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.
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.
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.
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.
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