Glossary
From the list below choose one of our FAQs topics, then select an FAQ to read. If you have a question which is not in this section, please contact us.
Blanket Mortgage
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A blanket loan is one where there is just one promissory note (I promise to pay $10 million ...), but the note is secured by several different mortgages on several different non-contiguous parcels. If the parcels were contiguous (touching), it is customary for the lender to use just one mortgage and to include each of the contiguous parcels in the legal description of the property. Where the properties are clearly different and separated from each other, it is customary to use a separate mortgage for each separate property.
So why would a borrower want to get a blanket mortgage? He might think that he is saving money on closing costs by making the loan just one big deal. In addition, the larger the commercial loan, the slightly lower the interest rate.
But commercial lenders in general do not like to blanket properties, especially if the properties have different uses. Few commercial mortgage lenders would jump at the opportunity, for example, to make a blanket loan across an apartment building and an office building. This is especially true if the commercial mortgage lender loved apartment loans but hated office building loans because they are over-built, or vice versa.
Real Estate Investors often use Hard Money Loans at high interest rates and will use a Blanket Loan to refinance to a lower rate or to get Cash out.
Many people ask "what is fractional ownership?" and the closely related question "Is it timeshare? In this article I will attempt to answer these questions. This article is concerned exclusively with the fractional ownership of leisure/luxury assets. However most of the principles would apply equally to the fractional ownership of a practical item (e.g. for business). Definition of Fractional Ownership In its broadest definition, fractional ownership is any arrangement where a group of people (numbering from 2 to 10 or more) share the ownership of an asset and also share certain rights to use the asset. The use of the word "ownership" in the definition therefore excludes timeshare arrangements, where there is no ownership of the underlying asset. Unfortunately however, some so-called fractional ownership schemes are closer to timeshare than they are to true fractional ownership. When investigating whether to purchase a fraction it is essential to know what your relationship to the asset purchased is. The best arrangement is to be identified as the legal joint owner of the asset (or in the case of multiple assets, the owning organization). Types of Fractional Ownership The most cost-effective form is where a group of individuals decide to purchase an asset jointly. They then decide on the exact asset to be purchased, draw up ownership documents (perhaps with the help of a legal firm) and purchase and manage the asset themselves. This avoids the sometimes substantial profit-margin that developers charge when selling fractional properties. This approach does have disadvantages, e.g. the amount...
What is Cap rate
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One of the most difficult and perplexing problems for realtors and investors is finding current Gross and Net Income Multipliers and Cap Rates. Determining the value of an income property generally involves establishing either the Gross or Net Income Multipliers, or the Cap Rate according to comparables. There are a number of difficulties: Finding comparables and market information Information relating to a sale of a commercial property is often confidential and difficult to obtain. While the sale price can usually be determined, the Income and Expense Statement, Net Operating Income etc. is often not available, making it difficult to calculate the financial measures. Discovering the underlying motives behind the purchase and adjustments that may have been made by the purchasers. The financial measures are simply ratios that have been derived from the purchase price and the financial figures. They reflect the attitudes and the results of the negotiations between the buyer and the seller, economic conditions etc. In some instances, the purchaser may be strongly motivated by income tax considerations, other times; the motivation may be to move money into another country by an overseas investor. Often, purchasers make adjustments to compensate for particular circumstances relating to the particular property. As an example, if a purchaser estimates that there is $250,000 to be spent immediately on major repairs, then the $250,000 will be deducted from...
Gross Rent Multiplier or "GRM" is the ratio of the price of a real estate investment to its annual rental income before expenses: Gross Rent Multiplier (GRM) = Sale Price / Potential Gross Income The GRM is useful for comparing and selecting investment properties where operating costs can be expected to be uniform across properties. In other words, the more homogeneity of the sales and subject, in terms of age, quality of construction, style, condition, etc., the higher potential there is for accuracy. Historically, the GRM was used primarily for 2-4 unit properties. In this case, a property value may be estimated using the following related formula: Sale Price = Gross Rent Multiplier x Potential Gross Income It is important to beware of the limitations of the gross rent multiplier. For some properties, gross rents may include funds that a landlord must spend on utilities, while the tenants of other buildings may pay for utilities themselves. Various property-specific items are not captured when using the GRM. If one property has higher taxes or higher vacancy than the next, then using the GRM to calculate values will be deceiving. Another caution is if you derive a multiplier from a sale where the rents were at market rates, then it should be applied to your subject's market(forecast) rates. If the above multiplier were applied to your subject's below-market rates, it would yield a below-market value for your subject. The common measure of rental real estate value based on net return rather than gross rental income is the Capitalization Rate or Cap...
