- Just found our third property that yields about 9% and then 9.8% by the end of the month. I have another CF+ property in the same area and the capital growth is about $150k for a $239k house in about 1.5 years. There are no stopping this growth for at least the next two years. I have been lucky.The help I need is this: this new property is only a house on a caravan park. It is less than 10 years old and still have some good depreciation schedule on it. The catch is I am not buying the land underneath but lease the land from the caravan park vendor. The funny thing is, the house price in this park has practically doubled for the last 2-3 years due to a mining boom. There is a mine nearby and has about 100 years left. Not only we do not have to pay for the conventional water rate, council rate etc, we do not have to pay for maintanence of the park ie road or path etc. It is all covered by the lease fee, which is minimal. It is not in a strata title- like set up either. Vacancy rate in this town is 0% with one agent telling me that she has 70 people on her waiting list. I do not anticipate the council opening any more land as the town is surrounded by conservation park.The bank is abit reluctant to lend me the money because of the type of the property, but now I was able to convince them by allowing them to collateralise my the other two properties,which is not ideal for me. What is the best way forward? I am sure this is a good deal? Are there any other bank that is prepared to lend us money without collaterise my other properties? My wife and I can service this loan as we both earns about $100k each. i am not sure what the dilemma is.Thanks for helping
Hi kokjhoonwong ,
Instead of cross collateralising, why don't you take a line fo credit on your existing properties and use that equity for cash purchase of the new property at the caravan park?Hi,
What postcode is this property located?
You should not have to cross collateralise depending on its location and the zoning. There are now lenders who will look at purchases that are outside the norm.
Sharlene
[email protected]Not too many lenders would consider lending on a caravan home. If you could get finance it would be more like a personal loan.
Doesn't sound like a very good investment to me. You get no land, but only a building which depreciates as time goes by. 9% is not very good. You could put your money in a savings account and get about 8% without the hassle or risk. How are you going to sell? How do you access the increased equity, if there is any? Think carefully before buying something like this.
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
thanks for your thoughts.Terry you are right about the depreciating bit. To my surprise the house price in this area either in the caravan park or normal suburb are increasing. There is capital growth as I mentioned which is quite cute. Depreciation of the actual house is expected, whether on paper or reality. It is very likely that I will hold this for only for a few years when the price get to a certain amount. But in the mean time, it has been difficult to find yield like this Australia.
Hi Charlie, if you can direct me to a few of these lenders would be fantastic. I may not need to collateralise my the other two properties which is my initial aim anyway.This is not real estate investing. You wont get a mortgage over it.
This is a business proposition like buying machinery and leasing it out.
Returns are high becasue the asset is not attractive to own. If the market thought it to be attractive then they would value it higher thus making the return lower.
You wont get any sort of finance secured by this. You may be able to borrow against your other properties but this project will not stand alone.
Treat it like a business and buy it if the numbers stack up. But don't expect that the resource boom will continue forever and if this business relies upon it then I suggest the whole deal has a fairly significant weakness in it,
Ask yourself why the cashed up miners aren't owning these themselves? They are investing in Perth!
Hi. I was going to say that I would be surprised if you could get a mortgage for one of these, (same with the 'over 55' style 'homes' in parks-lenders are not interested as essentailly there is no real security to lend against) but it has already been covered nicely. If you had cash or funds accessed via equity in another property (using a line of credit or similar) and wanted to take some brave pills and purchase outright, that would be your only way I think.
Sounds like Roxby Downs.
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