Taupo House Builder – What To Look For When You Want To Build A Home
Constructing a house is not an easy task. That is why you should look for a Taupo house builder who specialises in this type of work. However, there are lots of house building companies in Taupo which makes it difficult to know which building firm to hire. To help, here are key factors you might want to consider when looking for a house builder.
Characteristics Of A Good Taupo House Builder
The first thing that you need to consider is experience. An experienced Taupo house builder will have the skills and knowledge required to tackle complex work. Furthermore, an experienced house builder will have worked on plenty of different building projects so should be fazed by your building job. Therefore, make sure that you hire a house builder who has been in business for an extended period.
Even though there are lots of housebuilders offering construction services, not all of them are approved and accredited as licensed builders. Being a Licensed Building Practitioner or Master Builder means that the contractor is certified and has the best training to deliver quality services. This will also make it easier to sell your home later if you can show that it was built by a fully qualified builder.
Insurance For Workers, Public And General Liability
If you are going to hire a building contractor, then you will want to hire a builder that has suitable insurance coverage. If there is an incident of any sort, and the builder doesn’t have insurance then you are liable. Look for insurance policies that protect workers, yours and neighbours’ properties, and members of the public if injured. If you hire a Master Builder, they are required to carry insurance as part of their ongoing membership.
Cost Of Rendering Services
House building companies charge different rates for different jobs. If they are going to build on flat land, that I much easier than on a sloping section. The amount of land preparation will also have a major impact on the costs. For example, if it is bare land, the cost of getting services like water and electricity to the plot will be considerable. And of course the house design itself will have a big effect on the overall budget, as will the level of fixtures and fittings.
Given all the variables, you must make sure that you have a written quotation that itemises all of the work including the fixtures. For example, a bathroom tap could cost $70 or it could cost $370. Having everything itemised at the start will prevent shocks and arguments at the end.
As previously mentioned, the quality and cost of materials can vary significantly. Better quality material used by building contractors will affect the end result, and also the life of the work. Cheap products don’t tend to last as long as more expensive or better quality materials. If you want your house to be of high value, then you need to make sure that it is constructed using high-quality material. Therefore, make sure that the builder you choose to work with uses the best material to construct your house.
A house building project will always have issues; it’s inevitable. So communication is key. Communication can either speed up your project or slow it down. This is why it is necessary to look for a house builder with good communication skills. With good communication skills, it will be easy to understand each other and make quick decisions.
A good builder who is confident of the quality of their work will have no problem in giving you a guarantee. A member of the Master Builders will automatically have a ten-year guarantee backed by the Association. This last point is important because if a builder stops work for whatever reason, then the Association will find another builder to carry out the remedial guarantee works.
It might not be easy to find one of the reliable Taupo house builders who can guarantee quality services at an affordable cost. But, by considering the factors listed above, you can be sure to find the best house builder near you.
Why An Instant Water Boiler For Auckland Offices Is A Great Way To Make Hot Drinks At Work
Do you like to drink hot drinks during your work day? Do other people in your workplace enjoy hot beverages? If hot drinks are a hit in your workspace, you should consider buying an instant water boiler for Auckland offices. A product like this offers plenty of perks.
A Hot Water Boiler Offers A Lot Of Value For The Price
If people can’t make their own hot drinks at work, they’re going to run out and buy them from somewhere else. These kinds of labour costs, and personal expenses for coffee can really add up. When you have an instant water boiler for an Auckland office or other type of workplace, everyone that likes to drink hot drinks will be able to save money.
When you compare the value that a hot water boiler offers to the price you’ll have to pay for it, you’ll see that a device like this is an amazing deal. If you do decide to buy a product like this for your office, you’ll be able to get your money’s worth and more.
You Can Get Hot Water Quickly
When you are at work, you’re expected to be doing your job. You don’t want to spend too much time making a hot drink for yourself; you should be able to prepare your drink quickly.
When you have a hot water boiler, you’ll always be able to get the water for your drink very quickly. You’ll be able to finish preparing your drink in no time at all. You’ll be able to make yourself a nice drink at any time, even when you’re having a busy day.
