What kind of loan for boarding house?

[Stackhat14]

Looking at purchasing a boarding house for approx 1M.
The boarding house is in a regional CBD location walking distance to the uni and shops etc. I am talking to the uni about them leasing it off us for student accom. If we can get finance rough numbers look like it will be at least $300 pw positively geared.
With only $150k deposit available and joint income of $70k this will be a tough one to get finance for. Can anyone suggest recommendations?
We could get the approx $300k IF we sold our PPR however I would like to avoid that if possible.
Any advice would be much appreciated

 

[Perp]

Generally maximum 65% LVR on this type of property, so you're going to really struggle to finance it with only $150K deposit, alas. If it could theoretically be occupied as a residential property, and is zoned appropriately etc., you may find a lender who'd go higher, but that's not likely.

It also strikes me that those numbers don't sound great. Even if you got $650K finance, you'd have to put in $350K of your own cash for a positive cashflow of only $15K pa, which is barely better than a cash deposit. I own one of these properties in the CBD and because of its prime location, the cashflow's not as good as it should be in a regional centre, but even it is yielding around 10% gross / 6.5% net and would do better than that if valued at $1M. $65K net income less $33K finance costs (5%-ish on $650K) = $32K cashflow positive.

In a regional CBD - depending on how "regional" and how "CBD" - I'd be looking for more like 12-15% gross / 8-10% net. (Expenses on these properties typically run around 1/3 of gross.) It sounds like your property is running somewhere well below 10% gross, which is way too low.

 

[Mick C]

1/50 boarding houses deals are done as Commercial.
LVR: 60-70% LVR, higher if your willing to give Standard resi to the new comm bank as well ( up to 80% LVR possible)
Rate: Comm rate.

 

[Mush]

If you were to purchase a suitable property and renovate/extend to create a boarding house,would you be able to borrow 70 to 80% of the gross realisation value?