First Big Purchase

Discussion in 'Property Investment - Other' started by jweg, 24th Jul, 2013.

  1. jweg

    jweg Investor

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    Hi all... current portfolio = approx. 1.4M mortgaged at around 70%.

    We are looking... possibly pipe-dreaming at a project somewhere between $2M - $3M.

    The basic numbers stack up -- but very worried about overpaying, and also worried about serviceability.

    Property is currently grossing around 200K per year - with potential to expand to maybe 350K. It would also become a full-time live-in management job.

    Does anyone have an excellent 'feasability' and/or 'service ability' excel sheet they can share?

    Also -- do I talk to a run of the mill lender? Will they help us with due diligence because we are an existing customer.
     
  2. Peter_Tersteeg

    Peter_Tersteeg Finance broker/strategist

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    You've said a few things that indicate that this is not a simple residential deal. I'd suggest you talk to a specialist commercial broker with regards to finance because a simple spreadsheet isn't going to give you accurate answers.
     
  3. Aaron_C

    Aaron_C Finance Broker

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    Is this a B&B/Motel purchase?
     
  4. jweg

    jweg Investor

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    Correct

    Agreed - quite likely need to speak with commercial broker and/or financial advisor.

    Its a lodge. 4 bed residence plus 4 x 18 room lodge.

    Financials look promising - but need to do some sort of feasibility study.
     
  5. Aaron_C

    Aaron_C Finance Broker

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    Oh I see. This requires a specialist spreadsheet which I've used before. Not too difficult...financing is hard due to the type of security and I suppose you are buying the leasehold and freehold?
     
  6. jweg

    jweg Investor

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    lease or free

    I assume it is freehold.

    The vendor is owner & operator.

    Is the spreadsheet freely available, or at a cost?
     
  7. Aaron_C

    Aaron_C Finance Broker

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    Yes so you are buying both the Freehold (the property itself) and the Leasehold (the business). You have to value each one separately as technically speaking a lender will only lend against the value of the Freehold as this is the one with a tangible asset.

    I think I have a spreadsheet somewhere PM me if you want and I can send it if I have it.
     
    jim1964 likes this.
  8. jweg

    jweg Investor

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    Anyone have thoughts on best ownership structure?

    I plan to pay myself a wage of 50K... which should hopefully leave an operating profit of around 170K per year --- the aim being to pay off the mortgage as quickly as possible.

    Any thoughts?
     
  9. james_w

    james_w Member

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    You will generally need around 40% of the cost for this type of investment

    30% deposit 10% for closing costs stamp duty legal fees accountant company setup etc