Hello all, and my apologies if this appears twice.
I have a question re: a commercial investment and was wanting an opinion.
There is a multi-tenanted commercial property returning 10%NET for $640,000.The sales blurb states that there is real potential to increase it to 11%NET.Do you think a lender would loan the money for this soley as a stand alone venture.
As for my own situation we have made a lifestyle change and are full time on a small farm. We have about $8,000 dollars owing on the farm valued at around $550,000. We also have an investment property that we bought a few years ago for $165,000 and is now worth around $250,000 with a mortgage on it for around $70,000.It is tenanted and returns $20,000 pa.Our only other income is a sporadic one from the farm and other cash from personal training clients.
Any thoughts on this idea would be appreciated. Thankyou,
GeorgeHi Bodyworks,
Please note that I am not a broker so please take what I say with a grain of salt.
From a lending point of view you are very strong in terms of security even though the ‘farm’ will only be secured at a lower LVR level than your IP. A discussion with a good broker will be able to determine you true borrowing capacity.
Bear in mind that commercial lends usually peg out at around 65%-70% and as such you will need to provide the balance from somewhere – your equity in the farm and/or investment property should be sufficient.
Derek
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Most lenders would look at that as a stand alone deal. You should be able to obtain a Lo-Doc loan around the 65%/70% LVR mark. You would need to come up with the 35%/30% plus costs. If you use a broker, make sure you use one that has had commercial experience.
Your farm would also be considered commercial by many lenders as you seem to be earning an income (albeit sporadically) from it. I would love to know the size of the farm as well. This may also restrict access to many of the more standard lenders. Using standard lenders where possible will keep your overall interest expenses down.
Robert Bou-Hamdan
Mortgage AdviserM: 0414 347 771
E: [email protected]
W: http://www.mortgagepackaging.com.auComments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty Ltd
Thankyou all for your response…i will also add that the farm is 65acres with the availability to subdivide 5acres of it should i choose to at a later stage.
Just so you know, the size of the farm knocks out the majority of standard lenders in the market. Select a knowledgeable mortgage adviser who will go searching for you and don’t take the first offer made. There is usually something better out there than the first offer.
Robert Bou-Hamdan
Mortgage AdviserM: 0414 347 771
E: [email protected]
W: http://www.mortgagepackaging.com.auComments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty Ltd
The size of the farm definately knocks out a lot of the standard lenders. There is quite a few non standard lenders that would look at the deal but you are looking maybe at a 50-60% lvr depending on the location and because it would need to be lo doc. As Robert said, choose your broker wisely as not many brokers have experience dealing with this type of security and have them come back to you with a few options don’t accept the first offer.
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Owner occupied 4.49%
Investment 8.24%There are lenders that will lend on commercial security based on the rent for serviceability. It is like a semi low doc, as long as the rent is above a certain yield – about 11% I think, then they will lend. Also, location has to be good etc.
But as the others have said, you will need a deposit of around 35% or use one of you other properties as additional security.
Terryw
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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