Closing 21 units in Halifax with 7.5% Down Payment

[Roy Cleeves]

Myself and my creative Partner are closing today on a 6 - plex (Brand New) and 15 Bungalows (about 5 years old) in Halifax.  This is a commercial financing deal.  And I want to mention it here because many times we think that we have to put a much larger down payment on a commercial financed deal.  And we often believe that the interest rate will be a lot higher than we can get on a residential deal.

This was a $4M purchase price with CMHC insurance.  Due to the insurance which cost around $175,000, we were able to purchase this with 15% down.  And having a CMHC approval certificate allowed us to shop the lenders for the best rates.  We ended up choosing RBC offer of 1.8% for 10 years.  This incredible rate will make up for the CMHC fee over the ownership of the units.

The 15% down payment was cut in half because the Vendor was willing to do a VTB for $300,000.  And CMHC was fine with this as part of the deal.

So there is deals out there to be had.  You have to search for them, package them together and then work with great commercial mortgage agents.  This process took at least 10 months.  We had to extend the closing 3 times due to Covid delays and this was frustrating for all of us.

Yet like all good things, just keep going until you get to your goal.  And we reached that goal today!

[Roy Cleeves]

Thank you all for your kind words.  And yes, RBC had no issue with the VTB.  I think that is because they are in 1st position and they are insured by CMHC so they have their bases covered.  They also immediately provided our new company with a credit card line of credit for $50,000.  I thought that was very helpful since the company is newly formed for this purchase and does not have any credit history.  I am sure they based it on our personal credit histories which are excellent.

My Business Partner is a licensed Realtor in Nova Scotia and it was through his help that we decided upon Halifax as a great spot for investment.