Every man has to have a shed

[Dazz]

two major hurdles to overcome to conclude the deal,

1. The tenant says NO...they don't want to buy it at the price I just negotiated for it.
2. The Bank says YES...go ahead.

Bit of an update.

Of those two barriers listed above between us and controlling the property, we're still chipping away.

# 1 was sorted out when we received a lovely one page letter from the Tenant's Chairman stating they he had no intention of purchasing the premises, and thereby waived their "first right of refusal". He did indicate however, that they had no plans on moving and looked forward to co-operating with the new Owners. Excellent news - one down, one to go.

# 2 has proved to be a bit tougher. We received the official "Go away" from our normal Bank contact, the first time we've ever been refused. They applied no less than 7 layers of conservatism to both the equity levels and the income streams (both from the properties and the salary) to finally arrive at a conclusion that we didn't have enough income to support the deal ?? WTF....Suffice to say we weren't too impressed, and I let rip at the manager who made the final decision. Didn't help one iota of course, but made me feel heaps better.

We've subsequently approached another Big Bank who also wanted to apply layer upon layer of conservatism, to the point where it made it so unattractive, it wasn't worth pursuing. Things like they thought ;

1. A 7 year lease wasn't secure enough.
2. Reduced my salary by 200K p.a. cos we might eat that much ????
3. Wanted to apply only 75% of the rental income.
4. Wanted us to pay back not only the interest but the principal at the rate of 61K per quarter....yeah right.
5. Didn't trust the sworn valuations we had commissioned at great expense in April by Colliers International.
6. Wanted to charge 2% extra interest rate because they weren't happy.


By this stage I was getting the distinct feeling no-one wanted a bar of this deal.

Didn't help that I was bobbing around the ocean offshore working nights - out of contact with just about everyone. I've found when you are doing business, it's best to be there in person. People assume way too much and wander off on any old tangent if left to their own imagination and devices.

Anyway, I've now contacted one of the MB's on this forum and they are on the case - trying to secure finance for us. If they manage to pull the finance off at a reasonable interest rate, it'll be most pleasing.

Looks like we are just about to do a whole bunch of "uncrossing".

 

[Debt Junkie]

Keep us updated.

Surely your MB will be able to sort it for you - would be such a shame to miss out on your shed -and the post settlement shed party

Also be interested to hear what your bank does when you get approval elsewhere. You'll probably be subjected to all manner of fawning ....

DJ

 

[Les]

G'day Dazz,

Also be interested to hear what your bank does when you get approval elsewhere. You'll probably be subjected to all manner of fawning ....

I had to smile at DJ's comment. And have to agree totally - please keep us informed.

Hope you've got some well-worn dirty old boots you can wear, just so they can lick them clean for you

Regards,

 

[kingchevy]

Looks like the new manager is a bit of wanka then Its so hard to find people with the same vision sometimes isn't it??

 

[GoAnna!]

GoAnna, me too.. 4 months ago..

5 properties X-colled with the Commonwealth Bank.. sold one and they took ALL proceeds.. about $120K more than what was used to secure the debt originally. They held all the cards and wouldn't budge. It was a very rude shock and a massively treacherous act on their part after many years of loyal business.

I'll never cross collateralise again and I'll never bank with the Commonwealth again.

Hiya Duncan,

Sorry just noticed your post. In my case they actually reduced the LVR on one of my places to 0% yes that's right zero to justify taking the cash from sale but then got strange when i then wanted to take that property from them. If it had no value to them why did they want to keep it? They then increased the LVR to 50%. This was on a property that had 80% LVR on for the past 7 years with no issues about repaymenst etc. A perfect clean record. So like you I left. They tried to woo me back in at the last minute by increasing LVR back to 80% but I was over them. I considered them to be a business risk.

 

[GoAnna!]

I never understand when people are shocked about what happens when events transpire and Banks exercise their rights under the loan documentation......after all, as investors we sign them to get access to the funds in the first place. I suppose what is written down and what we "think" it means is the area you are addressing.

Daz

If only it were that simple. I my case the CBA changed their policy three times in the one week. At one point they said yeah we know that it is documented on your file that we approved x plus y but that employee is now in another role. What the? A policy that is subjective accordng to which employee is looking at it means I need to watch the employee movement to guess what the policy might be this week. Way too riskly for this little duck and her business.

So my issue was no so much with their contract but the change of policy.....multiple times. I think until it happens to you it is hard to fathom just how wierdly a bank might behave. Up until them the CBA was my best friend and always gave me the best deals. I am now spread far and wide and I ensure that my home is with a different bank than my investments just for that extra layer of protection.

