Loan for a Recreation Centre
Recreation Centres in Australia are increasing in popularity. If you are looking to purchase a property for this type of use, You may have a few questions to get you started.
What can I borrow?
- Where you are looking to purchase the recreation centre freehold (just the building itself), you can either borrow up to 70% of the value of the centre , but if you have a residential security with adequate equity, or even a guarantor, you may be able to increase this to 100%.
- Loan terms are limited to 15 years for commercial properties, with some lenders extending that to 30 years where there is a residential security cross secured against the loan.
What type of purchase is it?
When considering a recreation centre you can either choose to just buy the centre itself or you can choose to also run a business from the centre. How you decide to proceed will dictate how banks assess your loan.
What will the lender request?
If you are buying the centre and have the intention to also run your own business from there, you will need to show the bank:
- Your financials from the last 3 years,
- Evidence that you have managerial experience running a similar business, and
- A business plan that shows how you intend to run a profitable business.
What else does a bank consider?
- If the centre is purchased for investment purposes only, banks will want to see; that you can actually service the loan, that the tenants running a business from the facility have a long-term lease in place AND that they actually make rental payments promptly
- What is also of consideration to the bank is whether the building is specially built; where this is the case, banks may take a more conservative approach. This is because if the bank has to sell the property in the evident you can no longer make payments, it may be more difficult to do so with a specialised property. For example an indoor swimming center
Location, location, location
- The overall location and zoning given to your centre will also be of important consideration to the bank’s assessment; this is because the more accessible the centre is by transport, the more likely you are you to attract customers.
- In the same way, the zoning classification given to the centre can often mean the possibility of future residential properties around the centre, therefore exposing you to the possibility of more customers.
There are many factors to consider when looking to purchase a recreation centre. Our brokers are ready to help you determine which lender is right for you. Call us today or esquire online and one of our brokers will be in touch with you.