Holiday Home Investments #4 Lending Availability

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Video Transcription: 

Hi guys. So, Holiday Home Investments and we look at the lending in this video. So really exciting because obviously with hotels, you know, you can't get lending because effectively you're buying a room that's part of a hotel and they can't, you know, a bank can't repossess it. But with a furnished holiday let, or with a holiday let investment, you can actually…you're getting the land. You're getting, you know, the plot of land, whatever, leasehold. So, it is more mortgageable.

Now, how easy is it mortgageable? It's not like buy-to-let. So it's not as easy as that. So don't think for a second that you can just go to any buy-to-let lender. There are a number of lenders, okay. I'm not going to list them here, you know, but there are a number of lenders that will actually do that. And look, the…what I would say is the most important thing is to realize that this is a business. So what you're going to get is not buy-to-let, but you're going to get personal…I'm sorry, personal…you're going to get commercial terms. In other words, a commercial mortgage is available. Okay. And so a whole range of lenders, you know, that will do that.

Most of your high street lenders, you know, they will lend on these. They will have products on these. And if they don't, then there are more specialist lenders that will do. So there's a whole range of options for you. Excuse me. Right now they're not available to international lenders…international investors. So we will…we are looking for a product and we are looking to, you know, put one together. I'm actually talking with a developer and the owner of these holiday parks to see if we can get some vendor financing involved because if we can do that it makes the process so much easier, and all of our international clients, you guys, can get involved, too, which is, you know, great, because it is a fantastic income proposition. You know, you're talking sort of, you know, 12% gross, you know, 7% net, you know that you're looking at getting depending on how it will go. And it'll change because of things happening and that.

But the reality is you're looking at quite a high yield, and in other words is a set and forget investment. So what you're looking at is a business loan. Okay. And, you know, up to 70%, but I would say work on 60%, all right, because I'm always a bit, you know. But look, you know, at the end of the day, you can cross-collateralize. If you've got property here, you can borrow from that and use that to buy the next one or use that as the equity. The deposit for the next one. So there's a whole range of options with that, and with the process of the application. Remember because this is a business, they're lending to the business not to you individually. But as a director or shareholder of that business, okay, they will also look at you. So they'll look at the business proposition. Okay.

They'll look at the asset in terms of the property. Okay. And then they'll look at the proposition in terms of meeting their criteria and things like that. And assuming that that works, then the mortgage will go ahead. And look, you know, for me, this is not, you know, it's not a problem. But as all mortgages, you know, there is going to be an application form. We suggest you get a broker. And the broker is going to charge you about 1%, which, you know, at the end of the day there's a lot of work to be done these days.

You know, many years ago I was a mortgage broker and back then, you know, mortgage applications were easy. You know you did your credit check. You had your mortgage application. It was probably about five pages long, you know, and maybe you got some accounts, or some payslips or something, and that's pretty much it. Now the hoops they have to jump through, you know, and if you're going to do it yourself, a lot of …a lot of the lending, they won't let you do it yourself. You have to go through a broker. So some of the lenders will only accept stuff through brokers because otherwise, you know, there's so much detail without going to…that's not just this. That's any mortgage now, even the buy-to-let mortgages.

So, you know, you're looking at sort of 1%. You're probably looking at another 1%, 2% arrangement fee. That's what the lender would charge. Will they add that to the mortgage? Yeah, some will, some won't. But in most cases, you'll be able to add that to the mortgage, so you don't actually have to come up with that money. The brokerage fee you will have to. Okay. You know, evaluations, too, remember this is a commercial mortgage, so you're going to get a commercial evaluation.

So, you know, it's not going to be a 300-buck valuation. You're probably going to look at, you know, anywhere from $800 to $1500 depending on what the value of the property is and all that sort of stuff. But the reality is, you know, you're looking, I would say, just put $500, $1500 in the cash flow and be done with it, and it might come in a bit shorter than that. So look, you know, lending-wise it is there. Now people will tell you, “All right, you can't lend on those.” You can. You can. I did a quick research, you know, and I found five different lenders. Lenders I never even heard of that were specialists Holiday Home lets.

They have a specialist product for Holiday, you know, furnished holiday lets. Okay. And, you know, we're just going to treat it like a business. Like any other business, you build that into the cash flow, which we'll talk about later. You know, fantastic. You know, good, good thing, so you can leverage this. Awesome. Okay guys, have a great day. Live with passion and we'll see you in the next video.

About the author


Brett has over 20 years experience in all facets of property, he owns various companies centred around property and is the driving force behind the education and training at Ezytrac. His companies have sold over £850 million in UK and London property and he manages over 1200 properties through his estate agency chain. Today he shares his time between UK, Australia and Singapore. He is married to Arlene and together they have 4 kids. Brett holds both the Level 3 Property Mark Qualifications for Property Sales and Property Lettings and Management.