or you can use bank bills. (oops that isn't an option for a broker)
Borrowing for Commercial property
- Thread starter TSwizzle
- Start date
Brokers can do bank bills...but they are for loans over $1m
thanks Aaron. I didn't know that brokers could do bills.
I looked at commercial IP but its an expensive pain. Interest rates are higher, loan application fees are higher, bigger deposit required, agents charge more to manage, valuations are higher. You don't have the same consumer protection as residential.
I know on the flipside they are some benefits but high setup costs are a pain.
I know on the flipside they are some benefits but high setup costs are a pain.
Really Datto?
I rarely (if ever) have seen management costs at the same rate or more than resi. I have seen some go below 2% for exactly the same reasons lack of consumer protection, tenants easier to manage (or lock them out), clients are more informed etc.
Borrowing rates might be higher but it is a reflection of risk & return.
I rarely (if ever) have seen management costs at the same rate or more than resi. I have seen some go below 2% for exactly the same reasons lack of consumer protection, tenants easier to manage (or lock them out), clients are more informed etc.
Borrowing rates might be higher but it is a reflection of risk & return.
Bank bills? Hmm, I've just been googling and I'm confused. For the sake of education (because we certainly don't have millions to invest in commercial property) can anyone explain it to me in laymen's terms?
They are different to a normal 'commercial' or 'business' loan because they do not have a fixed term. With a standard business loan it's just like a home loan except you are paying commercial interest rates and have a shorter loan term.
Bank bills are loans from the bank that roll over every 3 months or so. That means that you pay your interest 3 months in advance based on the BBSY rate (the interbank rate) plus a margin agreed to with the bank. After 3 months, you pay that 3 months interest again at the bank rate plus the margin etc etc. It is an indefinite process.
And the rate is usually cheaper than a business loan rate? So the general benefit is having no term and lower interest?
Usually cheaper yes but each time you renew technically the margin can be changed by the bank.
A post like this brings it home how much one takes for granted along the road of property investing education.
Something that is a standard tool in the acquired property toolkit bag turns out to be completely foreign to another investor.
The follow on assumption is that most other standard tools one uses throughout the day and year may also be foreign to most property investors.
You can go up to 30 years if you have residential security
Similar threads
