Lenders forcing investors to move into commercial

More landlords are selling up their single-family homes to get over the increasing obstacles imposed by lenders, according to investors.

Frustrated by the increasing demands for additional paperwork and lengthy waiting periods, more investors are selling their assets to make the move into commercial.

“Investors realised more the advantages of commercial investing over residential after the market tumbled and with more lending restrictions in place, we are seeing a lot more make that move,” says Chris Davies, a real estate investor and Realtor in Edmonton.
Requiring a larger down payment, Davies says more investors are willing to sell up their assets quickly and make the move, both into multi-family buildings as well as retail and office space.

Speaking to CREW for a special feature on commercial investing in the new September issue, Simmone Park, an Ottawa-based investor, says landlords can be more financially “creative” to make the move.

“You can get creative and use a small business loan in your corporation’s name rather than use a conventional mortgage,” she says.

The positive performance of commercial real estate across the country is also whetting investor appetite to make the move from residential. According to the latest REALpac/IPD Canada Quarterly Property Index, Calgary recorded the best return of 11.1 per cent for the year ending June 30 compared to the Canadian average of 9.5 per cent.

Edmonton enjoyed returns of 10.8 per cent during the same period, while Toronto hit the spot at 10.1 per cent.

**In the September issue of Canadian Real Estate Wealth, we speak to three investors who made the move from residential to commercial investing. They share their insights on how to identify key markets, how to finance the deals and overcome the big issues. The magazine will be on newsstands this week or subscribe here to avail of a special deal today.

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