Transcript of Video Blog:
Hi, everyone. It’s Rowan Smith from the Mortgage Centre. I want to talk today about the ever-tightening noose that’s slowly closing around the neck of former marijuana grow-op properties.
Now these properties in the past, we always had some credit unions and some smaller institutions that really had more of a make-sense approach to this, to financing former marijuana grow-ops. But the list of lenders that does it has just gotten smaller and smaller and smaller, and those few that do still do it require an extensive amount of documentation up front.
Now if you’re looking at one of these properties, these former marijuana grow-ops, and you want to buy one, and you think it’s an amazing deal, chances are it’s an amazing deal because most people can’t get financing on it. Most banks won’t do it.
There are a couple of institutions. I’m going to use an example, VanCity Savings. I sent a file in to them recently. It was a former grow-op, and they told me after the fact, once they had funded it, this will be the last one that they’re going to do through the broker channel. So they’re not going to be doing former marijuana grow-ops any longer.
Well, that was one of our primary institutions. But think of it from their point of view. When you’re one of only a handful of these companies that’s still doing these products, your book is going to get loaded with these applications, and people may only use you for that type of a product. That’s not what any bank wants. They don’t want themselves to be known as the institution that finances former grow-ops.
So if you’re looking at one of these properties, we need to do some due diligence ahead of time. Things you’re going to need: you’re going to need a full appraisal on the property to make sure the market value’s there. You’re going to need an environmental air quality sample. This is going to cost about $1, 000 to $2, 500 depending on the property.
Now a smart seller will go get this stuff in advance, and this message is for Realtors, too. Realtors, if you’re listing one of these properties, make sure to get this stuff up front. It’s going to mean that you’re not going to go through eight offers and all the stress and everything. You’re going to have all the paperwork you could provide.
Some municipalities are doing to ID occupancy permit reissue program, where if it’s a former grow-op that’s busted the city yanks that occupancy permit, and they only reissue it once the appropriate fire and chemical and environmental reports have been obtained. In those circumstances, you’re going to have to get that reissued occupancy permit.
It’s a huge hassle, because you have to go to the city hall and deal with them to get it. “Who are you? You don’t even own the property. What right do you have to this information?” It becomes a fiasco. You’re going to need the buy-in and the assistance of the selling Realtor and the seller.
In summary, what are you going to need? An appraisal, environmental and occupancy reissuance or some sort of proof from the city that electrical and everything is up to code.
There could be differences, because a few municipalities are not on the reissuance program. Some issue comfort letters. An example is Surrey. Some of them reissue the actual occupancy certificate. You need to know what you’re dealing with, and you need to deal with a broker who knows what municipalities do what.
Now I used to do a lot of these things nationwide, and I’ve retracted to only financing former grow-ops in the BC market, the reason being is other markets, particularly Toronto, where I used to get a lot of these applications, the only lender that would look at them was HSBC, and they’ve now exited the broker market.
I can’t help any more in that matter. If you’d like to try HSBC directly for those people that are back east, go ahead and give them a try. But for now, I will be restricting my activities financing former grow-ops to British Columbia alone.
For the Mortgage Centre, I’m Rowan Smith.