Commercial Loans With No Financials – Is It Possible?

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TRADITIONALLY, for any business or commercial loan, most lenders will require at least two year’s past tax returns and financials to establish servicing capacity.

For some borrowers, this is either not desirable or not possible. And so, here is a summary of several loans that could be available for such a borrower; plus how those loans may also apply to you, as a commercial investor. [Read more…]

4 Steps to Finding Your Ideal Commercial Finance Facility

IN MY EXPERIENCE, most seasoned property investors seem to have a good idea of how to structure a home loan and what to look for.

However, the complexities of commercial property and the wide array of commercial loan products mean it can be a little more difficult for commercial investors.

As a result, many get trapped in loan products that are not appropriate to them, which can be very expensive.

What followings will help lay out some steps required to ensure you are making the right decision with your commercial loan product; and, at the same time, avoid the costly mistake of going into a product that doesn’t suit your needs

1. Determine your plan for the property

The right commercial finance option should be consistent with your future investment plans. And therefore, you first need to figure out what you want out of the investment, before looking for the finance solution – rather than the other way around.

Perhaps some questions to ask yourself might include:

  • Do you wish to hold your investment for the long term or just for a period before selling?
  • Are you an active investor who regularly buys and sells or a passive investor who will look to slowly acquire?
  • Are you wanting to be aggressive or conservative?

2. Prioritise your loan requirements

Once you have a good idea what your investment plans are, you can then decide what your main priorities are.

For example: If you are wanting maximise return on equity and have an aggressive growth strategy …having a higher loan to value (LVR) ratio for your investment may be more important, than obtaining the cheapest facility.

Furthermore, if you are looking at a long term hold strategy, a longer loan term may be preferable to a shorter term – even if this means a higher interest rate.

3. Consider Your Circumstances

While you have a wide range of products available, most loan applicants are able to obtain funding – provided they have sufficient equity and the property is acceptable.

Commercial loans are generally priced for risk – which means the riskier the transaction, the higher the pricing.

When you consider your strategy, it is useful to have some awareness as to where you sit in terms of risk profile. If you are pushing the envelope with debt amounts or security type, your priorities need to be more aligned with finding the facility that suits.

On the other side of the coin, if you are a high net-worth investor with a low risk transaction … you may have significant bargaining power to obtain the most attractive terms you can. And it is advisable to make sure you ARE getting the best terms possible.

4. Get the Right Advice

As a commercial property investor, the terms can be a little more complex. So, it is important you have a competent team around you in the area of tax, legal and financial advice.

A commercial credit advisor can assist with tailoring the right loan product and structure to suit your investment goals.

However, it is important your borrowing structure is set up correctly from the start.

Bottom Line: Your financial structure is just like a chain … where any weak links can be very costly. Therefore, it is well worth the time, effort and money to obtain good advice before investing.

Going through the above steps will go a long way towards ensuring that you choose the right commercial loan for you.


Using Your Self-Managed Super Fund for Investment Without SMSF Borrowing

SINCE THE Superannuation Industry Supervision Act was amended in 2007 to allow superannuation funds to borrow against property, Self-Managed Super Funds have become a popular vehicle for investing in property — in particular, for self-employed borrowers or those in transition to retirement phase.

However, the loan products associated with this type of lending can be onerous and restrictive and this makes this form of lending far from preferable for many borrowers. [Read more…]

5 Ways to Maximise Your Borrowing Capacity

WITH BANKS having tightened up investment lending considerably, gaining access to money for active property investors has become increasingly difficult.

Here are several strategies to help you to get the greatest amount of borrowing capacity with your lenders.

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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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Would You Like to be Paid a Bonus to Refinance?

A NUMBER OF YEARS AGO, in the early days of online casinos, some sharp individuals were able to make a quick dollar by taking advantage of "welcome bonuses" being offered in this new and competitive industry.

Taking Advantage of the System

Here is how it worked.

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APRA & Commercial Lending

Comm-Lending

WITH MORTGAGE LENDING at a high, RBA rates at an historical low, and competition within the lending industry extremely hot, a peculiar thing began to occur last month. Interest rates began to increase.

This was most profoundly evident with residential investment loans, with several of the majors increasing rates and reducing LVR limits for these loans. [Read more…]

Buy Commercial Property Without Loan Guarantees

commercial-loans

WITH YIELDS ON commercial properties getting tighter, one way of achieving better yields is to pool with other investors to purchase a property that may be out of each individually.

Or in other words, form a property syndicate. [Read more…]

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…]