Financing block of units

[Harris]

Hi,
I am investigating blocks of units at the moment, however almost all with half decent yields aren't strata titled. Would the bank consider a non-strata block of units as commercial property and only provide close to 65% finance instead of the normally 80-90% on strata title block..?
What if the returns are decent enough in a fairly large town (Pop- 25,000 plus) and the prop is cash flow neutral/ positive..?

Any mortgage brokers who have had any clients being able to borrow a non-strata titled block with an LVR of 80% +..?

Harris

 

[Rolf Latham]

Hiya Harris

The days of 80 % lends at resi rates for more than 4 units on one title are pretty much over. For up to 4 on one title St George will still do 80 % in many areas, and at resi rates

I say pretty much because there will always be an exception.

70 % LVR at resi rate should be achievable. You dont have to go to the silly extents that for example WBC would put you through, 65 % LCR, 15 year max P&I and rates in the 7s

Ta

rolf

 

[Kristine..]

Harris

How many tenements are in the development?

Class 1 or Class 2?

How old, what type of construction? State of repair?

In Melbourne metropolitan area?

Any possibility of strata titling the block - would they meet fire regulations? Why haven't they been done before now?

I got a quote for a customer recently to 90% LVR, so it really depends on the individual circumstances.

Cheers

Kristine

 

[Rolf Latham]

Hi Kristine

Wow Kristine, thats some funding source that doesnt mind risk. A 90 % lend on resi terms on a block of units in a town for 20 to 25 k people.

ta

rolf

 

[Harris]

Hi Kristine,

Looking at 2 developments.. one has 8 units (6x2 BR, 2x3BR) and the other one has 10 units (4x1BR, 4x2BR, 2x3BR).

Both buildings are in excellent state - repair wise (one being recently renovated)

NOt in Melbourne metro - (in a large coastal city in QLD)

Brick construction - first one built circa 1988 second one 1997

Dont know about Class 1 or Class 2. .. will find out on monday. The owner (as told by real estate agent) hasn't thought about strata titling yet and wont be too keen on doing that, however will help the new owner towards it.

I will also investigate about fire regulations.

What would the banks think if the sale is subject to strata titling the block..? Can strata titling be achieved within 90 days, generally speaking..?


Thanks,
Harris

 

[geoffw]

My block only got a 70% LVR because the LMI insurer regarded it as commercial, even though the bank regarded it as residential (and lending terms reflected this).

Strata titles, as well as potentially costing extra in terms of potential fire improvements, may also cost more for rates- see your local council.

And if the market is for investors, there's also the possibility that a single title carries a premium.

 

[mitchmakhan]

Hey people,

Just bought a block myself and I could only get an 80/20 deal in a likewise town. But they have to be under 4 units for this LVR.
Why dont you ask the vendor to leave some money in the deal? as these type of units are hard to move, and to only certain people (hence the lower lending LVR) I am sure the vendor would look at a deal...particularly if you balloon hiim out in 2 to 5 years...

Cheers Mitch

 

[Kristine..]

Hi

Just for the record - I've checked back to my emails and the deal was for a four unit on one security title property in a town of 40,000.

90% with LMI

80% without LMI

Major national lender, residential rates, 30 years.

The customer did not proceed but my BDM used to play football in that town and was more than happy to take the deal!

Cheers

Kristine

Meadowgate Mortgages
Member MIAA

The profile says it all!

 

[Harris]

Had CBA guy over last night to go through another application.... Apparently CBA will now provide up to 95% finance (LVR) on an investment prop that we discussed (house on the beach in a coastal QLD city) without cross collateralisation - though I am going 80% on it and will also go 95% with LMI on group title for up to 3 units. Commercial rates / criteria apply over 3 units on single title.

Even if the contract is subject to strata titling at the time of settlement, CBA wont go over 70% LVR unless the contract outlines seperate titles on each unit at the time of signing the contract.

Harris

 

[Rolf Latham]

Hiya Kristine

Good deal that, ya gotta wonder why the buyer didnt go ahead !

ta

rolf

 

[Qld's007]

You might like to try the Rock Building Society.

I have financed about 4 clients into blocks of units over the last 3 months and purchased 2 myself.

Standard IP rates apply.

 

[Rolf Latham]

Hiya Richard

The Rock does all its business using securitised money, the LMI people arent happy with more than 4 on one title pretty much regardless of the LVR.

At 4 units or less I have heard they can scrape them through, at that level STG is generally a better bet because there arent the commensurate deferred establishment charges to cover the LMI costs, since STG usually takes these to 80 % LVR sans lmi

ta
rolf

 

[Harris]

Did those blocks comprise of more than 4 units....? Do you mean up to 85-90% LVR on a large block when you say standard IP rates apply or are you referring to interest rates..?

Can you PM me your details..?

Thanks,

You might like to try the Rock Building Society.

I have financed about 4 clients into blocks of units over the last 3 months and purchased 2 myself.

Standard IP rates apply.