Useful tips
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APARTMENT MARKETING RESIDENTIAL, COMMERCIAL, CONVENTIONAL, CANADA, UNITED STATES ETC. THEY’RE ALL THE SAME. LOOK DEEP INTO THE BASICS OF YOUR OPERATIONS Great operations + Great Marketing = Great Success Great Operations + Weak Marketing= Success Weak Operations + Great Marketing= Total disaster SOME SIMPLE APARTMENT MARKETING BASICS ARE NOTED AS THE FOUR P’S 1. PEOPLE 2. PRICE 3. PRODUCT 4. PROMOTION WHICH OF THESE FOUR P’S DO YOU FIND THE MOST IMPORTANT? Please take the time to read the ten tips below on how you fill your vacancies and keep your tenants happy. We have done our research and have found the biggest set back most people have is focusing on their vacancies way too much. Nobody likes to have vacancies, but if your focus is off and away from the units you presently have occupied, the chances of that tenant telling people how much of a nice, reliable, and honest Landlord are more than likely not going to happen. Most rented units come from word of mouth, referrals. The remainder will come from someone looking for an immediate place of residence, and more than likely running from something. There are 10 top ways to keep...
Fixed-Rate (Closed) Mortgage
With a fixed-rate mortgage you benefit from the security of locking in your mortgage interest rate for a predetermined length of time, usually ranging from six months to five years. Other terms such as three months, or six, seven and 10 years are also available.
If you think interest rates will increase, you may want to choose a longer term, such as a five-year term. If you think that rates are going to decrease or remain relatively stable for a long period of time, you may want to choose a shorter term.
Most lenders will allow you to make additional payments on your mortgage without any penalty. These could amount to as much as 25 per cent of your original mortgage amount (depending on the institution). However, if you want to pay more than the annual allowable maximum, or pay off the entire mortgage at any time, you will generally have to pay a penalty. Make sure you understand this before choosing your term.
If you are locked into a closed mortgage, you may want to break your current mortgage contract and negotiate a new mortgage at a lower rate. Some agreements do not allow for a mortgage to be renegotiated, but most do. Financial institutions will usually allow you to pre-pay your mortgage in full, but will add a penalty.
A tenant has the right to discuss a rent increase with their landlord if it will be a financial burden.
If rent is a financial burden, there are several supportive housing programs that assist Albertans. Contact the Housing Services Division to determine if assistance is available.
Yes. Alberta’s tenancy legislation minimizes the impact of rent increases by requiring that one year must pass between increases for monthly tenancies.
The amount of notice required to increase the rent for a month‑to‑month periodic tenancy is three full tenancy months. Rent increase notices have to be in writing, be dated, state the effective date of the increase and be signed by the landlord. If a notice does not comply with these requirements, it is void. Tenants who pay an increase in rent based on a notice that does not comply with the requirements may recover the amount of the increase, with court approval.
Experience shows that rent controls are harmful to the rental housing market over the long term. Rent controls discourage development of new rental housing and fewer units are available for rent. Some landlords reduce maintenance of property or provide fewer services as a method of reducing operating costs, therefore buildings start deteriorating.
A landlord may enter the residential premises at any time with the tenant's consent. Consent can be verbal or written. If the landlord has the tenant's consent, no notice is required. The landlord may enter the premises without permission and without giving proper notice to the tenant: when the landlord has reason to believe there is an emergency; or when the landlord has reason to believe that the tenant has abandoned the premises. The landlord may enter the residential premises without permission but only if the landlord has given the tenant a written notice at least 24 hours before the time of entry. The notice has to be in writing, be signed by the landlord or agent and state the reason, date and time of entry. The landlord can give notice to enter to do repairs; to inspect the state of repair of the premises; to take necessary steps to control pests; to show the premises to prospective purchasers, or mortgagees; or to show the premises to prospective tenants after the landlord or tenant has given notice to end a periodic tenancy, or, in the final month of a fixed-term tenancy. The tenant does not have to be present since the landlord has the right to enter as long as proper notice has been provided....
No! Not without the Courts' permission. You should also check with the Public Health Inspector about the landlord's obligation to make repairs.
You have the right to get the full amount of your security deposit back, plus interest, within 10 days of moving out if you have done no damage beyond normal wear and tear, if the premises have been properly cleaned, and if no rent is owing. Otherwise the landlord can keep part or all of your security deposit to cover the costs.
If the damages exceed the security deposit, the landlord can take you to court for the rest of the money owing. If there are deductions for damages the landlord must pay you the balance of the deposit within the 10 days, with a statement of account that lists all the damages and repair costs and cleaning costs.
Alternatively, the landlord may within the 10 days give you an estimate of the deductions to be made and return any money that won't be used. In this case, you must receive a final statement, plus any money owing, within 30 days after your tenancy ended.
Landlords usually ask tenants for a security deposit, sometimes called a damage deposit. The Residential Tenancies Act limits the maximum amount a landlord may ask for as a security deposit to no more than the equivalent of one month's rent at the time the tenancy starts. The security deposit cannot be increased as rent increases.
Laws for Landlords and Tenants in Alberta (external site)
(Source: Legal Resource Centre)
Reference Guide to Landlord and Tenant Law in Alberta (external site)
(Source: Legal Studies Program, University of Alberta)
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