Commercial

“We need a commercial mortgage, but we’re in Fort St. James…”

Here’s the thing about being a MIC that lends in tiny towns: sometimes commercial comes with the territory. The general store that’s been there since 1952. The six-plex that passes for high-density housing in Vanderhoof. The campground that’s also someone’s retirement plan.

We’re not going to pretend we love commercial lending. We don’t. It’s like being a vegetarian at a steakhouse – we’ll find something on the menu, but it’s not why we came. We’re not a no - but we don’t want to disapoint you and tell you we love all commerical and will consider anything. We’d rather be upfront about it.

Why we’re picky about commercial

Commercial properties have this annoying habit of going from “solid investment” to “what were we thinking” faster than you can say “anchor tenant.”

Single tenant commercial? That’s just a fancy way of saying “one bad day from vacant.” We’ve seen too many strip mall dreams die when the one business keeping the lights on decides Kamloops has better foot traffic. It’s just not something we can consider.

But here’s what we’ve learned after 20 years: sometimes commercial makes sense in small towns precisely because it doesn’t make sense anywhere else.

When commercial actually works

The general store with the owners house inter alia. It’s commercial, technically. But when the business and the owners roof are at risk, they’ll usually find a way to make it work. Hard to abandon a business when you’d have to move houses too.

The four-plex in Chase. In Vancouver, it’s nothing special. In Chase, it’s 5% of the rental market. Different math when you’re the only game in town.

The campground that prints money four months a year. Banks see seasonal. We see a business model that’s worked since cars were invented. Just keep the LTV low enough that even a bad summer won’t hurt.

The mixed-use building where diversity means safety. Four tenants, no single one paying more than 40% of the rent. One leaves? You’re still above water. That’s the kind of boring we like.

Who uses commercial mortgages through us?

The family with four lakefront cabins – three on Airbnb, one they live in year-round. Technically commercial, practically residential with better cash flow.

The numbered company that owns six residential rentals but one happens to have a coffee shop on the ground floor. Technically commercial. Practically residential with a caffeine bonus.

The family that inherited grandpa’s strip mall in a town of 3,000. The credit union that held the mortgage for 30 years just got bought out. The new owners don’t even know where Vanderhoof is. But we do.

Why not just use a credit union?

Credit unions get small-town commercial. They really do. If your client can get a commercial mortgage from Interior Savings or Kootenay Savings, they should probably take it.

We’re for when that doesn’t work. When the credit union’s commercial lending team is one guy named Dave who’s been off sick for three weeks. When the property’s in a town so small the credit union closed their branch in 2019.

Sometimes you need a lender who’ll actually look at a general store in Rossland without immediately checking Google Maps and saying “where?”

The uncomfortable truth about our commercial rates

Our commercial rates aren’t competitive. They’re not supposed to be.

If we’re doing commercial, it’s because: - The property’s in the middle of nowhere - The credit unions already said no - There’s something quirky about the deal - Or all of the above

Think of our rates as small-town tax. You want big city rates? Get a big city property.

Quick example

Husband and wife own the only grocery store in a village of 800. Building includes their residence upstairs. Need to buy out a business partner.

• Property value: $650K (commercial plus residential)
• Requested mortgage: $200K (31% LTV)
• Income: Store does okay, not great
• Our take: It’s really a house with a very expensive basement

Credit union sees commercial risk. We see people who can’t afford to let their business fail because it’s also where they sleep.

What we won’t touch

Let’s be crystal clear: - Single tenant commercial buildings (unless inter alia with strong residential) - Pure office buildings - Anything that screams “environmental cleanup” - Properties where we’re the only option because twelve other lenders already ran away

The bottom line

We do commercial mortgages the way a cat takes a bath – reluctantly, carefully, and only when absolutely necessary.

If your client’s in Quesnel with a solid four-tenant commercial building and nowhere else to turn, give us a call. If it’s decent, we’ll probably say yes. We just won’t be happy about it.

But hey, in small-town BC, sometimes unhappy money is the only money available.