I have a question for the gurus. My brother and I have a portfolio of 9 properties, 2 townhouses, 2 factories, 1 vacant block of land just about to be rezoned commercial and 4 duplexes on one title. We have just purchased a further block of dirt, Via different bank at fixed interest commercial loan. Which is zoned, for units, which we intend to put 5 on. We are currently working off a line of credit but the bank is now only willing to lend us just enough to get us over the line to complete them again a line of credit. We have roughly 50 % equity in the properties, with two on freehold title. What would be our best way to gain access to more money for further development?Should I be getting individual loans for each property and using the LOC for my deposits plus interest?N
Which two do you have unencumbered? Maybe you could take the residential properties out to different lenders and borrow up to 80% of the value using Low Docs. St George can do 4 on one title. Spread them around a bit. Each new property with a separate loan and use the LOC for costs and deposits.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Blacknblue,
Without knowing the nature and value of the commercial properties and developments it is difficult to give difinitive advice. However, generally you should keep each commercial property and development within a seperate legal entity. If you have residential property crossed in, then you should only use this as a temporary solution. This will assist you with servicing using the same lender and will also give you maximum flexibility in terms of usiong altenative lenders where appropriate. I'm happy to go into more detail, but its a fairly complex topic, so please feel free to post questions and i'll do my best to answer them.
Regards
Alistairthx guys we have 2 seperate factory units on both on their own title freehold worth around 550k commersial land worth around 300k freehold ,loc on ppor at around 50 percent of value , two townhouses loc at around 60 percent of value, just about to get loc againts 4 units on one title but because of income Around 200k between all owners, brother his wife ,me and my wife, they will only give us 50 percent of value in a loc. we have equity of over 50 percent on portifolo. the other townhouses are on loc at around 70 percent off value.
Hi Blacknblue,
Sorry for taking so long to get back to you. You should have no trouble lending more money as you have heaps of equity, your problem is with the way you are structuring your loans. Stop using LOC's for everything, use construction loans for building and keep everything seperate. It's also a good idea to use a seperate structure for commercial properties (best is a structure for each), development and residential.
Regards
Alistair
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