All Topics / Finance / Block of Flats with 90% LVR?

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  • Profile photo of tjunctiontjunction
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    @tjunction
    Join Date: 2011
    Post Count: 18

    Is there any chance of getting a Block of Flats with 90% LVR?

    Circumstances as follows;
    Buy Price $900,000
    Return $85,000 pa
    Fully tenanted
    No strata- just 7 flats on one block
    Located in a strong regional centre with population 15,000
    Cash I can put into the deal: $90K
    My Annual salary: $90K
    My equity in other property: $130K

    I'm aware of one lender who will go to 80% lvr, on the condition that the individual flats are all 50sqm or greater.  These flats measure 46sqm, so dont qualify.

    The alternatives I have at the moment are mostly commercial loans and 65%- 75% LVR.

    Any creative suggestions to finance this investment? 
    would me living in one help?

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
    Post Count: 12,024

    In short – NO you will not get 90% on a block of 7 non strata units.

    You living in one or not has no bearing on the deal.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of Mick CMick C
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    @shape
    Join Date: 2010
    Post Count: 1,099
    tjunction wrote:
    Is there any chance of getting a Block of Flats with 90% LVR?

    Circumstances as follows;
    Buy Price $900,000
    Return $85,000 pa
    Fully tenanted
    No strata- just 7 flats on one block
    Located in a strong regional centre with population 15,000
    Cash I can put into the deal: $90K
    My Annual salary: $90K
    My equity in other property: $130K

    I'm aware of one lender who will go to 80% lvr, on the condition that the individual flats are all 50sqm or greater.  These flats measure 46sqm, so dont qualify.

    The alternatives I have at the moment are mostly commercial loans and 65%- 75% LVR.

    Any creative suggestions to finance this investment? 
    would me living in one help?

    90% LVR – no

    80% LVR – yes, even if the unit are only 46 squ it’s fine with 2 another lenders…as long as it fully Self contained, in an area with comparable sales, not student accommodation etc and zoned correctly. – Resi Rates/deal

    At 55%-60% LVR – The above condition are less strict and can still be pushed as a resi deal.

    And as you mentioned, pretty much anything is possible at commercial rates :)
    P.s you living there makes no diff.

    Do you have any resi property you can access equity to lower your LVR?

    Regards
    Michael

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
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    Profile photo of Mick CMick C
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    @shape
    Join Date: 2010
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    Also as a side note…you mentioned the population is 15,000; it sounds like it’s still part of a rural area ( given the returns and sale price as well)- this alone may push it outside the resi lenders comfort level.

    Whats the postcode?

    Regards
    Michael

    Mick C | Shape Home Loans
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    Profile photo of tjunctiontjunction
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    @tjunction
    Join Date: 2011
    Post Count: 18

    Thanks Richard and Michael for your valuable responses.

    Michael: the other lender I found that was willing to do 80% residential loan, pulled out because the units didnt have individual laundries.  I havent heard of that one before….

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
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    Hi TJ

    You would be suprised a separate laundry is fairly common with many lenders.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of Mick CMick C
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    @shape
    Join Date: 2010
    Post Count: 1,099
    tjunction wrote:
    Thanks Richard and Michael for your valuable responses.

    Michael: the other lender I found that was willing to do 80% residential loan, pulled out because the units didnt have individual laundries.  I havent heard of that one before….

    That’s very common.
    No individual landries 50% of the time means it’s part of a boarding house zoning -Residential Zone 2b.
    This is the solo reason why soo many of these cash flow properties are on the market for > 6 month.

    Depending on your financials and overall deal…you may be able to get this pass a lender that will do resi- but rate is around 7.9%

    Regards
    Michael

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
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    Profile photo of Tracey BTracey B
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    @tracey-b
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    To the finance guys: 
    We are about to sell an 8 unit property and would like to understand whether purchasers may be able to borrow 90%.  These ones are on individual strata titles, have laundries internally, fully tenanted, in a city of 100,000.  Expected listing price will be $1.1M, offering the purchaser a 6.7 gross yield. 
    Would any lenders do 90% on something like this?
    Does the level of return for the size of the investment come into consideration for lenders when determining the LVR?
    If lenders won't do 90% on something of this size, maybe we are better off to sell them individually (although we were planning to leave something in it for the next person)?
    Cheers,
    Tracey

    Profile photo of Mick CMick C
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    @shape
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    Tracey B wrote:
    To the finance guys: 
    We are about to sell an 8 unit property and would like to understand whether purchasers may be able to borrow 90%.  These ones are on individual strata titles, have laundries internally, fully tenanted, in a city of 100,000.  Expected listing price will be $1.1M, offering the purchaser a 6.7 gross yield. 
    Would any lenders do 90% on something like this?
    Does the level of return for the size of the investment come into consideration for lenders when determining the LVR?
    If lenders won't do 90% on something of this size, maybe we are better off to sell them individually (although we were planning to leave something in it for the next person)?
    Cheers,
    Tracey

    Hi

    Residential rate- 6.9%-7.1%

    If it’s individual Strata then the bank will allow 90% LVR..but only on 4/8 of them- so it be 4 x 80% and 4×90% and the loan will be split bwt 3-4 lenders as well…a lot of work…and bit of hassle but that’s the way around it.

    Commercial rate 8.5-9%

    less hassle and less chance of a rejection- 1 lender only as well… LVR at 80% Max

    Tracey- if you dont mind…could you email me the address of the property? + any another details you have; as i have a bunch of client who actively invest in block of units so i could forward your email to them.

    P.s In your situation, i would suggest you sell them individually but it will take you 6-12 month to sell them all….as you have to releae them in stages so there is no “over supply”.

    Regards
    Michael

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
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    Same Banks. Better Rates. Served With a Passion.

    Profile photo of Tracey BTracey B
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    @tracey-b
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    Wow, that was quick – thanks Michael.  I will email you later with further info.

    So can I just check – you're saying that even if 4 were with say NAB and 4 with another lender, only one would give 90% LVR and the other 80% LVR?

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
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    Post Count: 12,024

    Tracey you have it one.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of Mick CMick C
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    @shape
    Join Date: 2010
    Post Count: 1,099
    Tracey B wrote:
    Wow, that was quick – thanks Michael.  I will email you later with further info.

    So can I just check – you're saying that even if 4 were with say NAB and 4 with another lender, only one would give 90% LVR and the other 80% LVR?

    Yep…that’s cos the LMI providers will NOT insure more then 25% Risk per building. and since there are only 2 LMI providers in AUS- it doesn’t help..

    Regards
    Michael

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
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    Same Banks. Better Rates. Served With a Passion.

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