I have 1 million currently to invest actively-I wish to do a development of motel/unit accomodation which I have done succesfully before. Theoretically if I was to begin to buy up residential homes, the bank would probably loan me 4 mil if the ability to repay was there, giving me up to 5 mil to invest. Can anyone tell me (assuming the lender is satisfied with my capacity to pay) how much I would be able to borrow on such a development-I have spoken to 2 institutions to date-both with different ideas.
Most lenders will easily consider loaning 80% for residential homes and most for investment properties as well.Also, I have been instructed by W/Pac that they only loan to 70% now though for “special” customers they may consider more. I have 4 mil in property with them-never defaulted but they tell me they are covering themselves in an overheated market. The reply I gave them was considerably overheated as well. Is this now becomming common for investments that lenders are less inclined to lend to the traditional levels??
I have considered using a broker in the past 12 months or so and am wondering if now is not the best time to trial a different approach. Any thoughts??jmn
Development lenders will normally lend 70% – 76% of end value or 80% of hard costs. Development lenders are short term funders so you will need to have “take out” finance once the development is completed and leased/operated.
NAB has a similar “policy” about investment lending. It’s nonsensical and has never actually impeded any of my clients. I just ignore the policy and always ask for 80% – no problems.
With regards to using a broker… If your existing lender is not doing what you want or need then it may be time to look elsewhere. A broker is a good avenue.
Cheers
Stu
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