How Will Trump’s Win Affect Commercial Property?

Trump and Commercial Property

WHILE THE WORLD may be stunned by Donald Trump’s win, you’ll most likely find things will not be nearly as bad as everyone thinks.

And that’s reflected in the huge rebound in the stock market — once investors began studying his policies in more depth.

How did Trump achieve the Win?

In many respects, the media is responsible for the outcome — because so much airplay was given to his outlandish rhetoric. [Read more…]

APRA Cracking Down on Commercial Property Investment Loans

AS MANY INVESTORS would already be aware, borrowing for investing in property has become increasingly difficult over the past 12 months.

And that's because APRA (the banking regulator) has issued a warning to major banks to reduce their exposure to investment property loans.

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Recent Changes to the Lending Environment

THE CURRENT LENDING environment has changed markedly over the last two months with the main developments being:

  1. Lending to foreign investors has been severely restricted or entirely removed by all Australian banks.
  2. Interest Rates have been cut, with the drop passed on for owner-occupied loans and partially passed on for investment loans.
  3. Concerns have been raised about housing oversupply in certain parts of the country, including Melbourne and Sydney, and lenders have placed increased restrictions on higher density developments. 
  4. Some banks have been advised that their loan books are too heavily weighted to property investment (including commercial) and have thus pulled back their lending ratios.
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To Fix or Not to Fix Your Commercial Loan Rate?

Fixing-your-rate

WITH BOTH SHORT AND LONGER term fixed rates currently at historical lows, discussions around fixing rates for commercial loans has increased markedly.

This article will focus on the major factors that should be taken into account when considering whether or not to fix a loan against a commercial investment property. [Read more…]

Do You Fully Understand Commercial Property Valuations?

property_valuation

WHEN PURCHASING A COMMERCIAL PROPERTY, the valuation is a key element in the financing process and in providing the buyer with comfort in their purchase price.

For the wise investor, it is important to have some understanding of how valuations are conducted.

Doing so will establish confidence that the valuation will not pose an issue with finance and also act as a basic tool, to verify a purchase price or estimate asset value for existing properties. [Read more…]

How to Borrow to Buy a Property Within Your Personal Super Fund


AS YOU PROBABLY realise, this is not quite as simple as it may seem. And yet, all you need to do is follow some clearly defined procedures.ff

Simply CLICK ABOVE to watch the short Video … for a quick summary of what’s involved. [Read more…]

Will Lower Oil Prices Mean Improved Economic Growth?

Oil-decline

THE ANSWER is both Yes and No … depending upon which country you live in.

Oil-GDPLast weekend’s Financial Review reported an analysis by Oxford Economics, which predicted the likely effect upon GDP during 2015-16 … of oil being at $US40 Vs. $US84 per barrel.

And a quick summary of that is included over on the right. [Read more…]

Commercial Property: State of The Nation

Office-Buildings

OFFICE VACANCY RATES have lept towards 15% in Brisbane, Darwin, Canberra, Adelaide and Perth. And this takes the national average to 12.4%, as an overall vacancy level.

However, businesses are now leasing space once again in both Sydney and Melbourne — where their vacancy rates are currently hovering around 10%, according to Jones Lang LaSalle. [Read more…]

How Does The Aussie Dollar Affect Commercial Property?

Aussie-Dollar

In simple terms, the answer is … both indirectly and indirectly.

The RBA’s Dilemma

General consensus is that our dollar should ideally be trading at around US85 cents. And that would provide a balance between encouraging non-resource export businesses, while not adding unwanted inflationary pressure.

The RBA could achieve this simply by lowering the official interest rate. However, that would then fuel even more local borrowing — especially within the residential property market. [Read more…]

Super SUPER — Lending to Your Personal Super Fund

Lend-to-Super

ARE YOU THINKING about borrowing to buy property or other assets via a Self-Managed Superannuation Fund (SMSF)?

If so, you may be wondering whether you need a bank to lend directly to your SMSF; or if there is a simpler and cheaper way to borrow? [Read more…]

Commercial Finance for Business

business-finance

IN THE CURRENT low-rate environment, demand for property funding has spiked considerably over the past couple of years, fuelling some concerns in various quarters for a property bubble.

As a result, most of the major banks have loan portfolios heavily weighted to property.

Slowly but surely, this has resulted in increased competitiveness for the small business sector, which has resulted in some attractive terms being offered for small business loans.

Below are some tips about business loans in the current market. These will be useful if you are looking at purchasing a small business or expanding your existing business:

Borrow at Home Loan Rates

If you have equity in residential property, you may be able to borrow at home loan rates.

The major banks tend not to allow business purpose for loans through their home loan departments, and will unnecessarily sell their customers into more expensive business loan products.

If you have equity and can afford the repayments, there is no reason to have a bank overdraft (sold at rates up to 13% pa) or even bill facilities that are subject to frequent review.

Before taking out a business loan secured by a residential property, explore the market for possible home loans for business use, they will be much cheaper and more flexible.

A suitably qualified mortgage adviser will be able to do this for you at no cost.

Loan Terms are as Important as Loan Rates

Most businesses live and die on cash flow. Therefore it is important to look past just the interest rate and fees on a loan and consider actual repayments.

This is the major benefit for using home loans where there is sufficient equity in residential property as they can be taken out interest only and usually rolled over continually.

Banks offer “unsecured” business loans against some businesses.

But these are subject to sharp amortisation periods (anywhere from 1-7 year loan terms). So consider the actual repayments as well as the rate before progressing with a particular loan product.

Ensure You Have Sufficient Capital

You are unlikely to get over 50% of the purchase price of a business. The exception to this is for well-established franchises, for which borrowing can be as high as 70%.

As discussed earlier, you may be able to use equity in property to bridge the gap, but you need to consider from where the capital will be raised.

If you are purchasing a franchise, banks will hold approved franchise lists outlining the terms that the bank will extend against a particular business.

It is worth speaking to more than one bank (or engaging a mortgage adviser to do it for you) to make sure you are getting the best deal as banks will vary on terms extended against each franchise.

Learn About the Different Finance Options on Offer

For existing businesses there are many different types of financing that can assist with cash flow and growth strategies.

These include the following:

  • Asset financing
  • Debtor financing
  • Invoice factoring
  • Trade Finance
  • Credit Insurance
  • Overdrafts
  • Bank guarantees

BOTTOM LINE: Too many business owners learn about these products only when they are in difficulty. Smart management demands that the right debt strategy be an integral part of any business planning.