Borrowing with rental guarantee

Hi Team/ almighty brains trust.

Questions for the brokers perhaps?

We have a long-term partnership with a local community group who lease some of my properties under a "head lease". They contacted me yesterday about a property they would like to lease- only Id have to purchase and renovate the thing fit for purpose of course.

Would banks or more likely private lenders help fund the purchase and reno on the basis of fixed income? We can get a contract together stating the lease would be 3x3x3 at XYZ amount which still leaves me cash flow positive with P/I at 4%.

 

Commercial? Will be hard as they will only lend a certain lvr.

 

Residential, it’s a unit block.

So likely still a contribution from our fund along side, rental income and LVR?

thanks for your help

 

I believe commercial you can probably do it as a lease doc.

 

Lenders always see any lease as subject to being paid late or financial collapse. The income is neither fixed nor assured as absolute.
LVR and valuation will play a part even for leasedoc loans. Some tenancy leases are appraised as better than others. eg Centrelink, ATO etc Banks. However clauses that allow them to terminate with notice may also be present.

 

no chance without other security or cash

 

Hey everyone sorry for the late reply!

It’s a 4 unit residential/ however I’ve purchased through the business entity so can borrow through the business.

We can put equity into the purchase, it’s also a government backed not for profit!!

The numbers are great, it’s a 650 outlay and will return 75k PA. I’m sure I can negotiate a 10 year head lease.

 

A business is not an entity

 

Great feedback, thanks.