A driven real estate agent established their own agency, enlisting the support of three financial partners. The business flourished, prompting the agent’s desire to acquire full ownership by buying out their partners for a negotiated price of $1.2 million. To facilitate this, they sought a loan of $950,000, intending to contribute the rest in cash.
The financing strategy involved leveraging the value of the business’s rent roll alongside equity in the agent’s Primary Place of Residence (PPR). This approach would enable the client to retain the fruits of their hard work, transferring the rewards of their dedication and business acumen to themselves and their family, rather than dispersing them among others. This outcome resonated deeply with the client, sparking immense gratitude for the opportunity to claim the results of their diligent efforts. They pledged future business collaborations and committed to referring industry colleagues to the assisting institution.
To achieve this vision, the client required higher-than-standard leverage against their assets, seeking 80% lending value against the rent roll and 100% against their home, surpassing typical lending Loan-to-Value Ratios (LVRs) of 60% and 80%, respectively. Notably, the client strategically managed a tax debt during the buyout arrangement. Despite owning 25% of the business, their pivotal role as the main success factor was evident. The client’s ability to provide funding at the required LVR levels and at reasonable rates ensured the viability of the transaction.
Efficient and consistent communication, via email and phone, played a crucial role throughout the process, ensuring the alignment of goals and facilitating swift decision-making. Introducing the lender early in the process significantly expedited information transfer, expediting the decision-making timeline.
Ultimately, the lender understood and accepted the client’s tax position after evaluating the circumstances, culminating in a successful arrangement that honoured the client’s dedication and entrepreneurial spirit.
