[Mark Baltazar]

I am hosting an FB Live / Webinar specifically on mindset titled: Mastering the Multifamily Investor Mindset

July 20 – 8pm EST / 5pm PST

Hosting it in the Multifamily Investors Network FB group:

https://www.facebook.com/groups/mfinvestorsnetwork

facebook.com

Multifamily Investors Network | Facebook

The MULTIFAMILY INVESTORS NETWORK has been established to facilitate learning and networking in support of those investing in or looking to invest in apartment buildings. In this group, we aim to...

[Mark Baltazar]

Most of the larger institutional or institutional-backed lenders will bridge to CMHC at purchase.

We had a closing where the seller (large REIT) would not budge on timing and given that the building was nearly stabilized we wanted to go straight to CMHC. We worked with First National on that deal. First National gave us a 5-month bridge to close and submitted the CMHC application at same time.

Fortunately for us, we turned a few units during that 5-month period and were able to get a large CMHC advance than originally anticipated.

If timing is an issue with CMHC, I’d run a short-term bridge to close quickly.

Some of the lenders / brokers that will do this that we have worked with include: First National, Peak Hill Capital, Firm Capital, CMLS. There are many others.

My $0.02

[Mark Baltazar]

You can still bridge before going to CMHC and there are approved lenders that can be taken out by a CMHC-insured mortgage.

If you are planning to bridge, you will likely need to plan for an interest reserve (IR). This is when the lender requires you to pay some portions (sometimes 100%) of the loan interest upfront. This ensures that payments are covered, mitigating their risk.

Like anything a lender propose, IRs are negotiable and will vary depending on the perceived risk (operator, market/location, business plan, amount, length of term, etc.)

Before working with a bridge lender, just make sure that they are an approved CMHC lender and can be taken out directly by a CMHC-insured mortgage.

[Mark Baltazar]

CMHC is still an extremely viable option to exit shorter-term financing for buy & hold strategies. In fact, I think it is becoming the go-to option in order to be able to take-out existing debt.

We are currently in the process of refinacing a few buildings into the standard CMHC and MLI Select programs.

One of the strategies that we are working on with our lenders is “rate buy-down”. This allows us to pay an upfront fee to secure a lower rate for the term of the mortgage. This helps increase the mortgage advance while maintaining the target debt coverage ratio.

CMHC processing times: we currently have applications and expect closing within 6-7 months. In our dicussions with lenders, these times have increased for a couple of reasons:

1) there was a rush of applications leading up to the submission dealing of June 19 in order to take-advantage of CMHC premius before they went up.

2) Current rates are making conventional financing harder as they limit the morgage advance.