Can anything be done?

[Ken]

After a period of investing everything in various business ventures (one that failed and one that has yet to come to fruition) I am in the process of rediscovering my passion for property. Up to 5 years ago I had successfully bought and renovated a number of houses, I loved it, then I got sidetracked.
I need to get into it again!
Problem!! I think I am too highly geared to be able to fund anything.
Here is my situation - Existing PPOR value $810k mortgage $720k (90% with mort ins) with local community bank. Approx $50k in Credit Cards etc.
Have no cash.
I am looking at a house worth $250k in need of renovation. I estimate $25k to return it to its former glory.
All I can think to do is - 95% loan for IP ($237k)
- bump up PPOR to 95% ($40k for 5% of IP & reno
costs) can not do with existing lender
I would probably need another $10k for Mort Ins, solicitor etc.
To assist servicability I could convert Credit cards to unsecured loan.
The house needs work so it is not attractive to First home buyers, but after reno it would be.
Any Ideas? Or am I getting all excited over nothing.

Thanks

Ken

 

[ok180]

Any Ideas?

Time to pay off that credit card one feels. The party is over.

I would be trying to knock down that PPOR loan too, doesn't leave you much wiggle room if something were to happen to you or if rates start shooting up.

 

[tobe]

It is hard to find a lender to do 95% refi these days, even if the purpose of the further funds is for a purchase. Perhaps you can find a joint venture partner?

 

[Casserole Dish]

Hi just wondering as we are looking from moving from a credit union to a bank with our PPOR mortgage so we can get an IP loan and more flexibility. We were looking at having to pay mortgage insurance on BOTH with the new lender and have to get our PPOR valued to make sure we don't. With asking for 95% surely you will be up for mortgage insurance on the PPOR loan as well and your numbers are a lot bigger than ours!

I don't know if it's just our situation though and yours might be different but it might be something to factor in.

 

[Ken]

Thanks for the replies so far
- ok180 - I wish I had been partying! I am starting to pay things down, all the funds had gone into the business venture.
- tobe - Joint venture would be the next option if I cant get finance.
- Casserole Dish - I already have paid mortgage ins. for the PPOR, I will have to pay it for both loans (if I can find them)

 

[Casserole Dish]

Oh Ken, sorry to hear that. I feel your pain as it does eat into things. Also I guess only the M.I. on the investment property would be tax deductable? STill, hopefully worth it in the end for us suckers, hey?

Better to do it quickly, like a bandaid. That's going to be my approach.

 

[Nathan]

Hey Ken,

short answer is YES things can be done...

 

[Bradsdad]

Hey Ken,

short answer is YES things can be done...

All that withought knowing income?

I would suggest Ken sits down with a MB and crunches some numbers. Sounds like a tight fit.
Would need to know more about income, how "failed" was business venture (any adverse CRRA entries) & any credit impacts that may be present from current BV.


Regards
Steve

 

[Nathan]

hehehe, i was talking general, anything is possible, without knowing details i cant post anymore then a short reply

 

[Belu]

are the businesses your only source of income? If so i think you will struggle.

As above it depends on income. if you have enough time to do a reno and be in the process of getting a business up in place then i think it would be difficult to have a sufficient income to cover $1m in property loans + $50k CC.

If you are looking for an opinion, mine would be to put property to the side for a bit and work on the business. there is always something more that can be done and if it were me, personally, i would be doing everything i could to make sure this business doesnt go the way of the first.

 

[BoatBoy]

Its only wafer thin

 

[Ken]

Some more info - The failed business was a small retail business that I purchased about 6 years ago, went well for a year, then the next year turnover dropped to about 2/3 technology advances got me, Couldn't even sell it, had to close. Major money lost and lessons learnt. (Don't buy businesses, start them, build it up and sell to a sucker like me)
Current business venture is purely as an equity shareholder in a start up that will be manufacturing building products, I had been putting all my funds (available PPOR equity etc) into this. The company is currently looking to sell the last of its available equity to enable the building assembly and plant installation, so apart from occasional meetings I am not involved in operations. The profit from this will be a 'never have to work again' situation.
I have a clean CRRA
I am working full time on a contract basis for a company I have been associated with for 30 years, they are paying for my expertise and experience. Approx $8k nett/mth. my work time is very flexible, planning to go to 4 day week (10hr days) to allow reno work for 3days (have done in the past and works well for me).

Thanks again to all

Ken