Hi fellow investors. I hope some of you can help me find answers to a couple of questions that have been on my mind the past few weeks.
Being very passionate about my real estate investing, and hoping to aquire many properties and try out at doing some buy/renovate/sell deals in the near future:1) Everytime I apply for a loan it gets marked on my credit rating report. After say 10 or 15 deals, won’t the banks start getting concerned and not want to lend to me even if I can prove servicibility ? Is there any way around having dozens of credit checks, for example, if borrowing with the same lender or mortage broker, can I ask them not to do a credit check if I only did a deal a few months back ?
2) Loan terms are generally 25-30 years, and if my main strategy is renovations and sell within a few months, won’t the banks realise that I will sell quikly every-time, or do they not care because they benefit from application and break fees etc ?
Thanks in advance,
Arthur. K
Hi Arthur
You are correct in most cases every time you make an application for a loan the lender usually records a enquiry against your credit report. In saying that if you have made the application and subsequently repaid the loan then in most cases the lender and the mortgage insurer (if applicable) will not have an issue especially if you can show prompt payment of the loans you did take out.
Yes if the lender realises you are using him as short term development finance then you may find it difficult to convince them to charge you residential rates and fees. If you use a mortgage broker remember in most cases his / her commission will have been clawed back within the first 12-18 months so you may not be their favourite client.
I have several clients who i act for where we have a fee arrangement as they and I know they intend to repay the loan back after a short period of time. Bear in mind most lenders have included some form of deferred application fee / early repayment fee on their loan products including their variable rate loans.
Cheers
Richard Taylor
Residential & Commercial Finance Broker
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Thanks Richard that was very informative. I’m one of those people that needs to know eeeeverything [biggrin]…What are the options ?
I mean, there has to be a way. People are doing it everyday and making great deals and obtaining finance right ?
Would it have anything to do with structure (i.e trusts, companies, partnerships etc) ? How do say trusts or companies obtain finance, and do they have credit checks ? And what are your thoughts on operating renovations under a business name, would that help ?
I know I should get some legal advice from my accountant or solicitor, and I’m looking at purchasing wealth guardian in the near future, but any opinions and experience is much appreciated as I don’t want it to huant me later down the track.Cheers,
Arthur. K
Hi Arthur
Richard has given a good reply to your first posts.
Having a company or a trust will not help with making finance easier. Lenders will look at the individuals behind these entities.
If you wish to keep going on forever, then it is possible if you have either income or equity. You may just have to try a few differennt lenders.
Having a business name will make no real difference. A business name is not a structure, but merely a name which companies of individuals can trade under.
Buying renovatons under a company/trust is a good idea for asset protection and taxation reasons and you should probably be looking into this area if you plan to do more than 1.
Terryw
Discover Home Loans
Parramatta
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Thanks Terry, I appreciate you taking the time out to answer my questions.
I’m still not comfortable with the second part of my question- how am I going to convince the banks to lend me money every 4-6 months for my renovation/ value adding projects when they know that I won’t keep the loans for 30 years ?Cheers,
Arthur. K
They probably won’t notice for a long while and there are so many lenders out there it probably won’t be an issue as you can spread your loans around.
Terryw
Discover Home Loans
Parramatta
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Just send me a blank email, with “subscribe†in subject line.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
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