Where to access funds for an investment type project

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Hi,

I currently have two properties, one primary family home and a second rented investment property. Both have mortgages and not in negative equity (APROX €200K Debt 50/50 ). I have another old commercial property in my name that I want to convert into one/two rental residential properties. It will take +€300k to complete works. Could I avail of a loan rather then a mortgage, realistically I would only have €15k in funds, so I will not be near the required criteria and the LTV could be poor. Is there a lender out there who I could approach ?
 
What security would you be able to provide to the lender, if any?
 
So a legal charge on the property?

I presume there is already a charge from the mortgage - does it say anything in the mortgage agreement about subsequent charges?

Sounds like you would need legal advice on this.

So you want a loan of € 275-285k and you are proposing a guarantee of € 100k?

Can't see many takers there
 
Mitchell1 said:
I have another old commercial property in my name that I want to convert into one/two rental residential properties. It will take +€300k to complete works.
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Forget about the other property - there's already a mortgage on it, and it's not 2007 any more.
What's the situation with the property that you want to renovate? Is there any debt secured on it? What's it worth, and how much will it be worth once renovated?
 
There is a pretty good reason why they would not give you a loan.

Property development is a risky business.

If you want to develop the third property, then you should sell the second property to provide you with the funds.

Brendan
 
RedOnion said:
Forget about the other property - there's already a mortgage on it, and it's not 2007 any more.
What's the situation with the property that you want to renovate? Is there any debt secured on it? What's it worth, and how much will it be worth once renovated?
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The property is debth free and worth €40k. When renevation is complete i would estimate €250k min.
 
Mitchell1 said:
The property is debth free and worth €40k. When renevation is complete i would estimate €250k min.
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Banks are doing you a favour not providing loans for that type of project!!

Value 40k
Cost to renovate 300k
finished Value 250k....

Can you see anything wrong with that?
 
The workings are off, because im not concerned about value when finished, i intend to rent. Forgive the naivety. Realistically if i converted into two units it would be around €400k value when finished. With a gross of return of €60 k, would a bank consider me, or when can i get funded. ?
 
Mitchell1 said:
The workings are off, because im not concerned about value when finished, i intend to rent. Forgive the naivety. Realistically if i converted into two units it would be around €400k value when finished. With a gross of return of €60 k, would a bank consider me, or when can i get funded. ?
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You may not be but a lender will. They want to ensure that if you default, they can get their money back.

To be honest, it doesn't sound as if you have the resources or the equity in any property to make it an attractive proposition to any lender. If there is a non traditional lender out there that would give you the money, they would charge you a very high rate that would make it extremely risky for you.
 
Mitchell1 said:
With a gross of return of €60 k, would a bank consider me
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Absolutely not. That's a 15% rental yield, so it's either a pipe dream or in an extremely high risk area.

You're looking firstly for development finance. Unless you've a track record in the building trade, forget about it. There are specialist lenders, but fees and interest rates will put the interest rate over 10%. There's no guarantee you'd be able to convert to an investment mortgage afterwards.

The 15k you already have will be eaten up in architect s c engineer fees applying for planning permission, building standards and costing the project. So you'll have no money, and not even be started on it.

Unless you know someone that'll go into partnership with you in it, I can't see how you'll get off the ground.
 
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Mitchell1 said:
Realistically if i converted into two units it would be around €400k value when finished.
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You'd need planning to do that, unless you have it in place no lender could consider basing a valuation on that basis.
 
Peanuts said:
I don't think the €60k represents rental yield. I took it as the potential profit (€400k -€340k).
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Ah, makes sense. The 60k would disappear with professional fees and interest.

But it looks like it's all made up numbers anyhow from the look of it!
 
Here's a previous thread on the topic, and the post by @MrEarl covers it very well.

What kind of interest rates would a bank charge a property developer ?

Hi, I'm looking for a ballpark idea of what kind of interest rate a typical bank would charge now-adays to a small property developer. eg. Buy a single derelict property in Dublin city centre completely renovated it and flip it. With the way the property prices are at the moment it seems like...
www.askaboutmoney.com
 
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