First National Financial LP

Borrower Perspectives: Michael Klein, Diamond International

  • First National Financial LP

Michael Klein runs a Toronto-based real estate investment business. A 30-year industry veteran, he has been running his business for the past 20 years, specializing in apartments, industrial and commercial. His portfolio includes approximately 15 properties, with a strong weighting towards multi-residential. The company also provides in-house management for all properties.

Michael shares his perspectives about the Toronto market, what he sees as opportunities, his vision for growth and why First National’s business perspective adds value.

Q: What are your perspectives on the Toronto market?
MK: Generally speaking, the Toronto market has been on fire for the past number of years. Home prices have continued to rise, which has had an impact on the investment side as well. Fundamentally, there is an issue of supply and demand – huge demand, not enough supply. The condo market has tried to fill that gap somewhat, and that pipeline continues to widen. There is certainly local demand, but immigrants and foreign investors are also looking to own. The low interest rate environment has helped to stoke the fire, but with movement in the bond market and an eventual rise in interest rates, things should stabilize to a degree.

Q: Where do you see the opportunities?
MK: My specialty is different than most. I generally buy off market products. I like to think of it as buying opportunities. Think properties that have low rent, vacancies, physical issues or problems tenants. I step in and get to work. I like to describe myself as a doctor. I bring these buildings back to life. I invest physical and financial energy to work a property back up to market value.

Q: What is your vision for growth?
MK: I have historically grown through acquisition, but it’s currently difficult to find properties in the GTA that meet my mandate. I am considering geographic diversification to find the types of opportunities that fit with my skills and strategy.

Q: How is First National supporting you in your vision for growth?
MK: First National has been and will continue to be by my side when opportunity arises. From my experience, First National doesn’t really act like a banker, but more like a business partner. I deal with Ilan Barda exclusively and I like the fact that he brings a business perspective and insight to any deal. Ilan acts quickly, and speed of delivery is paramount in this business. He is a consummate professional.

Q: From your experience, how does First National deliver on the concept of being “more than a lender?”
MK: It comes down to speedy and seamless service. Any obstacle that may arise is dealt with efficiently, and I have access to every level within the organization. I have been working with Ilan for more than 10 years and I have been completely satisfied every single time. I really value the collaboration. Sometimes I bring an opportunity. Sometimes we hunt together. I feel that Ilan is an associate sitting beside me at the table regardless of how we originate an opportunity.

Q: What stands out to you about working with First National?
MK: First National has various options to fund a deal. Very often, with the types of opportunities that I pursue, it is difficult to get CMHC financing at the outset. We often do a short-term conventional loan so we can meet the aggressive timelines usually associated with the deals. I do the work on the property, and then we go back and refinance, often times with CMHC. It’s a level of flexibility that is unique in the industry. But beyond the mechanics of how we get deals done, I feel that I’m more than a number on the book. Ilan knows me personally, appreciates my business model and works hard to help me achieve my goals.