NZ Commercial Real Estate Finance
Property development is a popular method for making. It is a difficult task but one that is rewarding. Besides finding suitable development opportunities, getting finance is a challenge so here are some tips on how to secure Commercial Real Estate Finance.
How to obtain the best property finance deal
Finding the best finance deal in today’s touch economic climate can be difficult however there are some steps one should follow to have a better chance. Firstly, always present a portfolio of successful developments as banks are more likely to finance ‘safe choices’. If you already own the land there is a greater chance you will receive planning consent as you already hold the title. Finally, by showing that the development will have a strong rental demand or there is a good exit strategy at the end of the project, there is a better chance of a loan.
The senior debt loan takes its name from having seniority in the issuer’s capital structure, unlike a subordinated debt. This means that if an issuer should face bankruptcy the debt must be repaid before any other creditors (except the IRD and the liquidator) receive payment.
Property development finance can also be obtained from lenders and investors with elements of debt and equity. In such cases, the investors are given a share in the ownership and will be partners for any profits that are made after the property is developed. Mezzanine finance may also be resorted to which combines both equity and debt and has to be paid back after a period of seven to ten years at interest rates that can be quite high. When preparing any proposal for development finance, it is best to do this in an acceptable format and agree to any terms that any lender has. This greatly increases the chances of acceptance of the project and getting the required finance.
Another tip is to know exactly what changes will increase the value of your property the fastest. For example, in a residential property re-development, one of these is an updated kitchen or adding an additional bedroom. For an office block, you can add better air-conditioning and for a retail development, you can install more parking. This is the key to successful property development – identifying where you are going to make the best and fastest profit.
There are many different places where you can get financing from not just banks. But, finding the right property financing company can be daunting. He or she would be able to give you advice on all options you have for property financing. Another idea is to talk to a lawyer or accountant. They act on behalf of lenders, especially private funding sources and they could make an introduction for you.
Global Pacific is a leading player in the Auckland commercial real estate finance market. Look at their website to get some background and then talk to one of their financiers. The go and talk to your professional legal and accounting advisers.