Limit The Security You Grant to Your Lender

Security

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…]

Will Commercial Property Keep on Performing?

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Ford-Holden

THERE HAS BEEN a whole lot of negative talk recently about the detrimental impact of the Car Industry leaving Australia.

And clearly, our hearts go out to all the affected workers and their families in car manufacturing and those related component suppliers.

Most of us cannot even begin to imagine the shock and surprise they are now feeling — particularly right on Christmas.

And yet, if you just focus upon the likely impact on the Australian economy … much of the commentary can be seen as misguided. [Read more…]

With Commercial Property … Balance Wins the Day

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Sub-Lease-Space-L

THIS CHART APPEARED as part of a recent article in the Financial Review, by Mercedes Ruhl (30 October, page 41).

The article reassured investors that the anticipated short-term surge in sublease space (within Australia’s CBD Office markets) has simply not eventuated.

“Sublease space spikes at times when the economy is weak and business confidence is low because companies are restructuring and downsizing.”

Furthermore, the article suggests the overall amount of sublease space is expected to fall sharply over the next few months — following the post-election improvement in business confidence.

And of all the capital cities, the CBRE research shows Melbourne has provided the greatest improvement over the past year. [Read more…]

Control The Loan Process

Commercial-Loan-Application

THE OTHER DAY, I was doing some analysis on the loans lodged over the past year … looking at the time-frames, and where the delays have occurred.

And I was struck by the number of stages a loan application needs to go through, before settlement. Plus the number of people the file depends upon, to go smoothly.

The people involved in this process can include the broker, the bank officer, credit analyst, valuer, borrower’s solicitor, bank’s solicitor, vendor’s solicitor, accountant, financial adviser (if financial advice is required), real estate agent and, possibly, the tenant.

As you can appreciate, delays can occur at the hands of any of these stakeholders with dire consequences. That’s why it is advisable (as far as possible) for you to retain as much control over the process as you can … in order to avoid potential pitfalls. [Read more…]

4 Key Tips for Couples Arranging Loans

Loan-Approved

WHEN BORROWING against Residential or Commercial properties for investment, it is important to keep in mind the most effective ways of claiming tax benefits, if you wish to maximise the return from your investment.

This is particularly so, when the purchasers are couples — because working with the correct loan set-up can ensure the household tax burden is considerably reduced. [Read more…]

Never Cross Collateralize Your Loan Arrangements

Cross-Collateralizing-2
Part 2: Proper Loan Structuring can give you Protection.

LAST TIME (in Part 1), you discovered why the banks should not be allowed to call the shots. And perhaps a couple more Case Studies will help to further explain that.

Let’s take a look at what happened “Kevin”

He was a very successful property investor who had an impressive portfolio, consisting of several residential and commercial properties.

Kevin was able to build this portfolio through a mixture of a good knowledge of the market, savvy negotiating skills, a high-income job with a resources company and, it has to be said, some luck in picking the trends.

Kevin’s problem was that he wanted to retire early — which is something someone of his net worth should easily be able to do. But he made one major mistake. [Read more…]

Commercial Property Investors are Relishing the Current Drift

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Confusion
EVER SINCE Julia Gillard announced the September election in February … the ensuring political hiatus has meant almost everything (including our thinking) has simply been moving sideways.

Neither up, nor down … just drifting!

And that is completely understandable — because, when uncertainty reigns … people tend to do nothing.

What are the Experts saying? [Read more…]

Never Cross Collateralize Your Loan Arrangements

Cross-Collateralizing
Part 1: Don’t be easily Swayed by your Bank.

A COMMON piece of advice given by mortgage brokers to Commercial property investors — at least, by astute brokers — is to keep securities for each loan separate. In other words, any form of Cross Collaterization (as it’s known) is to be avoided at all costs.

So, just what is Cross Collaterization; and why is it so bad?

Put simply, it is the combining of one mortgage registered against two or more properties (or sometimes even your business) as security. [Read more…]

Arranging Your Finance

Your Top 5 Tips ...

IT IS NO SURPRISE that banks are still rather coy about funding Developments, so maybe a few ideas on how to get your projects across the line could be helpful.

Here are the Top 5 Tips …

  1. Properly Assess Your Capital Requirements
    Do a thorough feasibility before proceeding with any project, to ensure you have sufficient funds to complete the project based on 80% funding of total costs. Make sure you factor into your calculations capitalised interest, for least 12 months.
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  2. Lock In Enough Pre-Sales
    Make sure you are aware of the number of pre-sales you will require. And also properly research the market — so you are confident the properties in your development will sell off-the-plan. If your development is not suited to pre-sales, ensure that you are able to arrange finance without pre-sales (or with a lower pre-sale requirement through a non-bank) before proceeding. [Read more…]

How Will the Global Scene Impact Commercial Property?

The disparity in global Office Yields makes Australian Commercial property very appealing to overseas investors.YOU NEED to look “behind the curtain” … and not allow yourself to become concerned by the recent headlines. Just remember: Media companies need to make sure their newspapers sell.

Last week, share market speculators drew breath rather sharply … as China’s 3-month growth in GDP to March, came in at “just 7.7%”.

True, this was down from the expected 7.9%; but it was still in line with China’s overall growth, throughout 2012.

However, let’s get real: Compared with anywhere else in the world, 7.7% is clearly an enviable figure. [Read more…]

Commercial Property: The Interest Rate Dilemma

Interest-RatesSHOULD YOU be fixing the interest rate for the term of your investment loan … or simply running with the best variable rate?

Lurking behind that question is another concern: Will interest rates fall any further; and if so, by how much?

The Case FOR a further Interest Rate Cut [Read more…]