Investing in real estate can be a lucrative venture, but it often comes with its fair share of challenges especially when you aim to expand commercial property portfolio.
For one client of mine in Auckland, their desire to purchase a commercial property with a retail shop on the ground floor and a boarding house above seemed like an ideal opportunity for growth.
However, they faced hurdles when it came to obtaining commercial financing from traditional banks.
This was due to income verification and existing property portfolio limitations.
The Challenges in Traditional Financing
The client, who already owned six properties in Auckland had ample equity available; however, proving their income to meet the main bank criteria became a significant obstacle.
Additionally, all their properties were held and linked with one bank.
This bank was unwilling to provide any further lending or release property.
Frustrated by the limitations imposed by traditional lenders, the client sought alternative solutions and approached Sunil from Mortgages by Sunil, who helped them secure the funding they needed to establish their investment goals through a non-bank lender.
My name is Sunil, and I am known as a trusted mortgage advisor from Mortgages By Sunil.
I work with most banks, but also have an in depth knowledge of the non-bank lenders which can often be more flexible in their lending.
Trading as an adviser with Mortgage Managers.
When faced with this client’s predicament, I assessed and worked diligently to find a viable financing solution that aligned with their objectives.
It’s About Getting Results That Work!
Despite the challenges, I was able to secure lending for the client’s commercial property.
The client was thrilled with the finance offered as they recognized the potential of the property, especially considering the favorable terms they were offered – a competitive interest rate for commercial property lending of 9.75% on an interest-only basis for the first two years.
The client planned to renovate the boarding house upstairs to enhance its appeal and attract tenants, thereby ensuring optimal returns on their investment. By focusing on improving the property’s specifications and amenities, they aimed to create a desirable living space that would command higher rental income.
Our non-bank lender could see the clients vision, whereas the bank was focused on the negatives and the criteria that they invented.
The two-year interest-only period allowed the client ample time to execute their renovation plans and establish a steady income stream from the boarding house.
Once the property begins generating the desired returns, the client intends to sell some of their underperforming properties within their existing portfolio. This strategic move would free up capital and enable them to further expand their real estate holdings or explore alternative investment avenues.
My Clients Summary
Despite facing obstacles in securing financing through traditional means (with banks) the client’s determination and partnership with myself (Sunil from Mortgages By Sunil) proved invaluable.
The suggested lender provided the necessary flexibility and support to overcome income verification challenges and limitations imposed by existing banking relationships and with the planned renovations the client is well-positioned to maximize returns on their investment.
By strategically selling underperforming properties, the client can further optimise and expand commercial property portfolio.