 

[markp]

# 2 has proved to be a bit tougher. We received the official "Go away" from our normal Bank contact, the first time we've ever been refused. They applied no less than 7 layers of conservatism to both the equity levels and the income streams (both from the properties and the salary) to finally arrive at a conclusion that we didn't have enough income to support the deal ?? WTF....Suffice to say we weren't too impressed, and I let rip at the manager who made the final decision. Didn't help one iota of course, but made me feel heaps better.

We've subsequently approached another Big Bank who also wanted to apply layer upon layer of conservatism, to the point where it made it so unattractive, it wasn't worth pursuing.

Ah conservatism. "The condom to the p.... of progress"

 

[tropic]

Do you think it has something to do with sub prime crisis now the are more conservative?

 

[GoAnna!]

Do you think it has something to do with sub prime crisis now the are more conservative?

Unsure who you are directly that question to but my example is from 2004 I think so in my case the subprime issue was not there.

 

[tropic]

Sorry, I was referring to Dazzling.
I have a feeling that banks are starting to become more cautious.
My bank manager seems to be sitting on my application form to increase my home equity loans.

 

[quoll]

I've found the CBA to be my very best and closest investing partner over the years. Without their support, I'd probably own my average PPoR and maybe have one small IP. I owe them big time. I also know I'm very much in the minority on this forum when it comes to appreciating the Banks support.

It's funny you should say that, for so many it seems like the person at the bank is the key, get lucky find a good contact and things role, they move, the whole momentum stops and you start running into NO.

Hope things go well with the new guy at the BANK. (cross out BANK put in MB)

BTW just moving some property in with CBA so I'll see how they treat us for the next 4 or so years.

Cheers
quoll

 

[APerry]

Do you think it has something to do with sub prime crisis now the are more conservative?

I was at a breakfast this morning with Westpac and this question was asked to their Head of Business Banking in Victoria. He was emphatic that the sub prime crisis has not effected credit policy at all, I would think it would be mirrored at all the banks.

Regards
Alistair

 

[steveadl]

I was at a breakfast this morning with Westpac and this question was asked to their Head of Business Banking in Victoria. He was emphatic that the sub prime crisis has not effected credit policy at all, I would think it would be mirrored at all the banks.

Regards
Alistair

I've heard the same from my mate at CBA. In fact, they are even loosening further some of their requirements with low docs etc.

 

[Dazz]

Hi everyone - been away for a while, furiously working on the finances trying to secure this puppy....looks like in my absence a few more D&Gers with lots of theoretical knowledge and no property experience have joined us on SS.

Anyway, she's been a hard road to hoe so far with quite a few kicks in the teeth trying to go unconditional on this deal. I feel like I've got a whale on the end of the line, and I've just about run out of line as she pulls away off into the sunset. It wouldn't be far off to say that I'm hanging onto this deal by the plaque on the dental floss on the skin of my teeth.

It's funny you should say that, for so many it seems like the person at the bank is the key, get lucky find a good contact and things role, they move, the whole momentum stops and you start running into NO.

Exactly right....my contact of 4 years took off...and so did access to any funding. Apparently I'm big enough for one Bank, and they've said no more. Oh well, that won't stop this little black duck. Fortunately, that decision resides with me - not them.

Hope things go well with the new guy at the BANK. (cross out BANK put in MB)

Nope - things didn't go well with the new guy. I'm in the process of pulling out 2 props from their security blanket to use as a deposit on this deal.

I've got a reasonable MB working on this for me - if they get it across the line at a decent interest rate - there could be a nice bonus in it for them....I tend to look after my team members.

I was hoping to have it unconditional by now - but it's proved a little harder than expected. Wish me luck !!

 

[Rixter]

Wish me luck !!

Good Luck!

 

[steveadl]

Good luck Daz, fingers crossed for you mate!

 

[GoAnna!]

Best of luck. Its these situations that really sort out who will be successful and who not. It's so easy to say "Too hard" throw up your arms and walk away. But when you know you've caught a good one.....

 

[sailor]

Best of luck Dazz. We're all rooting for you mate!

 

[kingchevy]

Mate this is were the fun part starts hanging by a thread not knowing wich way its going to go bring it on. Nothing like the excitement of a big deal damn I wish I was at you're point in life...

 

[LynnH]

Oh well, that won't stop this little black duck. Fortunately, that decision resides with me - not them.

Good luck, Dazz - am sure that 'this little black duck' will triumph! Please keep us all updated with any developments!

Cheers
LynnH