend on the lowest value (always the purchase price). I'm told that after 3 years they will ignore the purchase price but that's a long old brrr. 

I would've guessed that buying with cash and bringing it to the bank after improvements would avoid that but it doesn't according to rbc commercial lending. Does anyone have experience with the big 5 or credit unions looking income/expenses and appraisals over purchase price within that 3 year period?

I know that these are questions for our banker but it seems like the more questions I ask the more rules suddenly appear and get applied to me.

*This is commercial lending I'm dealing with- all tapped out with residential mortgages. 

Thanks!

Mike

[Chris Baxter]

@Mike Hamson commercial lenders really only care about the current numbers... have you reached out to a commercial broker yet? @Jordan Perry is active in this forum and works with clients in the maritimes