A commercial asset sale process can be lengthy. From marketing to close, the process can take a year or more, and I’m going to argue that you should like your real estate broker before you go through such a long process with them.
Find a Broker Well in Advance of the Sale Process
I don’t mean a month in advance, I mean closer to a year. Why? You will work with this person for at least a few months. Sales are intense, require daily communication and sometimes simply don’t work out despite everyone’s best effort. This is likely to be a lengthy interaction with someone who will leave an imprint on your life.
From the get-go, you should like the broker’s “type”. We are all different as individuals and now, more than ever in history, we have the option of choice in almost all aspects of our lives. Do you prefer intensity, or a more analytical approach? Are you annoyed getting piece-meal information and prefer a thought-out, spaced-out process, or do you simply need to know where the listing/deal is “at” on a daily basis (at the very minimum)?
The Broker should be able to prove to you that:Continue reading
The excitement and stress of negotiations have reached their peak as initial negotiations are concluding for your apartment acquisition. Now the realities of due diligence are rearing their ugly head.
Due diligence is an unglamorous but vitally important part of any deal. At face value, it involves the careful review of a mountainous amount of documentation. But if done right it also requires discussions with a diverse array of employees, vendors, lenders, government agents, and the current owner. These are parties that you must work with carefully, hoping that they will be honest and forthcoming with you.
Unfortunately, due diligence is perhaps best approached with the belief that the vendor is trying to hide something from you. That level of caution is what is needed, because although there is tremendous momentum when a deal is moving through the offer process, a prudent purchaser should always have in mind the option to withdraw from the process if faced with a realty which you are unwilling to accept.Continue reading
Financing is vital in real estate transactions. Be it a 10-unit building or 1,000-unit portfolio, investors want positive financial leverage. In parallel to this, lenders (including CMHC) are eager to finance acquisitions, but only on their own terms. While the purchaser would like to put no money down, few lenders will accept this. Finding a middle ground between these two perspectives is what informs what percentage down payment the buyer will need.
Too often, investors make mistakes when estimating the down payment needed for an acquisition. This is because the needed down payment is a moving target for every lender involving many variables. These include the cost of funds for the lender, what the asset’s stabilized net operating income is, whether there are any capital expenditures needed, and are the rents in place real or do they need to be normalized.Continue reading
This fall, interest rates on mortgages reached an all-time low. Since 2008, where rates peaked at 5.89%, they dropped this November to an average of 2.09%.
But in the wake of the federal Liberals’ tightening of mortgage rules, the rates are already on the rise. Currently, 5-year fixed rates stand at about 2.43%—still reasonably low compared to the past eight years. So if you’re considering investing in income property in Montreal, right now is the ideal time.Continue reading
If you’re thinking about selling your apartment building, it may be tempting to put your property on the market right away. Without preparation, however, your sale may end up being much more complicated than you anticipated and take longer than planned. Careful planning helps you to get the best price possible for your property and ensures the transition to the new owner goes as smoothly as possible. If you’re getting ready to put your apartment building up for sale in Montreal, here are a few things you should consider from the real estate professionals at Baron Realty.Continue reading