When Kevin Green is contemplating the purchase of a multi-million-dollar apartment building, he wants a lender with expertise in the multi-family asset class, someone "who understands a building’s bones."
Ideally, the lender should be, "your financial team-mate, partner, advocate," says Green, president of Greenwin Inc., one of Canada's largest, privately-owned residential property management firms.
While many buyers decide on the property that they want to purchase and then enlist a mortgage broker to shop around at the banks for the best rates and terms, Green likes to involve his lender from the outset.
"We want to acquire assets, so we hunt like a team," he says. He switched from a bank to First National Financial LP shortly after meeting Robert Fleet, a financing specialist and Assistant Vice-President at First National, Canada's largest non-bank mortgage lender.
“It was a good move for Greenwin,” says Green, whose style is to act quickly when purchasing a building. First National has a reliable eye for evaluating the value and condition of the property, Green says, and they provide sound strategic advice.
Whether the lender is a bank or a non-bank institution, deep knowledge of the complexity of the multi-family sector is essential as well as CMHC expertise, he adds.
First National's Robert Fleet and Peter Cook, Assistant Vice-President of commercial lending, advise that borrowers should look at the reputation and experience of the manager handling their files as well as the reputation of the institution.
"You don't want to deal with an inexperienced person recently transferred from another department."
Knowing what it takes to get the deal done
Depending on the loan size, a borrower could potentially save tens of thousands of dollars in interest with a CMHC-insured mortgage, which typically offers lower rates.
"But the lowest interest rate on its own is not the most important thing," say Cook and Fleet. "The focus should be on the total cost of borrowing."
For instance, the cost of third-party reports, such as appraisals and environmental, engineering and structural studies may vary by thousands of dollars depending on the lender: "Borrowers should request that their lender provide them with three quotes from approved third-party firms and disclose processing and closing fees. The lender's legal fees should also be taken into consideration."
Greenwin’s Kevin Green says it speeds up the process considerably when the lender provides the borrower with a detailed checklist of what is required to get the deal done.
Cook and Fleet say every lender has a different approval process.
"The borrower should ask how long the process will take and how many credit reviews are required to approve the loan. He should also ask how quickly he can expect a letter of interest, a commitment letter and at what point he may lock in the rate in advance of funding. These are important questions to ask prior to selecting a lender."
For Green, the relationship with his lenders goes beyond transactions, valuations and discussions about roofs and boilers. His company is involved in providing social programs for families in some of Toronto's more impoverished neighbourhoods, he says.
"We want to make it safe. We want kids staying in school and getting jobs."
First National has provided financial and moral support for these endeavours. "When we launch a social program, First National is there. If we open a centre, First National is there." It means a lot, Green says.