All Topics / Value Adding / Fire damaged property

Viewing 14 posts - 1 through 14 (of 14 total)
  • Profile photo of babyflynn81babyflynn81
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    @babyflynn81
    Join Date: 2009
    Post Count: 5

    Hi All, 

    Question for brokers and experienced property investors…

    How difficult is getting finance for fire damaged property is it is purely cosmetic work that need rectifying?

    Is a lower LVR or anything else out of the ordinary required on application?

    Thanks in advance,

    Babyflynn81

    Profile photo of CatalystCatalyst
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    @catalyst
    Join Date: 2008
    Post Count: 1,404

    It depends on the bank. Some won't lend as it's not livable. Some even baulk if there are holes in the walls. This is where a good broker is very handy.

    I bought one that I wanted an 80% lend on. The price wasn't much more than land value and I already had sizable loans with the bank. They came to the party the week before settlement. Lucky I had a plan B if they hadn't come through. Best to have good equity before committing.

    Profile photo of wilko1wilko1
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    @wilko1
    Join Date: 2010
    Post Count: 510

    Same problems as catalyst,  base your LVRs against the land value of the property – 10 % as some valuers will even include a deduction for demolishing the house to get to the land value. As you won't see the CBA bank manager in there with a paint brush fixing it if they reposess. 

    Profile photo of Ryan McLeanRyan McLean
    Participant
    @ryan-mclean
    Join Date: 2010
    Post Count: 547

    I researched and wrote an article on this – http://positivecashflowaustralia.com.au/mortgage-uninhabitable-house/

    Basically you CANNOT secure traditional lending on an uninhabitable house. You would either need to borrow equity against another property or gain a construction loan which means you would need to provide detailed costings and plans for the construction to the bank.

    If you are doing the reno's yourself it will be even harder to get the loan than if a builder gives you a fixed quote or something.

    Nathan Birch bought a burned down house for $25,000 and made a killing from doing it up. Watch his 5 minute YouTube video http://www.youtube.com/watch?v=8PhhwxdbNA0

    He spent $25,000 on renovation.

    Ryan McLean | On Property
    http://onproperty.com.au
    Email Me

    Profile photo of CatalystCatalyst
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    @catalyst
    Join Date: 2008
    Post Count: 1,404

    Ryan- You CAN get finance but it's not easy. As I mentioned I got an 80% stand alone traditional loan. The other 25% I borrowed from them too but from equity in other properties. CBA

    We originally said we were doing the reno ourselves and they would not lend for that. My BIL is a builder and he wrote us a quote for the work, then they passed it.

    Profile photo of Hari YellinaHari Yellina
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    @yellina
    Join Date: 2007
    Post Count: 101
    ryan mclean wrote:

    Ryan, Excellent article.  Thank you. 

    Hari Yellina
    Email Me

    Keep Investing - Grow while Resting.

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

    Yes finance is available but boils down to the level of damage and lvr required.

    Cheers

    Yours in Finance

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

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of babyflynn81babyflynn81
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    @babyflynn81
    Join Date: 2009
    Post Count: 5

    Hi Richard,

    I saw an interesting property that was in the middle of renovation and looks like a fire has gone through parts of the house (that the insurance company had then repaired) but then the owners decided to sell half reno'd.

    I would think the same thinking would apply or would this be viewed differently?

    P.S. Merry Christmas to all!

    Appreciate your thoughts, babyflynn81

    Profile photo of TheFinanceShopTheFinanceShop
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    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271

    Why not just go with a lender that has a no valuation policy?

    TheFinanceShop | Elite Property Finance
    http://www.elitepropertyfinance.com
    Email Me | Phone Me

    Residential and Commercial Brokerage

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

    Hi babyflynn

    Yes same policy would apply and an upto 90% maybe possible.

    Cheers

    Yours in Finance

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

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of babyflynn81babyflynn81
    Participant
    @babyflynn81
    Join Date: 2009
    Post Count: 5

    Thanks Richard. 

    Which are the banks that don't do valuations?

    Profile photo of TheFinanceShopTheFinanceShop
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    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271

    If the loan amount is under $1mil then regardless of LVR ME Bank will accept the COS and will not order a valuation. Quite a handy niche.

    TheFinanceShop | Elite Property Finance
    http://www.elitepropertyfinance.com
    Email Me | Phone Me

    Residential and Commercial Brokerage

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

    And there are a couple of others also.

    Cheers

    Yours in Finance

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

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of CatalystCatalyst
    Participant
    @catalyst
    Join Date: 2008
    Post Count: 1,404

    Yes but in order to get finance you have to have insurance.

    When they ask is it habitable and you say no then that is recorded on the insurance. The bank will see that. 

Viewing 14 posts - 1 through 14 (of 14 total)

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