All Topics / Help Needed! / Finance 6 Unit Apartment Block

Viewing 12 posts - 1 through 12 (of 12 total)
  • Profile photo of danish83danish83
    Member
    @danish83
    Join Date: 2007
    Post Count: 7

    Hi everyone,

    I need help to finance a 6 unti apartment block all on one title, no strata. I have 20% deposit. The block consists of 6 x 2 bedroom units. All units are approx. 80 sqm. They are solid double brick construction. Less than 5% vacancy. $935 per week rent, $750K purchase price. Independent valuation $885K. Obviously a good deal – I just need finance. I am a high income earner $150K plus. Serviceability is not the problem but most lenders just have a rule not to fincance apartment blocks with more than a few units. I have tried big banks, ratebusters, advantage etc.

    Any help would be great.

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781

    You really need to send a detailed email off to a broker who does this sort of thing.  there are a couple of good ones on this forum who have some commercial lending experience.  Not me of course – I am a ratbag!

    These deals are not that standard and each situation needs to be shopped around by someone with access to a number of different lenders.

    All the best,

    Profile photo of pyramidpyramid
    Participant
    @pyramid
    Join Date: 2005
    Post Count: 64

    Contact Alistair Perry on this forum. We have recently got some finance thru Perry and Associates for a 6 unit block

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Dane

    I have several lenders who will do an 80% 6 pack and will respond to your email i received earlier this morning.

    Normally we need more than an hour or 2 to come back to you with conditional approval.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of NucopiaNucopia
    Member
    @nucopia
    Join Date: 2007
    Post Count: 102

    I love reading posts like this !
    just to know some one is out there finding the  deals with potential  and  then getting help advice and support from the members of the forum  to  solving the problems.
     fuels the desire !
     

    Profile photo of Jon ChownJon Chown
    Member
    @jon-chown
    Join Date: 2007
    Post Count: 254

    Danish83,
    On the surface of things, this appears to be a reasonable deal.   At $135,000 per 80m2 2 bed unit, I am guessing that it must be in a outer or remote location or that there are problems with the Building.
    Showing a 6%gross return, I would want better than that.   The weekly short fall is going to be around $600 and I am thinking that there would perhaps be better individual deals around.   Hopefully there will be ways to increase value to the Block.

    Jon

    Profile photo of Chris-SydChris-Syd
    Participant
    @chris-syd
    Join Date: 2003
    Post Count: 75
    Jon Chown wrote:
    Danish83,
    On the surface of things, this appears to be a reasonable deal.   At $135,000 per 80m2 2 bed unit, I am guessing that it must be in a outer or remote location or that there are problems with the Building.
    Showing a 6%gross return, I would want better than that.   The weekly short fall is going to be around $600 and I am thinking that there would perhaps be better individual deals around.   Hopefully there will be ways to increase value to the Block.

    Jon

    I am not sure you have the figures right.

    Purchase 750k with 20% deposit
    Oweing would be 600k
    600k @ 7.5% PA = 45000
    Rent 935pw x 52 = 48620
    This is profit of $3620 PA.

    This does not include any fees etc so at first glance it looks okay.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Not sure either of you have your figures right.

    Firstly it is a 100% Commercial loan so the interest payable is higher than stated.
    Secondly the property is managed by the local agent so you need to consider the net rents after the management fee has been deducted.
    Nowra is a regional town as far as any lender is concerned and with a valuation in excess of purchase price from day 1 the deal stacks upto me. 
    To increase value you would Strata and renovate.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of Jon ChownJon Chown
    Member
    @jon-chown
    Join Date: 2007
    Post Count: 254

    Richard,
    Not sure that anyone has to be or is right, simply stating my thoughts on the investment.

    With a commercial loan of $600,000 at 10% and taking into account Rates, Building Insurance, Management Fees,Maintenance and working on a taxable income of $150,000, my calculator still comes up with a $625 week shortfall. on 9% it is $500 and at 8% it is $380 and the rate of return on investment is 15% to 17% using an 8% annual Cap growth.

    My question would be. How much will a 80m2 two bedroom refurbed unit be worth on the current market.   Until this question is answered who knows if it's a good deal or not.

    The fact that you know that the property is in Nowra indicates that you have more information than we have.

    With the Indipendant valuation at $885,000, this may or may not be true, but is the Valuer on the Banks list of approved Valuers.   If not, his opinion is probably not in the equation.

    Just my thoughts and not wishing to be arguementative.   I have been involved in many Redevelopment (Strata) / Refurbished unit developments.

    Jon

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    No I agree with you.

    10% is a little high for a Commercial project most of ours are being done around the 8-8.5% so thats a little saving and yes it is an acceptable valuation.

    I guess as Dane contacted me yesterday with the loan enquiry and gave me all the facts I had a little more insight into the deal that was posted here.

    I think it is a good buy but hey a lot of the development deals here in Brissie i have turned down over the last 6 months people have made money out of so thankfully it is horses for courses. 

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of Tatts_83Tatts_83
    Member
    @tatts_83
    Join Date: 2007
    Post Count: 27

    What is the deciding factor or reasons for it to be a commercial project?
    Tatts :-)

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Usually over 4 units inline the Banks classify it accordingly.

    This is not say that it can be financed at residential rates or close to.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

Viewing 12 posts - 1 through 12 (of 12 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.