4 pack, 1 title

Discussion in 'Loans & Mortgage Brokers' started by Longrass, 4th May, 2020.

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  1. Longrass

    Longrass Well-Known Member

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    Larrakeyah
    Hey guys,

    Would love some suggestions on lender/product for the following transaction.

    4 units under 1 title.

    As is:
    PP: $800k
    Val: $800k
    Current rental $60k

    Option to renovate and strata title at a cost of $200k.
    End Val: $1.6m
    End rental $80k

    Will pay costs, I.e. stamps, legal, tfr with cash.

    Would like to do the deal without putting in cash or equity if possible.

    Any options with staying mainstream?

    Or going 2nd tier and then throwing the units mainstream after split.

    The upside on the deal is the land being zoned for 8+ units.

    Long term is to pay off, demo and go multi level 8+ units.

    Cheers!
     
  2. Lindsay_W

    Lindsay_W Well-Known Member

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    If you don't wanna use cash or equity - how are you going to purchase it? You need a deposit for the initial purchase,
    How are you going to pay for the renovations and Strata Title if not with equity or cash?
    If end goal is to demo and build 8+ units why bother renovating and strata titles now?
    Speak to a Mortgage Broker
     
    Terry_w likes this.
  3. Peter_Tersteeg

    Peter_Tersteeg Well-Known Member Business Member

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    There's a few lenders that can finance this type of property, but in additional to the purchase costs you will need a 20% deposit or additional security (equity).

    Standalone loans for 100% of the purchase price simply don't exist.
     
  4. Redom

    Redom Mortgage Broker Business Member

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    CBA do this in terms of lenders that accept 4 units on one title.
    But you'll need a deposit via cash or equity. All lenders will need this at purchase stage.
    Once your done with your work, you can reval'd everything up, you can get your funds back out. Most lenders would do this as it'd be financing individual units - subject to all other lending criteria.
     
  5. Longrass

    Longrass Well-Known Member

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    Cheers mate, wasn’t aware CBA would do 4.

    Will they allow you to keep all 4 on completion with seperate titles?

    Should have mentioned that I would prefer to use the end completion valuation to achieve a sub 80 lvr.

    If I have to use equity, so be it. Should only take 3 months realistically and I want to retain all units.
     
  6. Lindsay_W

    Lindsay_W Well-Known Member

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    Separate titles is actually preferable to most lenders, so no issues there.
    You would need to buy it as is first, then use the 'as if complete valuation' to fund the construction
     
    Terry_w likes this.
  7. Peter_Tersteeg

    Peter_Tersteeg Well-Known Member Business Member

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    The CBA (and a few others) will certainly allow you to purchase and hold 4 units on one title.

    You won't get any lender to use the 'end value' for the valuation. There's no guarantee that the work will be done (or even if it can be done) to subdivide the property. You could only top up the loan to recover the cash after you've done the subdivision (when the value has actually been realised).
     
  8. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    Borrowing 80% on an "As If" complete Val is smart if you're confident it will stack up.

    There is a few lenders that will do this as residential rather commercial which can save you a few dollars on interest.

    But servicing the loan And cashflow is another thing.

    Can you maintain the repaymemts during construction without rentsl income ?
     
  9. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    88 + lmi % lend is possible based on security type ( subject to locations) , thus allowing to hold back cash, but a bootstrap aint gonna fly

    Maybe find a cash partner

    ta
    rolf
     
    Lindsay_W likes this.