The RIP system stands for recession proof, internet proof, and pandemic proof. Matthew uses this framework to evaluate whether a tenant's job or a commercial tenant's business can withstand economic downturns, technological disruption, or health crises, and he has applied it for the last seven years to maintain stable collections.
Financing approvals now take 30 to 45 days conventionally and about 16 weeks through CMHC for multi-family, compared to roughly 21 days previously. Banks are also requiring more personal documentation and scrutinizing small discrepancies, such as a one dollar and fifty cent monthly rent difference on a rent roll.
Matthew explains that 2020 has presented the most multi-family opportunities in the last 10 years because mom-and-pop landlords are selling due to multiple tenants stopping rent payments for the first time, increased tenant stress and conflicts in buildings, and owners rethinking their lives after losing partners or friends to COVID-19.
Dalia explains that lenders look primarily at the building's performance and net operating income. They adjust the seller's income and expense statements by adding approximately five percent for property management and five percent for vacancies, even if the building is self-managed or fully occupied.
Matthew distinguishes that property managing is being "down in the weeds" with day-to-day operations, while asset managing is overseeing the portfolio to ensure revenue goes up, expenses go down, NOI increases, and each building maintains a good culture and buzz that attracts tenants.
