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Finance for income producing acerage ppor?

Discussion in 'Property Finance' started by Joshwaaaa, 8th Aug, 2016.

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  1. Joshwaaaa

    Joshwaaaa Well-Known Member

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    Getting what I feel is a bit screwed over here. Currently have a contract on a bare 12 acre property, has a house, few sheds and boundary ffencing. No cropping no nothing, not classed as a farm. It does however have a phone tower off in a corner paying $12000 a year.

    Now before we even entertained the thought of putting an offer in we checked with the bank via our broker whether this income stream would affect anything, we dont need it for servicing etc. They came back with a resounding no, infact it would do quite the opposite and detract from valuation etc.

    So we put in an offer had it accepted, put the application in everything was dandy. Now we got up to valuation stage and valuer came back saying this is a commercial property I can't help you with this. So now the bank is telling me I may have to go through as commercial if I want to go ahead with the purchase after telling me the exact opposite only the week prior.

    Does this sound like rubbish to anyone else, or have i been screwed by the valuer? Quite angry at the moment as we have listed our currenty ppor and got some very good offers within days (haven't accepted anything yet luckily)
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Hi Joshwaaa,

    That's a real shame - sadly, when there's a non-resi income stream it's always going to be commercial. It's not the valuers fault, it's the lender themselves that have given you wrong information.

    Hopefully you can get around this - or get out via a finance clause.

    If the broker spoke to the bank prior, they may be able to get their BDM to go into bat for you but I'm not keen on your chances.
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Sounds correct. You are buying a property with a commercial structure on it and that has many issues. valuer would need to take this into account as it would effect the value.
     
  4. Joshwaaaa

    Joshwaaaa Well-Known Member

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    Interesting, surely the hundreds of tini tiny vineyards surrounding it can't all be commercial? Maybe they are? the agent who sells most in the area said he's only come across it once before and they just swapped banks and had it re-assesed and came out all good as resi. Either way the bank assessor said he's going to go over it all tomorrow and get back to us.

    Getting out via finance clause wouldnt be an issues as i would probably be over my servicing limits under commercial, lol.
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Some lenders may not do a valuation for certain situations but just go off the contract of sale - so they may not be aware of the structure and thereby treat it as residential.
     
  6. Joshwaaaa

    Joshwaaaa Well-Known Member

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    Yup fair call, contract for tower as part of the contract for sale probably doesn't help things along in that regard
     
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  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Usually they will just go off the front few pages so may not see it.
     
  8. Brady

    Brady Well-Known Member

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    Who's the bank you spoke with?
    What's the purchase price and LVR?
    Was there anything tricky with the deal?
    Are you self-employed in any similar industry?

    I've got these deals over the line before as residential, not with a tower but a commercial element. Shoot me a PM if you like and should be able to let you know pretty quickly if I can help.

    Biggest issue is that it's a commercial structure, not just some crops etc that can go easily.
     
  9. Blacky

    Blacky Well-Known Member

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    Try one of the Ag lenders.
    Elders or westfarmers/landmark finance.

    Likely you won't get redo rates but on 12acre you probably wouldn't anyway.

    Maybe worth a call.

    Blacky

     
  10. dabbler

    dabbler Well-Known Member

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    That size and not in a suburban setting is going to mean most probably some finance issues, like, LVR, rate etc.

    A lot of acreage will be a commercial loan whether or not it is producing, they consider them farms at a certain acre rate, even though it is ridiculous or clearly only lifestyle suited, this seems common, but on that size if you shop around someone should do it.
     
  11. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Sounds commercial to me.

    If Brady can get it done under resi - then can't hurt shooting him a message.

    Cheers

    Jamie
     
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  12. Joshwaaaa

    Joshwaaaa Well-Known Member

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    This is such an annoyance to me, I wouldn't have even thrown an offer in if I knew this was the case, hence why I made sure to clarify it with both my broker and bank before doing so. Will have ended up wasting everyones time.
     
  13. Joshwaaaa

    Joshwaaaa Well-Known Member

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    The size and land usage isn't an issue at all, due to zoning it was a max 80% lend however. And the property is roughly 2-3km from the nearest major suburb with shopping center etc so not exactly rural setting per say
     
  14. dabbler

    dabbler Well-Known Member

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    Lenders vary a lot when it comes to block size & it zoning, and it clearly has a commercial income.

    Insurers also start to look closer once over a certain size, they too vary policies between companies.

    I am sure you can find someone, there is a guy in Bowral that mainly does lifestyle block loans who seemed pretty cluey. Being close to shopping or town does not change much, you can have RU1 in places that I consider in town, or, with residential next to it, I know it can seem stupid, but......
     
  15. Joshwaaaa

    Joshwaaaa Well-Known Member

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    So good news from broker, after a bit of prodding and poking the decision of it being a commercial property has been overturned and it is now being processed as a a straight resi purchase.
     
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  16. dabbler

    dabbler Well-Known Member

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    Good news ! glad it worked out :)
     
  17. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Which lender are you dealing with? That's good news!
     
  18. albanga

    albanga Well-Known Member

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    Good job! How did your broker get it turned?
     
  19. Marty McDonald

    Marty McDonald Mortgage broker Business Member

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    Sounds like may have been CBA to me?? Anything commercial they hate but in this case common sense prevailed.
     
  20. Brady

    Brady Well-Known Member

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    Would have been able to get it done resi.

    Wasn't CBA. OPs broker by the sounds have managed to get the valuers on board.

    See how it pans out.
     
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