Finance for block of 3-4 units

Hi Richard,

I think you have misunderstood my post but no harm done.  I don't want to have a disagreement.  I didn't say it's impossible to do 6 units.  I was replying directly to the original post to let them know it is possible to do the 4 units at 80% LVR at resi rates with Commbank.  Just trying to help a fellow investor who may need help  

Kind Regards,
Tracey

Tracey ok noted.

Hi GOM,

Thanks for the question. Yes, It is possible. I have contacted the bank and double checked this prior to making this post by way of requesting a question answer format which I am pasting below.  I have asked questions which I think will cover what most people would want to know.

The bank's reply is in red.  I have not changed the wording at all these are the exact answers.  You can email me directly if you have any questions.  I am an investor too and a licensed finance broker working with investors for 8 years, this is fair dinkum.  I hope this information helps you or other investors thinking about purchasing a small block of units to acheive your goal (and get a better return).

1. Will Commonwealth Bank fund an 80% LVR full doc loan on purchase of 4 established units on a single title which is 100% of development? Yes (established only, no construction).

2. Will Commonwealth Bank fund an 80% LVR full doc loan on purchase of 4 established units which are strata titled which is 100% of development? Yes (again, established only, no construction)

3. Will Commonwealth Band fund an 80% LVR full doc loan on purchase of 6 units which are strata titled with is no more than 25% of the development? Yes.

4. Is 6 units the maximum amount of units that Commonwealth Bank will fund in a single development? Typically Yes, but we will consider more than 6 (as long as they’re not more than 25% of the total development) on a case by case basis.

5. Is this available in personal names, companies and trusts? Available for Personal, Company and Discretionary & Unit Trusts. (No Hybrid Trusts)

6. Is this a residential investment loan at the residential investment rates? Yes.

7. Is 80% LVR available for metro, country and inner city? Metro and Country is fine, Inner city will depend on the type of unit (ie: Student accommodation is only 70%, Serviced Apartments may be as low as 50% depending on the Leasing Agreement)

8. What is the max loan size available for this purchase? (without going to LMI) 80%. There is no $$ limit.

Please note:  This is the lending policy today, in the future it can change.  Anytime you are considering a purchase like this get your broker to run the scenario past a few lenders so they can get the updated policy.  The banks change the rules all the time.

Best Wishes,
Tracey

How are you going to subdivide the land into separate Title when I assume the units are strata title and will all be part of the 1 Development.

Council is not going to approve a subdividable lot until completion of the building.

Hate to say if you Bank recommended this then they have absolutely NO idea.

Hi Richard,

No..the bank didn't recommend this. Its just we are trying to put the puzzle together to resolve the challenge in financing.

Isn't our going to be a Community title rather than Strata title. Since each house on property is independant and they have common area.

http://en.wikipedia.org/wiki/Strata_title
"Community title subdivisions are not dependant upon buildings. They involve normal survey techniques and can be completed and approved once access roads and services are in place. However, it is common for buildings to be completed on the various lots before the subdivision is undertaken."

Don't the big land developers follow the same principle, when they sell house & land package. Even theirs is big block on a single title which they sub-divide and sell to us after developing the common areas. And the banks happily finance it…

Why should ours be different……Richard, please excuse my ignorance if I sound gibberish…just trying hard to make it happen..

Dwolfe…I was told by a draftsman that we can get provisional sub-division even before building the house. But not sure whether that provisional title is good enough to get refinance…

Cheers

Hi Richard,

I rang our Architect/draftsman to double check whether individual title will be issued before construction. He said definately "yes"..

So it looks like its quite possible. Will only know the reality once we actually walk the path.

So assuming we have individual titles for the six lots and the one existing house, is the idea of getting refinance from three banks feasible in your opinion?

Thanks for your help.

Wow! that makes me nervous.

We are novice in the trade. Hence have to rely on people's expertise.

Will post it in the forum, the results of our efforts to obtain invidual title. I guess its going to take 3-4 months to get the sub-division approved.

Thanks for the help.

Really helpful thread thanks for sharing with us….