Hi Everyone………1st post on this forum, so please be understanding.
I have recently just finished reading Steves book and I am about to embark on my 1st acquisition since doing so.
The property that I am looking at is commercial and is showing a 23%cash on cash return.
My problem is that I am looking for a lender that will provide a lvr of 80% and not the usual 70% for a commercial loan.
Any ideas as to where I might locate lenders or brokers that are specialists or flexible in this area regarding an 80%LVR for a commercial loan.
Thanks,
ZacmanHi,
My problem is that I am looking for a lender that will provide a lvr of 80% and not the usual 70% for a commercial loan.
Any ideas as to where I might locate lenders or brokers that are specialists or flexible in this area regarding an 80%LVR for a commercial loan.
Hmmm – hard, but not entirely impossible. FYI all my commercial loans have been at 70%LVR, but I know people who have secured 80%.
I suggest trying one/several mortgage brokers and seeing what they can find.
Just a ‘heads-up’ it’s likely that the term will be a max of 10 years, so you’ll probably need to go interest only to achieve a +ve cashflow outcome. This being the case, be sure to allocate some of your cashflow profit to debt reduction, just keep it accumulated in an offset or other account.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Good on you for checking out a commercial deal – they’re not as easy to purchase as residential, but the returns are usually better and the headaches are usually less. Lenders may be more inclined to loan to 80% or higher if you have additional security (not nec yours – it could be a family member or someone very trusting of you), or possibly if there is a very long and secure lease ie 10 yrs. So perhaps you can talk to the tenant and find a way to encourage him/her to ammend the lease (assuming it is not that long) in exchange for some consideration on your part.
Good luck, Julian.There are some lenders that offer longer commercial terms. For example, IMB offers a commercial loan with a maximum term of 20 years which can be helpful.
There’s a lender called Orix that will lend 80% on non-specialised commercial property (on a P&I basis).
I wrote an article about commercial finance for API magazine. I’m happy to email it to people if they are interested.
Cheers
Stu
>>There’s a lender called Orix that will lend 80% on non-specialised commercial property (on a P&I basis).<<
Before you start jumping up and down about Orix I suggest you first find out what interest rate they will charge.
Pisces133
I certainly wasn’t jumping up and down about Orix – just merely mentioning them as a lender that I know of that lends 80% against commercial property. I’m sure there are others as well.
Anyone that lends 80% is going to charge a high interest rate.
Cheers
Stu
Stuart, what I said was meant for Zacman. I was actually suggesting that he better not start jumping up and down (out of joy, thinking he had solved his problem) until he knew whether the higher interest is acceptable to him).
Pisces133
We can assist with 80% LVR. Please contact me off-forum if you still require help.
Max Hugen
Alpha Financial
Residential & Commercial Loans
02 9560 3061
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