Finance options for our buyers

[Mamaof3]

Hi Guys,

We've just finished building some student accommodation townhouses. These townhouses are only approved for student accommodation purposes in our DA so its not like anyone can buy it and live in it.

We were going to hold them as long term buy and holds but would now like to sell.

I know banks hate this type of thing so I'm brainstorming to get as many ideas/options as I can because I know a first home buyer coming in to buy one of them as an investment or even a student who's buying to live in it might be in for a rude shock when they discover they can't get a standard 80- 90% resi lend on it.

So I am wanting to collate as many ideas/options as I can for the buyers. I'm pretty sure most of the majors aren't going to be interested in this sort of thing down the resi path and even if they do, it'd be at such a low LVR..... and would like to avoid business lending as most first time buyers are not going to even consider entertaining that option I would imagine.

What residential loan options are available?
What LVR?
Any mortgage managers or non-conforming lenders that you know will not have a problem with this?

All advice would be much appreciated!!

 

[Rolf Latham]

Sit with CJay who can take you through the options in detail, but Id guess youd be stuck with a 60 to 70 % lend if the places cant be owner occ with a 90 day approx notice period

ta
rolf

 

[Corey Batt]

As you've already identified, student accom. is lender and LVR restrictive (but certainly there are a number of options available). 60% LVR is more likely than 70+, but depends really on the details of the security. If they're townhouses I'm guessing they're actually a bit higher on the sqm than the average student apartments?

 

[Mamaof3]

Yep, they range between 58-74m2.

We do have a head-lease in place over 10yrs so from a rental point of view, its a reliable source of income with no risk of vacancies etc.

But yes, i'd be wanting the buyer to be able to get something more like 80% LVR....buyers in general let alone first home buyers are often struggling to come up with the 20% deposit as it so if i can find something that can offer them 80% at a reasonable rate, i'd be stoked.

They look like your standard 2 bedroom 2 storey townhouse only with these, only enrolled students are allowed to occupy them..

 

[Aaron_C]

So why not offer a lender that does a no valuation policy at 80%?

 

[Mamaof3]

Wouldn't the fact that its a student accommodation become an issue when the buyer has to submit various bits of dicumentation such as a copy of the by laws and/or scheme description ( both docs refer to it being student accom) then automatically reduce the Lvr right down to the lower end of the scale?

 

[Rolf Latham]

So why not offer a lender that does a no valuation policy at 80%?

Its likely the 10 yr commercial style lease will be on title

Ta

Rolf

 

[Peter_Tersteeg]

We do have a head-lease in place over 10yrs so from a rental point of view, its a reliable source of income with no risk of vacancies etc.

This is the primary problem right here. From your point of view there's reliable income, from the lenders point of view there's a 10 year commitment and thus no flexibility.

If you can, get it done with a no valuation policy. There's a few lenders who may do this depending on the individual deal. Otherwise it will probably be viewed as commercial.

 

[Mamaof3]

There is an out with regards to the 10 yr lease though so if we or buyers needed to back out then it is possible

 

[Aaron_C]

Its likely the 10 yr commercial style lease will be on title

Ta

Rolf

Yes true. Will be tricky!

 

[Rolf Latham]

There is an out with regards to the 10 yr lease though so if we or buyers needed to back out then it is possible

Is there a special zoning to the property?

Ta

Rlf

 

[Mamaof3]

Standard residential zone that encourages medium density housing.... These townhouses are on approx 80m2 of land each

 

[Rolf Latham]

Standard residential zone that encourages medium density housing.... These townhouses are on approx 80m2 of land each

so if there is no impact on the zoning, then the DA approvals arent enforcable per se ?

ta
rolf

 

[Mamaof3]

Thats what our approvals are based on, for student accommodation purposes (hence some of the planning criteria were relaxed because of this) but as our Planning Consultant said, Council are highly unlikely to be able to enforce it. They are not going to send staff around to the homes to check that each resident is currently enrolled in a secondary/tertiary or other educational institution

 

[Mick C]

Since it's over 50 sq meters- then 70-75% LVR for student accommodation is possible with some credit unions...and 60-65% with the majors and medium size banks.

Regards
Michael

 

[Mamaof3]

75% is better than a 60-70LVR.
Thanks Michael.