Trying to finance 95% commercial.

[HandyAndy888]

Hello,

I have been looking at starting to include commercial property to augment my growing residential portfolio. The problem is, my current broker is unable to source a loan with the equity we have in our IPs. Is there a lender/bank/whoever, who can loan 95% (with "mortgage insurance" for example) for commercial? The best I have been offered is around 20% of my own cash, which I just do not have at the moment.

Overall, I am after roughly $200,000....

Your help, as always, appreciated...

 

[Ridin-High]

Hi Handy,

no you won't get a 95% loan with commercial.

How much equity you got to play with.

I presume the 80% lend you are talking about you would be paying a higher then norm I/R and trade some terms.

I'm in the same position, 2 IP's about 35k equity and 10k cash... probably need a min 100k deposit to get into anything here.

 

[grossreal]

hi HandyAndy888
simple answer is no
comm lenders are at about 60% now of val and they won't go any higher.
I have a 70% but is a real push and even thne its a can we do this and that to get it there
as for tipping in resi very difficult
I have got a way that we are still doing it but it won't get to 95% even with vendor finance.
I don't think you will get to 95% in this market
if you do you have a lender that not been here long or you are paying 30% interest rates and even then they won't go as far as I know over 90%
hope you well.
and don't to hard on the broker its not he won't
its the lenders won't.whats the numbers on the equity and what the numbers on the loan and let me have a stab if you want post don't pm me

 

[Peter_Tersteeg]

95% only barely existing for residential these days and they're looking for reasons to reject them.

70% commercial is possible, but not easy, 65% is fairly acheiveable.

 

[Kristine..]

Hi HandyAndy

There are all sorts of ways to structure deals, the issue with buying is a mixture of money, equity, security, lending policy etc etc

Is there any particular reason why you want to buy commercial ‘now’? Do you think that the commercial market is down and that it will rebound significantly over, say, the next three years such that it is worth putting a significant number of eggs into that particular basket?

Would your interests be better served by buying another residential property now, and buying commercial in three years?

You mention ‘portfolio’, meaning plural investment properties. What other collateral would you have?

Each deal has it’s own strengths and weaknesses. If you have a generic idea to buy ‘commercial property’ then that is just an idea. If you have a specific deal which you think is really worth the effort there is almost always someone willing to fund that deal – at a cost.

However, many deals, under the microscope of analysis, are just ordinary deals and not worth more than ordinary risk. What category is your deal in?

Cheers
Kristine

 

[HandyAndy888]

First of all, thank you for your replies, I really appreciate you spending the time.

This particular property is a combination shops/unit, in a location that has very promising long term potential (30+ years, easy hold). I know that as soon as the word "shop" enters the equation, lenders are just not willing, whereas my main interest is the unit, with the shops as a bonus.

As far as the deal goes, I believe it's under valued. It needs work, I can do it, and then would be cf+ if the amount is right. It's not what you would call a super deal, but nonetheless, I see potential....

 

[Peter_Tersteeg]

You'd probably have trouble even getting the unit at 95% even if it's on a separate title. It's most likely zoned 'mixed use'. A residential loan is possible at 80%.

ANZ are doing about 65% for commercial at the moment. Their argument is that over the last 6 months, many of their 65% loans became 75% loans as the market dropped. As a result they're getting close to the edge of their comfort zone.

Keep in mind that on average commercial property takes longer to buy, sell and lease. Values are often determined on return. If the business in the property has a problem, the value of the property can drop very quickly putting the lender into a position where they won't be able to recover their money. Hence even 75% loans are starting to be considered as risky these days.

 

[mja]

Couldn't Dazz get 106% finance for his commercial deals? I know that Dazz has all his properties crossed to the wazoo...

 

[grossreal]

hi
not sure about 106%
because anyone can get 1065 funding if you put up 212% of purchase price in equity
when trying up other equityies its not really 106% of purchase price.
in this market yes you do need to be ccreative but throwing 212% equity or alike is not the way to go
the funders want it taht way but its not going to happen
hense you will find taht alot of the commercial sections in alot of the banks are going west at the moment
for me if I was working in a commercial section of any bank(and I'm not) I would be very worried as they have to do some thing or at least be seen to be doing some thing
and alot are not
but getting back to the question.
usually any commercial in the deal and a lender will do it as commercial
why because its an easy flick
and the comm guy are usually higher up the tree then the resi guys
like the cops and detectives the comm guys will take it over if it has comm in it or even if its all resi but the number is over 4.

so the chance of getting stand aloan 95% lending I think you have more chances of reading time travel and going back about 3 years
its been 80% for about 2 years and alot now are at 55 to 60%
so 95 is just not there for me unless you throw other equities in
and if you are going to do that you need to work out what and how you do that also and thats whenb the fluid pen comes out
have fun

 

[Peter_Tersteeg]

Getting 106% can be done if you're willing to put up additional securities, negotiate vendor terms, etc. Lots of creative strategies can be put in place to made deals happen, especially with commercial.

Strictly speaking though, against a single commercial security, lenders won't go anywhere near 95%.

 

[Rolf Latham]

Hey no probs I can get you a 106 % comm lend




Deposit will be 116 % though

ta
rolf

 

[HandyAndy888]

Hey no probs I can get you a 106 % comm lend




Deposit will be 116 % though

ta
rolf

Geez, thats is so funny, I almost forgot to laugh. Hang on a sec, I did forget to laugh...very strange that.

 

[moyjos]

jsut bumping this up to see if you managed to fund your deal HandyAndy??

I am in a similar situation at present.
Looking for a commercial loan to fund a PPOB!! (New term Principal place of business )
We are looking at a smallish factory unit around the $250,000 mark. (looked at a few on the week end.) We figure if we have to pay rent we may as well be paying it to ourselves (and get some capital gain long term)

So the question is how to fund it? We do not have a 45% deposit.
We have maybe 30K available between cash and equity in our house.

I was thinking maybe get a personal loan to top up the deposit , but I cannot find a "borrowing power" calculator for comm loans.

Anyone care to help??

 

[sash]

Andy,

Forget it...it anin't going to happen unless you X-collateralise assuming that you have at least 20% of 200k!

I thought...you said in a previous poll that property was heading for a dip?

On resi stuff plenty of people doing 95% + LMI...if you are a good risk....though serviceability calculations are an issue because some lenders are using a 7.5-8% base rate to calculate this.

Hello,

I have been looking at starting to include commercial property to augment my growing residential portfolio. The problem is, my current broker is unable to source a loan with the equity we have in our IPs. Is there a lender/bank/whoever, who can loan 95% (with "mortgage insurance" for example) for commercial? The best I have been offered is around 20% of my own cash, which I just do not have at the moment.

Overall, I am after roughly $200,000....

Your help, as always, appreciated...

 

[Rolf Latham]

tough gig, snd even with crossing, if the deemed equity position isnt there its not there.

Cross coll doesnt magically more equity in 98 % of deals.

In some cases it mat help get something across the line

ta
rolf