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June 15, 2020 - Blog Article
3 Ways to Increase Your Cash-On-Cash Return

Refinancing your retail commercial real estate property in Canada is one of the smartest moves you can take right now. Due to the current economic situation created by the COVID-19 crisis, interest rates are significantly lower, so refinancing your existing mortgage could be the solution to more cash flow. 

Smart Canadian CRE investors are already taking advantage of low-interest rates. Follow these footsteps that can boost your cash flow, supercharge your ROI, and improve the cash-on-cash return of your investment.

Here are the most profitable ways to increase your cash-on-cash return by refinancing your commercial real estate.

Reposition Your Retail CRE Property

Repositioning your commercial real estate property can help you reinvent it completely. The key is to invest in improving its overall quality, condition, and performance, as well as boost its financials.

You can then tap into a whole new market either in the same location or at an entirely new property. That’s because after refinancing you should be able to cash out with enough resources to invest in a new retail CRE project.

Since the coronavirus crisis has not hit essential businesses in Canada as hard, they could be a good choice of retail, along with new mixed-use development projects. 

Improve Your Cash Flow

When you refinance your retail CRE property, you have an opportunity to improve your cash flow and your cash-on-cash return, plus your return-on-investment “ROI”. The best part is that it’s completely free of taxes. That’s why buying another retail property can be an excellent choice.

However, you can also use that tax-free cash to do some renovations or repair to your current investment that would improve your property’s performance even more, like developing a PAD site, turning your parking lot into drive-up entertainment, or improving traffic flow for curb-side pickup at your tenants storefronts. 

These ideas and others can bring life to your plaza; allowing you and your tenants to generate more income and cash flow. This is how successful investors keep their investment money moving.

Maximize Your NOI and Curb Appeal

To qualify for a commercial real estate refinancing loan, you need to make sure your property is in its top condition. You also need to maximize its curb appeal.

It is also important to maintain a high occupancy rate (at least 90%) to ensure you have a high net operating income (NOI), which is your income after expenses and taxes. With many business reopening and tenants finding new ways to safely operate from their retail stores, now is the time to consider refinancing to pay yourself and your investors.

Summary

More and more retail CRE investors are refinancing their properties in Canada these days to take advantage of the interest rates. Having a high NOI and occupancy, as well as ensuring that your property looks great, will help strengthen your retail CRE’s financials. You’ll be able to continually get a high cash-on-cash return and avoid incurring higher interest rates, as long as you don’t miss your loan repayment deadlines.

Refinancing, then reinvesting is an excellent strategy to achieving higher cash-on-cash returns and maximizing tax-free benefits.