Insider Tips to Help You Discover How to Succeed with Commercial Property
IF YOU ARE funding a property development, financing is the most important aspect to consider. After all, without finance the project cannot proceed.
Below, I have summarised the three most important factors for getting bank funding for a project. [Read more…]
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:
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.
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.
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.
For existing businesses there are many different types of financing that can assist with cash flow and growth strategies.
These include the following:
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.
LAST WEEK, I covered the reasons why it can be very difficult for asset-rich investors (who are no longer working or have scaled down their working) to get a loan.
Thankfully to date, the NCCP regulations do not apply to loans acquired for a commercial and business use.
Therefore, you have more options for investing using commercial borrowing, then you do for residential borrowing. The following tips will help you maintain your eligibility to borrow for longer, after stopping work. [Read more…]
YOU’VE WORKED HARD your whole life; and had a successful career. You have used your money wisely, and your investments have been mostly successful.
As a result you have built up a solid asset base with a number of properties, which are positively geared and provide you with reliable rental income.
It is now time to enjoy life, scale down your workload, travel and do the things you always wanted to do.
You stumble upon the perfect Commercial property opportunity that will provide you with enough rental income to have the lifestyle that you want. [Read more…]
IN PART 1, we gave you some advice if you are deciding whether or not to fix your loan.
Today, we continue where we left of with three guidelines to help you avoid a few more common pitfalls when it comes to fixing a loan. [Read more…]
INTEREST RATES REMAIN at historically low levels. And the competition for business between banks and non-bank lenders is fierce.
As a result, you can find some very attractive fixed rate options in the market at the moment.
However, if you are considering fixing an existing loan or taking out a new fixed loan, you must understand some fundamental rules that govern these loans.
The following guidelines will help you structure your fixed loans to provide the most benefits for both your residential and commercial investments. [Read more…]
IN MY LAST ARTICLE, you read about the various securities lenders can take over your property, in addition to mortgages.
This article will highlight various options for improving your security position when borrowing as a means of maximising your asset protection. [Read more…]
IN THE LAST article, you read about two different types of security that lenders can take other than the mortgage. They were “Fixed and Floating Charges” and “Personal Guarantees”.
However, there are a few other forms of security that you should be aware of before entering into any agreements. Read on to find out more. [Read more…]
WHEN YOU TAKE out a property secured loan, you understand that a lender will register a mortgage against the property that is being secured.
However, typically, when you read through actual loan agreements, the mortgage is just one part of the security that is taken.
In this article, we will be looking at some of the other types of security that lenders will typically request when applying for a loan. [Read more…]
DEBT RECYCLING INVOLVES converting bad debt into good debt. In other words, converting debt you cannot claim as a tax deduction into debt that you can.
This can be a little complicated to explain so take a look at a couple of practical examples. [Read more…]
LIKE MOST COMMERCIAL PROPERTY investors … you are mainly concerned with obtaining the best rates and terms possible, when it comes to funding options.
As a general rule, you will find these with the major and second tier banks — their cheap cost of funds are able to on-lend at often attractive terms. And in the current environment of high competition for business and low interest rates, the bigger lenders are a good place to start. [Read more…]
WITH EVERY NEGOTIATION, you always need to be thinking on your feet. And here are several simple Tips to help you do just that.
WHEN YOU EMBARK on your journey as a property investor, it can be overwhelming – with a flood of information and diverse opinions. To help simplify the process, here are five essential tips for new (and seasoned) investors.
IT DOES NOT MATTER whether you’re an investor or an owner-occupier, there are several important factors to consider when purchasing a commercial property to ensure you make the right choice.
In a previous article, I shared a handy App to assist you in shortlisting potential properties. If you haven’t already downloaded it, simply click on the HiReturn Filter over on the right, to install it on your tablet or mobile device.
THERE IS A BELIEF among many experts that a surge in the stock market typically precedes a recovery in the commercial property market by about six months. And the start of this year saw equity markets gaining some momentum.
I HAVE BEEN ASKED countless times about the secrets to a successful negotiation. And I want to share with you the key elements to help make your negotiations effective.
But first, just watch this short video to gain a quick understanding of these three essential elements that form the foundation of every negotiation.
If you’re new to investing, you might be wondering if it’s possible to manage your own commercial property. The short answer is “yes”, but only if you know what you’re doing.
It’s important to note that owning a commercial property comes with certain legal responsibilities, particularly when it comes to compliance with Essential Services requirements under current Building Regulations.
The current trends in the business have made it clear that office landlords have to cater to the needs and preferences of their tenants. Building owners and managers (who understand and meet these demands) will be able to command higher rents and reduce vacancy rates.
To expand on this, here are four key tips to help attract quality tenants.
