Home Bank accounts
Credit cards
Savings and investments
Home Banking Solutions
Credit Cards
Going Further
Tips and Tools
Wealth Management

Commercial real estate: Obtain financing before you start

20 March 2013 by National Bank
Image générique

​Ask Martin Laroche, Commercial Banking Manager – Real Estate Financing at National Bank, for one tip for real estate developers looking to launch a project and he’ll answer without hesitation: Plan ahead.

​All real estate developers must ensure their funding sources from the outset, he explains. It is vital not to begin construction until financing is obtained.

Another essential step before breaking ground is reaching a good presales level (at least 50 to 60%) so you can gauge the market for your condos. For other types of projects, developers must be sure to reach a minimum preleasing threshold.

This allows them to see whether the planned project meets market needs and adjust their plans, if need be.

A single point of contact for construction and beyond

In commercial real estate, there are two main types of loans, those that cover construction (up to 75% of total project costs) and those that cover long-term financing (mortgage financing).

Most financial institutions offer both types of loans. What sets National Bank apart is that a single manager is in charge of providing both forms of financing.

When Martin Laroche or one of his colleagues prepares a file, long-term financing is arranged from the start.

It’s easier and faster. It’s also cheaper because clients don’t need to pay legal fees again when they implement long-term financing. Everything is done up front in one step; that way, clients know that they will be approved for financing later on.

National Bank can also offer a condo developer’s clients who are customized mortgages, which is not only simpler for buyers, but also lucrative for the developer.

A multidisciplinary team

Mr. Laroche’s team specializes in commercial real estate and supports multi-unit housing projects over $5 million, including condo or rental developments and seniors’ homes.

The team is also responsible for financing all other types of buildings, up to $3 million.

Developers with smaller projects or companies building other facilities deal with other National Bank departments.

The Bank’s multidisciplinary team is one of the largest of its kind in Montreal and is made up of specialists with a solid background in the real estate and financing sectors, including certified appraisers, former CMHC or BDC specialists, lawyers and internal auditors.

The team can even draw on the unique expertise of a chartered accountant who has personal experience investing in a major condo project.

Flexibility and tailored solutions

We offer our clients a flexible relationship to provide them with solutions that are truly geared to their needs, summarizes Mr. Laroche.

This flexibility also stems from the fact that the Bank retains ownership of all its loans.

We recently allowed a client to use a portion of the proceeds from the sale of his condos even before payment was made in full, concludes Mr. Laroche.“We were able to do that because we have excellent relations with him and because we retain control of our loans, unlike other institutions.

Legal disclaimer

Any reproduction, in whole or in part, is strictly prohibited without the prior written consent of National Bank of Canada.

The articles and information on this website are protected by the copyright laws in effect in Canada or other countries, as applicable. The copyrights on the articles and information belong to the National Bank of Canada or other persons. Any reproduction, redistribution, electronic communication, including indirectly via a hyperlink, in whole or in part, of these articles and information and any other use thereof that is not explicitly authorized is prohibited without the prior written consent of the copyright owner.

The contents of this website must not be interpreted, considered or used as if it were financial, legal, fiscal, or other advice. National Bank and its partners in contents will not be liable for any damages that you may incur from such use.

This article is provided by National Bank, its subsidiaries and group entities for information purposes only, and creates no legal or contractual obligation for National Bank, its subsidiaries and group entities. The details of this service offering and the conditions herein are subject to change.

The hyperlinks in this article may redirect to external websites not administered by National Bank. The Bank cannot be held liable for the content of external websites or any damages caused by their use.

Views expressed in this article are those of the person being interviewed. They do not necessarily reflect the opinions of National Bank or its subsidiaries. For financial or business advice, please consult your National Bank advisor, financial planner or an industry professional (e.g., accountant, tax specialist or lawyer).