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.
Here is how it worked.
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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…]
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…]
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…]
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…]
FOR COMMERCIAL PROPERTY INVESTORS with significant borrowings, one of the biggest headaches that you can encounter when dealing with banks are the annual reviews and short loan terms.
These facilities are costly in accounting expenses, time and money, particularly for sophisticated investors with more complex borrowing structures. [Read more…]
WHEN LOOKING AT debt strategies for any business, there are a number of aspects you need to consider. These would include things like … asset protection, interest rates, fees, ongoing service requirements, access to capital, alternative products and so on.
The weighting for each of these factors will depend on the particular transaction. [Read more…]
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…]
