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Business purchase - financing options
Options

property.advert
Posts: 4,086 Forumite


I'm looking over a business which is available leasehold for £125k with a £20k a year lease. It is also available freehold for £340k. Part of the freehold is a 2 bed flat currently on an AST at circa £5k per annum.
I can purchase the leasehold part without finance and am not really interested in the freehold aspect but I think it makes sense financially. Backing out a value for the flat at a 5% yield gives a value of £100k meaning the freehold retail outlet is valued at £115k.
I am wondering whether I could split the property and put together some financing. My initial feeling would be to take a BTL mortgage on the property, pay the £125k in cash and try and borrow some or all of the £115k for the freehold of the retail unit, say over 5/7 years.
I haven't looked at negotiating the figures as yet but want to ask whether the concept is viable and if not, where it fails.
I can purchase the leasehold part without finance and am not really interested in the freehold aspect but I think it makes sense financially. Backing out a value for the flat at a 5% yield gives a value of £100k meaning the freehold retail outlet is valued at £115k.
I am wondering whether I could split the property and put together some financing. My initial feeling would be to take a BTL mortgage on the property, pay the £125k in cash and try and borrow some or all of the £115k for the freehold of the retail unit, say over 5/7 years.
I haven't looked at negotiating the figures as yet but want to ask whether the concept is viable and if not, where it fails.
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Comments
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Seems the residential could be incorporated into a commercial mortgage with the retail unit at a maximum of 80% LTV. On those numbers the property would be valued at £225k and one may be able to obtain a mortgage of £180k.0
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I’d go down the FH route, but it also depends on many other factors.
One of these will be the profit that a company inside the unit (assuming that this is part of the package) is making. I know that it’s virtually impossible to get mortgages for start-ups, although it can be done.
With a business, you’ll be looking at 3-4x profit maximum, which again will depend on various criteria, including your own property. The best thing would be to either give us more info as to figures, or sit down with a bank and see what they can do.
CK💙💛 💔0
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