Block of Flats with 90% LVR?

[tjunctionParticipant@tjunctionJoin Date: 2011Post Count: 18]

June 22, 2011 - 12:47 pm

Is there any chance of getting a Block of Flats with 90% LVR?

Circumstances as follows;
Buy Price $900,000
Return $85,000 pa
Fully tenanted
No strata- just 7 flats on one block
Located in a strong regional centre with population 15,000
Cash I can put into the deal: $90K
My Annual salary: $90K
My equity in other property: $130K

I'm aware of one lender who will go to 80% lvr, on the condition that the individual flats are all 50sqm or greater.  These flats measure 46sqm, so dont qualify.

The alternatives I have at the moment are mostly commercial loans and 65%- 75% LVR.

Any creative suggestions to finance this investment? 
would me living in one help?

[Richard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,024]

June 22, 2011 - 12:55 pm

In short – NO you will not get 90% on a block of 7 non strata units.

You living in one or not has no bearing on the deal.

Cheers

Yours in Finance

Richard Taylor | Australia's leading private lender

[Mick CParticipant@shapeJoin Date: 2010Post Count: 1,099]

June 23, 2011 - 3:18 am

tjunction wrote:

Is there any chance of getting a Block of Flats with 90% LVR?

Circumstances as follows;
Buy Price $900,000
Return $85,000 pa
Fully tenanted
No strata- just 7 flats on one block
Located in a strong regional centre with population 15,000
Cash I can put into the deal: $90K
My Annual salary: $90K
My equity in other property: $130K

I'm aware of one lender who will go to 80% lvr, on the condition that the individual flats are all 50sqm or greater.  These flats measure 46sqm, so dont qualify.

The alternatives I have at the moment are mostly commercial loans and 65%- 75% LVR.

Any creative suggestions to finance this investment? 
would me living in one help?

90% LVR – no

80% LVR – yes, even if the unit are only 46 squ it’s fine with 2 another lenders…as long as it fully Self contained, in an area with comparable sales, not student accommodation etc and zoned correctly. – Resi Rates/deal

At 55%-60% LVR – The above condition are less strict and can still be pushed as a resi deal.

And as you mentioned, pretty much anything is possible at commercial rates
P.s you living there makes no diff.

Do you have any resi property you can access equity to lower your LVR?

Regards
Michael

Mick C | Shape Home Loans
http://www.shapehomeloans.com.au/
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[Mick CParticipant@shapeJoin Date: 2010Post Count: 1,099]

June 23, 2011 - 3:19 am

Also as a side note…you mentioned the population is 15,000; it sounds like it’s still part of a rural area ( given the returns and sale price as well)- this alone may push it outside the resi lenders comfort level.

Whats the postcode?

Regards
Michael

Mick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone Me

Same Banks. Better Rates. Served With a Passion.

[tjunctionParticipant@tjunctionJoin Date: 2011Post Count: 18]

June 23, 2011 - 4:05 am

Thanks Richard and Michael for your valuable responses.

Michael: the other lender I found that was willing to do 80% residential loan, pulled out because the units didnt have individual laundries.  I havent heard of that one before….

[Richard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,024]

June 23, 2011 - 6:54 am

Hi TJ

You would be suprised a separate laundry is fairly common with many lenders.

Cheers

Yours in Finance

Richard Taylor | Australia's leading private lender

[Mick CParticipant@shapeJoin Date: 2010Post Count: 1,099]

June 23, 2011 - 6:55 am

tjunction wrote:

Thanks Richard and Michael for your valuable responses.

Michael: the other lender I found that was willing to do 80% residential loan, pulled out because the units didnt have individual laundries.  I havent heard of that one before….

That’s very common.
No individual landries 50% of the time means it’s part of a boarding house zoning -Residential Zone 2b.
This is the solo reason why soo many of these cash flow properties are on the market for > 6 month.

Depending on your financials and overall deal…you may be able to get this pass a lender that will do resi- but rate is around 7.9%

Regards
Michael

Mick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone Me

Same Banks. Better Rates. Served With a Passion.

[Tracey BParticipant@tracey-bJoin Date: 2009Post Count: 158]

June 30, 2011 - 1:19 am

To the finance guys: 
We are about to sell an 8 unit property and would like to understand whether purchasers may be able to borrow 90%.  These ones are on individual strata titles, have laundries internally, fully tenanted, in a city of 100,000.  Expected listing price will be $1.1M, offering the purchaser a 6.7 gross yield. 
Would any lenders do 90% on something like this?
Does the level of return for the size of the investment come into consideration for lenders when determining the LVR?
If lenders won't do 90% on something of this size, maybe we are better off to sell them individually (although we were planning to leave something in it for the next person)?
Cheers,
Tracey

[Mick CParticipant@shapeJoin Date: 2010Post Count: 1,099]

June 30, 2011 - 1:26 am

Tracey B wrote:

To the finance guys: 
We are about to sell an 8 unit property and would like to understand whether purchasers may be able to borrow 90%.  These ones are on individual strata titles, have laundries internally, fully tenanted, in a city of 100,000.  Expected listing price will be $1.1M, offering the purchaser a 6.7 gross yield. 
Would any lenders do 90% on something like this?
Does the level of return for the size of the investment come into consideration for lenders when determining the LVR?
If lenders won't do 90% on something of this size, maybe we are better off to sell them individually (although we were planning to leave something in it for the next person)?
Cheers,
Tracey

Hi

Residential rate- 6.9%-7.1%

If it’s individual Strata then the bank will allow 90% LVR..but only on 4/8 of them- so it be 4 x 80% and 4×90% and the loan will be split bwt 3-4 lenders as well…a lot of work…and bit of hassle but that’s the way around it.

Commercial rate 8.5-9%

less hassle and less chance of a rejection- 1 lender only as well… LVR at 80% Max

Tracey- if you dont mind…could you email me the address of the property? + any another details you have; as i have a bunch of client who actively invest in block of units so i could forward your email to them.

P.s In your situation, i would suggest you sell them individually but it will take you 6-12 month to sell them all….as you have to releae them in stages so there is no “over supply”.

Regards
Michael

Mick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone Me

Same Banks. Better Rates. Served With a Passion.

[Tracey BParticipant@tracey-bJoin Date: 2009Post Count: 158]

June 30, 2011 - 7:02 am

Wow, that was quick – thanks Michael.  I will email you later with further info.

So can I just check – you're saying that even if 4 were with say NAB and 4 with another lender, only one would give 90% LVR and the other 80% LVR?

[Richard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,024]

June 30, 2011 - 11:03 am

Tracey you have it one.

Cheers

Yours in Finance

Richard Taylor | Australia's leading private lender

[Mick CParticipant@shapeJoin Date: 2010Post Count: 1,099]

June 30, 2011 - 12:16 pm

Tracey B wrote:

Wow, that was quick – thanks Michael.  I will email you later with further info.

So can I just check – you're saying that even if 4 were with say NAB and 4 with another lender, only one would give 90% LVR and the other 80% LVR?

Yep…that’s cos the LMI providers will NOT insure more then 25% Risk per building. and since there are only 2 LMI providers in AUS- it doesn’t help..

Regards
Michael

Mick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone Me

Same Banks. Better Rates. Served With a Passion.