Lee Rotbart

Posts Tagged ‘banks’

Guesthouse adultery

In The beginning on August 23, 2010 at 1:56 pm

Don’t tell anyone but yesterday we went to see another property in Cornwall. I actually feel a bit guilty for looking further afield, and if this blog had a voice it would definitely be a whisper.

We were recovering from being turned down by yet more lenders, were in the South West (Bristol to be exact), and attempting to be a bit ‘onwards and upwards’ about the whole affair, consequently in a fit of spontaneity we decided to hot foot it down to Truro to see a property that had been on and off our radars for the last month or so.

Don’t think that it didn’t occur to us, as we got on the 4 hour train journey to Truro, that it would have been much more helpful to fall in love with a B&B in the Cotswolds; with or without a car (and we are without) Cornwall is not an easy to place to drop in on.

While we’ve explored all the really interesting options that people are flagging up for us we’re not getting very far. Ultimately this guesthouse venture is just for us, so private investors, the EU, the government are just not really interested in helping the two of us relocate and keep a guesthouse open. We’re not going to make £millions, and we’re not going to employ half the Cornish community in our bid for world domination, consequently our options are limited.

The message we got was loud and clear ‘Porthminster View needs to make more money than you’re projecting, or you need to find a cheaper property’. Not happy about inflating figures until it looks like we’re about to open the St Ives Hilton, we opted for the latter and found ourselves in Truro yesterday afternoon.

Seeing a lovely B&B and meeting the very friendly and hospitable owners did little to dissuade us that Porthminster View is the place for us. We dabbled in the excitement of an affair which, in the current circumstances, seemed exciting, full of possibilities and very tempting; however in the cold light of day we came to realise that our first love was the best, the longest lasting, and more fit for purpose than anything we’ve seen so far.

It was simultaneously both a disappointing and uplifting afternoon. Disappointing because we’d built up Truro in our minds to be a real possibility (damn those wide-angled camera lenses), and uplifting because it quashed any doubts we had about Porthminster View, and made us even more determined to do everything we possibly can to get the money. Plan C is forming, and at the moment – as with all plans at the beginning – it seems promising.

Having sat through the first round of auditions for X-Factor on Saturday night I’m well aware that telling the four judges (in our case it’s the banking equivalent of Simon, Cheryl, Louis and Dannii)  about Porthminster View being ‘our dream’, and saying things like ‘we’ve never wanted anything more’ is just not going to cut it if we’re hitting a load of bum notes. For that reason alone we are sneakily looking around Cornwall for the next ‘perfect opportunity’… but we haven’t given up on Porthminster View, not yet. It still is (and always will be) our first love. A bit of playing ‘hard to get’ never put off Casanova  and it sure as hell isn’t putting off us.

The fat lady is warming up

In Getting the mortgage on August 18, 2010 at 9:56 am

They say it ain’t over till the fat lady sings… well, she may not be singing, but I can definitely hear her warming up.

Yesterday I was given some bad news about Plan B. The bad news being it hadn’t worked. Apparently the banks are so scarred from all their crazy spending a few years ago that they are demanding an income (from PV) that is 200% more than the business needs to pay out in mortgage.

To those out there, like me, who have very little experience of running a business / getting a mortgage this means that if the mortgage is £31,000 per year the guesthouse must be making £31,000 in profit (before tax), meaning that the turnover must be £62,000 + all the costs of running it + living expenses + wages. As per my cash flow projections we were coming in around 175%, but not meeting that 200% threshold means that we either have to pull £70,000 out of our arse, or ask the vendors to lower the price by that much.

That’s the news, now for the rant.

It’s absolutely bloody crazy that two (relatively) young, accomplished, experienced, intelligent people with a significant 6 figure sum in cash for a deposit, stamp duty, etc. cannot get a mortgage. It’s insane that these banks – who caused the credit crunch in the first place – now have such ridiculous lending criteria that a business with a projected £15k profit in the first year cannot get a loan.

It’s barmy that a 7 bedroom, 4 storey guesthouse which overlooks one of the most popular beaches in the UK, in the heart of the tourist destination of the South West, is not enough collateral on which to base this loan, a loan that isn’t even that much (in the scheme of things). 3 years ago they would have been throwing money at us.

And here’s the real irony. If we were buying this as a residential property our combined incomes (which come to less than our projected 1st year turnover) would have been enough to secure a loan on a 25% deposit, whereas for a commercial mortgage we need to be bringing in more money than that and need a 30% deposit. Go figure?!

Yes… I’m frustrated. I’m frustrated that these hugely greedy banks who are absolutely incapable of seeing past an application number, and looking at the real detail involved, are sitting back on their fat, fat bottoms telling the government that “they are doing everything they can to lend money”. The fact that they’ve considered our application means they can fill in their pathetic little statistic forms and say that they were looking to lend but on this particular occasion the applicant couldn’t meet their criteria, criteria that Bill Gates or Richard Branson would have failed to meet in their early days.

I mean… come on! What business is expected to make a profit in the first year? It’s a given that most businesses need between 1 – 2 years to start turning a profit, so the fact that we were showing a profit in the first year, well – we’re already ahead of the game.

I do apologise for this rant and I know that up until now I have refrained from using this blog to spit fury about banks and all their little ‘computer says no’ minions; please excuse me this one time as there was just no other outlet, and I realised that I wouldn’t be able to get a scrap of work done today if I didn’t vomit all this up onto (virtual) paper. Danny should count his lucky stars that he’s in France as this way it’s the blog that ‘gets it’!

OK… on to Plan C; I have no idea what it is yet but I refuse to believe it’s not out there.