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Investment Mortgage problems

  • 04-03-2019 11:05pm
    #1
    Registered Users Posts: 5 ✭✭✭ kccon


    I have a property in a prime tourist location which is mortgage free which I am converting into five star short term accommodation. To bring the property to the required standard it needs 300k to complete. The current market value is 300k and when complete will be valued at 900k plus. When it is complete it will generate an income of 120k plus p/a.

    I am having a lot of difficulties in getting the funds to complete it, tried BOI and they will only value it on long term rental of 2k p/m and will only allow me 200k of which I will need to show 20k in savings plus 10-15k for legals (which I don't have).
    I have also tried ICS and Financial Ireland but they won't look at it as its a structural mortgage.
    There is Financial bringing who will look at it if the likes of ICS will lend the funds once the property is completed but there rates are very high, they want 4% in fees plus 12.5k to cover legals with a rate of 8% on top of this.

    On paper everything adds up with the property but just finding it extremely difficult to get this over the line. I do tend to ask myself is there actually money in the country as I know quite a few people finding it really difficult to get backing/mortgages.


Comments

  • Registered Users Posts: 1,332 ✭✭✭ Rackstar


    Bank is being smart. Government have been threatening to interfere with the air bnb model.

    €2300 a week is a lot. Will it be full every week?

    How 300k renovation increase its value by 600k?


  • Registered Users Posts: 5 ✭✭✭ kccon


    Rackstar wrote: »
    Bank is being smart. Government have been threatening to interfere with the air bnb model.

    €2300 a week is a lot. Will it be full every week?

    How 300k renovation increase its value by 600k?

    It is going to be classed as fivestar luxury living which there is a big shortage of in the area as its a big tourist town. It should fill at least 200 nights per year.
    I am aware of the change of laws with short term accommodation Btw.

    There is not any housing crisis in the area and I already have planning approved for the property.

    There is already a house on the site which was two apartments which I have gutted to convert into a single dwelling in 2016 but the banks did not come through for us on this occasion either after they pre-approved before I gutted the property.

    Now, even though there is a house on the site but works have commenced and it's not habitable it is only been valued as a site. If it was habitable and at the state it was when I bought it, it would be valued at 500k plus.


  • Moderators, Business & Finance Moderators Posts: 7,821 Mod ✭✭✭✭ Jim2007


    kccon wrote: »
    It is going to be classed as fivestar luxury living which there is a big shortage of in the area as its a big tourist town. It should fill at least 200 nights per year.
    I am aware of the change of laws with short term accommodation Btw.

    There is not any housing crisis in the area and I already have planning approved for the property.

    There is already a house on the site which was two apartments which I have gutted to convert into a single dwelling in 2016 but the banks did not come through for us on this occasion either after they pre-approved before I gutted the property.

    Now, even though there is a house on the site but works have commenced and it's not habitable it is only been valued as a site. If it was habitable and at the state it was when I bought it, it would be valued at 500k plus.

    So a special purpose building, in a location where there seems to be no others is going to be value at 900k on what basis? Opinion? Your say so?

    And who is going to give it this five star classification? The tourist board?

    It would seem that there is very few actual facts to hook your dream to, never mind convince someone to finance it. Banks to no have an endless supply of money and there is a high demand for mortgages right now, which means they have plenty of low risk lending options rather than taking a gamble on something like this.


  • Closed Accounts Posts: 22,676 ✭✭✭✭ beauf


    Are there similar but completed properties nearby that would give some context to your valuation.


  • Registered Users Posts: 5 ✭✭✭ kccon


    beauf wrote: »
    Are there similar but completed properties nearby that would give some context to your valuation.

    Yes, there is two other properties in the area, but my location is that bit better and as of the last week in January one of there properties was booked out for 114 nights so far for the year, taking in 84k with the second property booked for 98 nights.

    Between my accountant, auctioneer and other sources we have done our homework on this and these valuations are what I have mentioned.

    Because of it not been habitable and complete I am finding it difficult to source the funding without paying through the roof with fees and rates.

    I was slow to come onto boards.ie in regards to this, but I said I'd give it a go in the hope some of the good people on here might have some ideas. Just got to trust me with my information, all I'm asking if anyone on here might know of a way around this.

    I have also thought about private investors but I am slow to give up equity as I own the property and I have a very good business for when I get it completed but I might not have a choice.


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  • Registered Users Posts: 5 ✭✭✭ kccon


    Jim2007 wrote: »
    So a special purpose building, in a location where there seems to be no others is going to be value at 900k on what basis? Opinion? Your say so?

    And who is going to give it this five star classification? The tourist board?

    It would seem that there is very few actual facts to hook your dream to, never mind convince someone to finance it. Banks to no have an endless supply of money and there is a high demand for mortgages right now, which means they have plenty of low risk lending options rather than taking a gamble on something like this.

    It's not a dream Btw, it's a business I'm setting up.


  • Registered Users Posts: 3,601 ✭✭✭ Fol20


    Try pepper/finance ireland to see what they can do. They do both residential and commercial


  • Registered Users Posts: 5 ✭✭✭ kccon


    Fol20 wrote: »
    Try pepper/finance ireland to see what they can do. They do both residential and commercial

    Cheers, but hitting a brick wall with them as they won't do a structural mortgage, same with ICS.


  • Registered Users Posts: 3,601 ✭✭✭ Fol20


    kccon wrote: »
    Cheers, but hitting a brick wall with them as they won't do a structural mortgage, same with ICS.

    Sorry i missed that you said that in your original comment.

    They do allow refi up to 80pc . if you have other assets you can use you could refi them and once this major work is completed. You could go back to them to remortgage the intended property to pump the money back into your other assets. Just make sure there is no clawback.

    Have you tried talking to a decent broker. The one i used also had ea in the company so a decent broker might be able to push and rephrase your agenda better. Especially if they have direct access to people higher up in the lending food chain.


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