It Doesn’t Make A Mess
Sometimes, preparing a drink for yourself can be messy. If you’re avoiding making drinks at work because of the mess, a hot water boiler is an ideal solution for you. When you use a boiler to get hot water, you shouldn’t make a mess at all.
Messes in the workplace can be a big hassle. That’s why it’s nice to have access to an efficient solution like a water boiler. Once you have the right boiler set up, you’ll be able to cut back on the amount of mess in your office environment.
A Hot Water Boiler Doesn’t Take Up A Lot Of Room
If you want to set up a hot water boiler, you don’t need a lot of space. A boiler isn’t going to take up much room at all. Even if your office is fairly cramped, you should be able to find enough room for your boiler.
Start looking at some of the boilers that are on the market right now. While boilers come in a number of sizes, you’ll notice that there are a lot of best-selling boilers that are smaller in size. Even if you don’t have much space, you can use the space that you do have efficiently.
From tea to coffee, people love to enjoy hot drinks in the workplace. With a hot water boiler, preparing those drinks is easier than ever. If you add a boiler to your workplace, you’ll be able to enjoy the above benefits and more.
Commercial lawyers will have to go through a significant amount of formal law education. They generally work to review and draft all legal paperwork and documentation for businesses and they will usually work from a law firm, or in-house for a larger corporation. Some Auckland small business lawyers will have to represent their clients in court as well.
Auckland small business lawyers specialise in the field of business law. They may work on the drafting and negotiation of contracts, dealing with company mergers, or reviewing different employment agreements. Some of the commercial lawyers that are working today will work for a law firm and deal with a number of clients. Others will be employed by a company on an in-house basis and represent all of their legal interests exclusively. Just like all other solicitors, a commercial lawyer has to hold a law degree, and pass the bar exam to become a qualified lawyer.
A professional commercial lawyer will deal with different issues as they pertain to business transactions. They could negotiate employment contracts, put together purchase agreements, or draft various client agreements.
Since disputes regarding commercial transactions will be brought to court for trial, commercial lawyers will work closely with the company throughout the entire process. Some commercial lawyers will also be employed by international or government agencies, where they will review various international business transactions, negotiate employment, trade and a number of other agreements.
Job Duties of Auckland small business lawyers
Not only will a commercial lawyer work to review the paperwork for the company, such as contracts and business documents, but they will also spend a great deal of time while researching, writing and then editing the commercial reports. This may include examining the local, national, or international laws to identify any of the rules that they have to follow or the conflicts that could arise.
The documents that are written up by commercial lawyers might be related to either establishing or dissolving a business, bringing two businesses together for a merger, establishing any non-compete clauses, creating sales contracts, or changing the organisational structure of the business. When it is necessary, a commercial lawyer will work to collaborate with other lawyers, government agencies, or clients to help complete transactions or execute paperwork. They could also engage in some negotiations on behalf of the clients.
Sometimes called a corporate lawyer, the world of Auckland small business lawyers is one that is always busy, dealing with the inner workings of business, from small to large scale. If you are looking to get involved in the field of commercial law, you will have to get a college degree followed by a law degree, then the appropriate licensing. It is not all that uncommon that you will deal with everything from handling contracts and acquisitions to transactions and a wide range of legal procedures and documents. This is a wonderful profession that can yield medium to high earnings that will make for a lucrative, rewarding career choice.
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.
Different Types Of Commercial Lenders You Can Find
development finance broker Auckland
When you are planning to do your next commercial construction project, it depends upon the type of project that you are attempting to do in regard to the amount of money that you need to borrow. Likewise, the amount of money that you need, and what you will be able to get, is dependent upon the company that you choose to work with. All of these factors play a role in the success of your project, how quickly you can get it done, and how soon you can start the next project that you have in your queue. Larger companies tend to have a much easier time getting money because they have an already established relationship with a certified vendor, whereas new contractors will have to find their way amidst the many different sources of funding that are available to commercial builders today. This article will address the different types of construction projects that people do today, the different companies that fund these projects, and how you can weigh the odds in your favour of getting the money that you need to complete the project as quickly as possible.
