Commercial Property Loan in Kunda Park

Brokering a Commercial Loan for a Local Electrician in Kunda Park

How Loanright Financial Services Helped a Kunda Park Electrician Secure a Commercial Property Loan

Loanright Financial Services recently had the privilege of assisting a local electrician from Kunda Park who was looking to make a strategic move for his business—purchasing a commercial property. Like many small business owners, this electrician had been renting a property for years and paying a considerable sum in rent, but he saw an opportunity to invest in his own property rather than continue renting. This would not only provide his business with a stable operating base but also set him on a path to building a property portfolio and growing his wealth.

The Situation: Renting Versus Owning

For years, the electrician had been paying $55,000 annually in rent, which amounted to about $5,000 per month. This was a significant outgoing expense with little long-term benefit. As with many business owners, the realisation came that while renting provided flexibility, it did not offer any tangible returns.

The idea of purchasing a commercial property, however, presented a way for him to redirect his monthly payments from rent to property ownership. Instead of continuing to pay $5,000 a month for someone else’s property, he could invest that money into a property he would own. This would allow him to not only gain equity in the property but also use it as a stepping stone for future investments.

But as is often the case with small businesses, the challenge was how to make this leap financially, without straining the cash flow of the business.

The Challenge: Balancing Cash Flow and a Property Purchase

Purchasing a commercial property requires a significant upfront investment, particularly when many lenders typically offer only 65% to 70% of the property’s value in a loan. This means that the business owner must come up with the remaining 30% to 35% in cash or find another solution. For the Kunda Park electrician, paying that much upfront while maintaining business cash flow was a challenge.

He knew that making a big cash contribution towards the property could negatively impact the cash flow of his business, putting unnecessary strain on day-to-day operations. Like many business owners, he needed a way to fund the purchase without draining his available cash.

The Solution: Cross Collateralisation and Equity Utilisation

This is where Loanright Financial Services stepped in. Our team worked closely with the electrician to explore various financial strategies and lenders who could meet his unique needs. One of the most effective solutions we uncovered was using a method called cross collateralisation.

Cross collateralisation allows a borrower to use two properties—both the commercial property and the family home—as security for a single loan. This option was appealing to the electrician because it meant he wouldn’t have to come up with a significant cash deposit for the commercial property.

Typically, lenders will offer up to 65% to 70% of the commercial property value, leaving the borrower to come up with the remaining 30% to 35%. However, we found a lender who was willing to provide up to 80% of the commercial property’s value and allow the remaining 20% to come from the equity in the electrician’s family home. This strategy enabled him to contribute to the property purchase without drawing cash directly from his business or personal funds.

The key benefit of this approach was that the family home’s equity wasn’t cashed out. Instead, it was used as additional security, providing the bank with extra reassurance and allowing the electrician to secure the loan without needing to drain his business’s working capital.

The Outcome: Wealth Creation and Better Cash Flow

This cross collateralisation solution gave the electrician the ability to purchase the commercial property without compromising his business’s cash flow. He was now in a position where, instead of paying rent, he was effectively paying a “rent” to himself by making loan repayments on his own property.

One of the standout benefits of this arrangement was that the electrician’s loan repayments were actually lower than what he had been paying in rent. His monthly rent on the building had been $5,000, but the loan repayments on the commercial property came to just $4,200 per month. This $800 per month saving immediately improved the business’s cash flow, giving him more flexibility to reinvest in other areas of the business, such as hiring additional staff or purchasing new equipment.

In the long term, the electrician now has an asset that is likely to appreciate in value. As his business grows, so too will the value of his property, helping him to build a property portfolio and create a more secure financial future.

Conclusion: A Win-Win Solution

This success story highlights the importance of working with a financial partner who understands both the needs of a business and the complexities of property financing. At Loanright Financial Services, we take pride in finding tailored financial solutions that help our clients achieve their goals without jeopardising their financial stability.

For this Kunda Park electrician, the move from renting to owning not only provided immediate financial benefits but also set the foundation for long-term wealth creation. He is now building equity in a property that will serve both his business and personal financial future, all without disrupting his business’s cash flow.

By leveraging cross collateralisation and smart financing strategies, Loanright Financial Services helped him turn a rental expense into a growth opportunity.

Case Study Details

  • Location – Kunda Park QLD
  • Type of Loan – Commercial loan
  • Purpose of Loan – Purchase a commercial property in an industrial estate
Commercial property loan Kunda Park QLD
Commercial loan Kunda Park QLD
Benefits of Cross Collateralisation
  1. Increased Borrowing Power: By securing multiple properties, borrowers can often access more significant loan amounts than they would if only one property were used as security.
  2. No Cash Deposit Required: Borrowers can use the equity from an existing property (e.g., the family home) as their deposit, meaning they don’t need to save a cash deposit.

Simplified Loan Structure: Instead of having multiple loans with different banks, cross collateralisation allows borrowers to have all their loans under one lender.

When Is Cross Collateralisation Used?

Cross collateralisation is commonly used by investors and business owners when:

  1. They lack a sufficient cash deposit but have significant equity in other assets.
  2. They want to secure better loan terms by providing more security.
  3. They wish to expand their property portfolio by leveraging existing properties.

Contact

1A / 14 Smith Street, Moolooalba, QLD 4557

How To Find Us

Driving directions

Our office is located on the corner of Smith and Muraban Street, just a block back from the Mooloolaba Esplanade.

Parking information

There are a few onsite parking spaces available, including disabled parking, as well as street parking and paid hourly spots, which are available in the multi-story parking facility across the road from our office.

Wheelchair friendliness

There is wheelchair access to the office, as well as wheelchair friendly restrooms and parking.

Pet friendliness

We are a pet friendly office; however, we do ask that you kindly keep dogs on a lead for their safety as we are near relatively high traffic road.