A great "no money down" purchase - yippee!

[Perp]

Just to clarify: I'm not remotely despondent, it's all good! Steve just asked me for an update so I thought I'd complete the story here. Thanks for your support and advice, Lawrence, I 100% agree. Definitely will tie the deal up more tightly next time before investing so much time in it.

The way I look at it, it was a lot of time effort for half the deal (so sub-$500K for our share), so I'm happy to move on to a deal that will be easier and worth more. I'm looking at industrial deals in the $1-2M bracket for my next purchase, in selected parts of Melbourne.

Thanks, Anita, Steve, and Lawrence, for your support; I truly appreciate the advice and encouragement that I receive on Somersoft.

Onward and upward!

 

[Aaron Sice]

geezus i've got a lot to learn about comm RE...

 

[Aaron Sice]

so i see this being cashflow neutral (or just slightly -ve) even after renovations. at market rents in 3.5y it's a cashcow with equity.

how did you find out about this deal if you don't mind me asking...?

 

[Perp]

so i see this being cashflow neutral (or just slightly -ve) even after renovations. at market rents in 3.5y it's a cashcow with equity.

I'm with you; if I could get into it - even at $675K - I would. But I have no free equity right now. I wouldn't be the least surprised if it has a boom in the next few years and performs even better than I'm forecasting here (which is based on very conservative 3% growth in rents).

how did you find out about this deal if you don't mind me asking...?

From knowing people in Mildura, I had heard about all the things happening there - particularly the marina, and a big infrastructure project I haven't even mentioned here yet called the "Thurla Freight Gate" (PM me if you want more info - plans to integrate rail and road transport at a new big hub just to the east of Mildura, new bridge over the Murray etc - hub for road transport Syd to Perth/Adelaide, with rail connection to Melbourne). And lots of big "names" such as Officeworks, Centro, Bunnings, etc have either entered town or are building right now. And there's a phenomenal amount of residential construction underway - the place is hardly recognisable from the sleepy town where I grew up!

So I just started checking out listings in town, running the numbers, and this one stuck out as a potentially great investment. (If you can pin down the vendor. )

 

[Cashflow]

Hi Ozperp

Could you tell me what financial institution will lend you 85% on this industrial deal. Always on the lookout for new lenders.

Good luck and stay persistent.

Peter

 

[Perp]

Think Tank www.thinktank.net.au

 

[steveadl]

hmmmm either I'm remembering wrong, or ThinkTank have lowered their LVR to low docs.

I'm pretty sure it was 80% or 85%, now it's 75%. Tracey am I imagining things?

 

[Perp]

hmmmm either I'm remembering wrong, or ThinkTank have lowered their LVR to low docs.

I'm pretty sure it was 80% or 85%, now it's 75%. Tracey am I imagining things?

I think you're right, Steve. Sign of the times?

 

[steveadl]

I think you're right, Steve. Sign of the times?

Looks that way Tracey. Oh well, roll with the punches. I don't need a commercial loan for another 2yrs anyway, will cross that bridge when I come to it.

 

[BUNDY]

Ozperp,

Couldn't you offer your second IP up to the lender as second mortgage security on the deal as well? If it's got $500k equity, it may not be a problem.

Alternatively, perhaps you should look at other lenders and see what they can offer. (Refinance the investment property and buy the new commercial with the same lender, etc etc) Dangle a few carrots out there, I'm sure someone would be happy to finance the deal.

Could you buy the property outright and borrow say $100k against your investment property to assist with cashflow for 12mths or so? This would allow you to secure the deal, do the minor rennos and increase the rent.

Just a few ideas which you may/may not have explored.

Bundy

 

[Perp]

Ozperp,

Couldn't you offer your second IP up to the lender as second mortgage security on the deal as well? If it's got $500k equity, it may not be a problem.

Thanks for the suggestion, Bundy. Events have somewhat overtaken my pursuit of this deal, anyway:

1) I have a new mortgage broker (thanks Somersoft!) and it looks like we can rearrange our mortgages to substantially improve the amount of free equity, and reduce our interest bill at the same time. Yee-ha!

2) I'm now looking at commercial deals which cashflow much better than this one, in the USA, as per this thread.

If anybody else has the free equity, that Mildura property seems to be still for sale. They still have $750K on it as the asking price, but I'm pretty sure they'd take $680K (possibly less now), and I still think it's a good deal at that price (for Australia - but I'm getting accustomed to USA-style yields now!).

 

[Rockstar]

Hi Tracey,

What's your take on the whole Murray River D&G situation? There is a lot of media attention around the system potentially suffering irreversible damage - whatever that means? Most investors would be a little apprehensive about banking on River towns at the moment I would assume?

Regards, Ian