Trying to expand portfolio

Hi Guys,

Hopefully some fresh eyes on this will result in a way forward.

The scenario is this:

My brothers and i own 2 properties in a family trust. One is a house in inner melbourne and the other is a house in our home town in country victoria.

The Melb house has just been valued by westpac at $750k and the other place is worth around $170k. Both places have DA's in place for 9 and 2 units respectively however these DA's were not taken into account by the bank. We have been offered $950k for the melb house so we know the bank val is a bit lean. We have one loan over both places for $700k.

At this stage we don't want to develop the units but gradually keep accumulating until we are in a better position to go back and start developing.

Now all we want to do is buy another place but westpac really aren't helping matters at all never returning my calls and basically trying to halt our progress.

Does anyone have any suggestions, maybe a different bank? I'm getting really frustrated and would love to move forward but i keep hitting a brick wall.

Thanks for your help

Morty
 
Hi Morty

Seems to be the story of every client i speak to these days.

Lenders have their own serviceability criteria and also have a monetary comfort level where they are happy to go upto.

Certainly dont think you are quite at that level yet but wouldn't hurt exploring alternative lenders.
 
Thanks for the reply Richard.

I guess it's a common scenario these days but i have heard that westpac in particular have pretty much "shut up shop" so to speak in a lot of cases. Would it be something you could look at or could you recommend someone who i could speak to?

Thanks

Morty
 
Hi Morty,

You will find that the valuer valued your Melbourne place as a single residential dwelling. This is how valuers are instructed to value the properties by the bank.

Development potential is IGNORED in most mortgage valuations. Banks lend against what is there the land and dwellings in place, not the potential.

Yes it is frustrating but look at it from the lenders point of view... lending on potential (while it has a DA it is still just potential the properties are not built - DA's do expire, there is no guarantee the townhouse market will stay where it is) is dangerous.

If the bank wanted the property valued as a development site it would have been a more complex and expensive valuation and chances are they would have loaned you a lot less, if anything at all as they probably would have treated you as a developer.

In this case it would appear that the only way to really unlock that added value of the DA is to sell the property, or develop it.

good luck,

RightValue
 
Hi Guys,

Hopefully some fresh eyes on this will result in a way forward.

The scenario is this:

My brothers and i own 2 properties in a family trust. One is a house in inner melbourne and the other is a house in our home town in country victoria.

The Melb house has just been valued by westpac at $750k and the other place is worth around $170k. Both places have DA's in place for 9 and 2 units respectively however these DA's were not taken into account by the bank. We have been offered $950k for the melb house so we know the bank val is a bit lean. We have one loan over both places for $700k.

At this stage we don't want to develop the units but gradually keep accumulating until we are in a better position to go back and start developing.

Now all we want to do is buy another place but westpac really aren't helping matters at all never returning my calls and basically trying to halt our progress.

Does anyone have any suggestions, maybe a different bank? I'm getting really frustrated and would love to move forward but i keep hitting a brick wall.

Thanks for your help

Morty

Hey Morty,

Why don't you team up with a developer and complete the project where the developer gets certain share of the profits?

Cheers,
Oracle.
 
Top