Different Types Of Commercial Construction Projects
There are many different types of commercial construction projects that people can start today. One of the most popular are private construction projects in which business entities, private parties, corporations or even homeowners can start to build on a piece of land that has been approved in your particular county. Residential construction, commercial construction and industrial construction all require a substantial amount of money in order to get started. The same is true for state construction projects, yet these are much easier to finance because they are typically part of and commissioned by a school board, government board, municipality, city or county.
Different Sources Of Funding For Commercial Construction Projects
When you start to look at the many different sources of funding, it can be a little bit overwhelming. The best thing to do is to put your head down, go through all of the available lending institutions, and find one that will be able to work with. Once you have an established relationship, you won’t have to worry about all of the paperwork and qualification that is necessary in order to get the initial funding. If there is no prepayment penalty clause, and you are able to pay the loan off in its entirety, many lenders are very happy working with an individual that is able to do this, and will happily lend you money once again. The different type of lenders include government-sponsored enterprises, non-bank lenders, portfolio lenders, and conduit lenders to name a few. Regardless of which Auckland corporate finance company you decide to work with, once you have found someone that is reasonable with their interest rates, and is reliable in regard to getting you the money fast, this is who you will probably work with time and time again.
Why You Need To Research The Different Lenders
The importance of finding a proper lending institution that will cater to your needs cannot be understated. The only way that you are able to do any type of commercial, not to mention residential project, is to make sure that you can get all of the funding that is necessary to move the project forward all the way to the point of completion. Without the ability to get the money that you need in a timely manner, you could be sitting for several months, and your opportunity to sell the homes or buildings that you are creating may miss their window of opportunity, causing you to lose hundreds of thousands of dollars, if not more. Once you have done your research, submit several applications, then choose the one that offers the best rate, the fastest funding, and is also highly recommended by those that you know in the industry.
In conclusion, finding an Auckland corporate finance company that is willing to work with you is not that hard at all. You should be able to find them very quickly in your town or city. If you can get a personal recommendation from someone that is also in the construction business, and is able to get fast commercial loans right away, this is a company that you should consider working with, allowing you to get started with your project as quickly as you can and complete your project in a timely manner.
Development Finance For Auckland Commercial Real Estate Projects
development finance Auckland – image xedos4
Securing the funds to finance Auckland commercial real estate development is often a major hurdle. With the recent housing collapse still fresh on the minds of the lenders and defaults reaching unprecedented rates, lenders around the country had already tightened their lending requirements. This had made borrowing quite difficult for even some of the top players in the commercial real estate market. This article will highlight some of the most important tips in finding the required development finance for your Auckland commercial real estate project.
The first place to look for commercial real estate development finance is your regular bank. They will have specialist departments for business banking and property development. However, the main banks are famously risk-averse and so the rules and regulations of larger banks are likely to be tough. So it is quite probable that your bank will not help you but if you have some assets held with them such as your home or a business, then you might be able to use this as collateral for the property development financing you need.
Leasing your building – image Stuart Miles
The first thing the bank will want to see will be our business plan. This should be carefully prepared, in fact, even the tiniest detail should be effectively addressed in it. Instead of presenting a general plan to the bank, be sure to make your presentation as specific as possible. Lenders are far more impressed with the details of a specific plan than a general plan. They will want to know how you will service the debt in terms of income you expect to receive and be sure to include the sources of that revenue plus sound reasons for your expectations. They will also want to know your exit strategy or more importantly, your exit from their loan i.e. how will they get their money back. That is their primary motive – repaying the loan.
You also need to project confidence to the bank. The bank will not like to lend money to anyone who is not confident of what she or she is talking about. Even though you may be confident inside, it will not do any good unless you are able to convince the bank about it. It is often said that bankers can tell by looking in the eyes of potential borrowers whether they will be successful or not. The best way to exude confidence through your presentation is through experience. After a few attempts, you will learn about the questions that are asked by the bank and how to answer them effectively. This will help you to speak confidently and clearly without any doubt in your mind. Doubts usually arises due to inexperience for that matter.
Looking professional when showing up at the bank is extremely important, in order to gain the confidence of the bank. Even though it may look shallow, it is quite true that the lender will likely consider every tiny detail about you before they decide to lend. