Ain't it strange how lenders have, what they tell us are, ‘set in stone credit rules’? When we run new deals by them, using local contacts as a sounding board and conduit to reach a more case-local manager, the local manager says: “Sorry but trading businesses are our current flavour of preferred business, just not doing investment property right now, or in this particular case, a war chest facility.”
My clients are a middle aged couple whose only income is derived from their unencumbered mixed commercial portfolio; a site in Handsworth, Birmingham, which includes a row of shops sat below two HMOs. Behind the shops is a large area which contains several industrial units let to the likes of car service centres, a window manufacturer, a taxi firm, and other storage units. And then the largest area being let to a builder’s yard; so all told an extremely mixed use-age. The net profit on the site sees my clients taking over £50,000 out of it per annum in income – which has been steady for several years – great quality accounts, bank statements, and personal standing, seeing them with unencumbered assets of approximately £3,000,000. So what are these clients looking for? Well it's simple; they want to grow their portfolio by having a cash facility to hand to dip into, and snap up, investment property bargains as they find them – either at auction or by keeping their nose to the ground and sniffing out the good buys currently in abundance. After all, they have offered the unencumbered commercial holding as security, they don't want initial draw-down, just the knowledge that they can offer on property and the funds will be released, easy deal... or so I thought. Once again the High Street completely turned their noses up at it. My clients were dumbstruck, nay they were astounded, and in fairness so was I. Two weeks I'd been at this case, and was considering an alternative option of placing some revolving bridging finance on the commercial site, then as new assets are acquired, place commercial funding on the asset to exit the bridge. And then an unexpected opportunity presented itself. Whilst speaking to Clydesdale bank, and Handelsbanken, both local to the Handsworth area, I was offered the same advice by both, “this is definitely a deal for Lloyds”, they said. But Lloyds have declined it out of hand, I exclaimed to them! But they weren't to be deterred, and the guy from Clydesdale gave me a contact in Lloyds. I called him and covered the basics of the deal and he was extremely happy to take the case, and if it stacked up as I said, then he'd offer a “War chest facility” – the amount to be decided after the valuation of the site, and taking into account the excess rental income after the clients personal needs are taken account of. So job's a good ’un and it's now going through the process. But my local Lloyds manager was sure it wouldn't fit current credit, so I suppose the moral to my story is: Get the local manager to direct you to the case-local manager and run it by them, even if in the area it's outside criteria, you just never know which lender will lend in which area on what deals. Bob Havenhand [email protected]
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