It's complicated....

[Prop_Perspectiv]

Hubby and I are in a partnership - landscaping (primarily artificial turf).

I am the one who does the property stuff.

Quick run down as it is all getting very complicated and making me nervous about setting it up right in the beginning:

PPOR - loan with CBA, 2 LOC already to fund entry into investing.

Multiple equipment loans for the business with 2 different banks (not CBA).

Loan for IP's (2 with a 3rd awaiting approval) with ANZ.

The business is growing and we need a warehouse. We have a business banker with the CBA and a mortgage broker for the investing stuff. The business banker wants to put all our business loans (including the new loan for the warehouse) into a business LOC based on the equity in our PPOR.

My question is - what affect is this going to have on our investing? I'm worried about having the business banker go for a LOC at the same time as the broker is applying for another IP loan.

It's all getting ridiculous I wanted to keep the business separate from the investing but it seems a bit impossible. Thoughts?

 

[Aaron_C]

Keep it separate. The business banker wants you to give them residential security and charge you commercial rates for it. No thanks.

 

[Brady]

CBA Business Bankers always do this, very frustrating.

They all love to x-coll up all your business with your PPOR.


Personally if its possible I would be keeping it seperate.

 

[Prop_Perspectiv]

I hate going through bankers but my broker doesn't do business stuff. I have an equipment finance guy (hence the different banks for all the business stuff) but he can't do the warehouse!

Also, if we roll all the loans into a business LOC will could potentially save $1000/m on repayments (which we would use to pay the debt down quicker).

On this, are the equipment loans considered "good debt"? We are concentrating all monies on paying off our PPOR but should we consider trying to pay off the business loans first?

 

[Aaron_C]

Doesn't your broker do loans for commercial properties? Just increase your residential LOC against your house (if needed) and get finance to purchase the new warehouse with a separate loan with another lender.

 

[Brady]

Doesn't your broker do loans for commercial properties? Just increase your residential LOC against your house (if needed) and get finance to purchase the new warehouse with a separate loan with another lender.

This is also what I would do if it was me.

LOC for the shortfall amount and max against the CIP, make sure its a seperate LOC

 

[Prop_Perspectiv]

It is a warehouse to put on our property (we have 30acres).

Saying that we could increase our resi LOC and buy the warehouse with that. Worried about the impact on serviceabilty though - with the loans rolled into a business LOC our repayments would be lower even with the extra for the warehouse meaning serviceability won't be impacted.

Just thinking out loud....

 

[Prop_Perspectiv]

Also working on getting a commercial lease in place from one of the companies we subby to. This would impact the structure I think?

 

[Aaron_C]

Ok I am not sure what the solution would be based on the limited information at the moment but obviously funding construction of a warehouse does complicate it a bit. Not sure about servicing etc it's probably best to ask your broker about what he thinks can be done.

 

[Prop_Perspectiv]

Waiting on a call back now. Will let you know what he recommends (it's good having a check up service lol).

 

[Prop_Perspectiv]

Throwing some ideas around.

How about getting a resi LOC in our personal names, then renting the warehouse back to the business? That way if things go belly up business wise our house is still safe?

Also, wondering if I could do something similar with the equipment loans to access resi rates and drop the payments?

 

[Aaron_C]

Well for equipment I find it better to get direct finance against it because you want to maximise your leverage. For business accounting matters like renting it back to yourself etc you would need to speak to an accountant for that.