What’s my financing expenses?
Purchasing a commercial property usually requires obtaining a mortgage loan. Unlike residential mortgages, the Loan to Debt Ratio requirement of financial institutions for Industrial, Commercial and Investment ‘ICI ‘ Properties is much greater. Traditionally Class ‘A’ Banks require a Loan to Debit Ratio of 60/40 for ICI properties. In addition, commercial loans are at a higher interest rate than residential. You may be able to find a Class ‘B’ Lender or Private Lender that may accept less than 40% down but at a higher interest rate than Class ‘A’ Banks. For your convenience, below is a mortgage calculator that will provide you the monthly payments that you could expect given your particular financing situation.
Additional financing costs!
Financial Institutions require various reports to be provided prior to being approved. For a typical industrial freestanding building, these reports include a Building Inspection of the structure, electrical and mechanical systems of the building, Environmental Phase 1 and or Phase 2 Report, Appraisal, Financial Statements, Corporate Returns and Legal Mortgage Documents, all provided by recognized professionals at the borrower’s cost. Providing these Reports is costly ranging from $10,000 and up, depending on the particular property’s current condition and previous uses. Industrial Condo’s are slightly easier to finance, due to the structure and common area repairs and maintenance being managed by the Condo Corporation and the mandatory upkeep of the Reserve Fund.