Join Australia's most dynamic and respected property investment community

how to finance this business

Discussion in 'Other Asset Classes' started by sunnyskies, 13th May, 2016.

  1. sunnyskies

    sunnyskies Active Member

    Joined:
    13th May, 2016
    Posts:
    31
    Location:
    melbourne
    Hello everyone,

    hoping for some ideas here.

    I have been successful in tendering for 2 business contracts to commence early next year and am now looking into how to raise some capital to get them going.

    I have 3 properties sitting around the 75-82% lvr, but I haven't had any payg employment for 6 months so I can't do an equity pull. (at the moment I'm working casually on ABN and won't be able to work full time prior to starting)

    All three properties are tenanted till January next year and I have read that it's difficult to sell while tenanted, so I figure I get some sort of loan to tie me over until mid june next year or beyond when i would be able to sell at least one and then repay the loan. The amount i would need is only 60k so one property would easily cover it.

    Another option is to put all three on the market simultaneously and pull 2 once i have a signed contract, i have 6 months to do this but would rather not

    The very last resort is family which I would rather not but the ideal situation would be to get a 2 year loan and then once I have had 2 years of trade I would refinance but I'm thinking this might not be viable but maybe I'm wrong.

    I read the thread on the solicitors loan so i'm wondering if they would accept the security I have for that with out current payg income?

    Would consider a high interest arrangement for 2 years as the profit is good and the scope for more work or to expand is high

    TIA
     
  2. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,103
    Location:
    Melbourne, Nationwide
    If you've got enough regular income to demonstrate serviceability, you could simply do an equity release from your existing portfolio. This is likely to be the most cost effective solution.

    Just be careful about how the application is framed as you'll often end up with a business overdraft instead of a regular home loan (not so cheap). Go through a broker rather than a branch.

    If that can't be made to work, then a business overdraft is likely to be the best outcome. Lenders may be able to approve this on the basis of the contracts you've got lined up.
     
  3. sunnyskies

    sunnyskies Active Member

    Joined:
    13th May, 2016
    Posts:
    31
    Location:
    melbourne
    Thanks Peter for the reply.
    Will look into an overdraft. Is it possible to get an advance on a sale of a house? I looked into bridging loans but it sounds like these loans need to be secured against the new property?
     
  4. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,103
    Location:
    Melbourne, Nationwide
    Bridging loans are only available when selling one house and buying another, for when there's an overlap between the two.

    I've never heard of anyone getting an advance on the basis of a house sale. I guess it might be possible, but you'd need an unconditional contract of sale. Some of the caveat lenders or similar would probably be keep to do it but they charge massive amounts. Ask your existing lender if they could help.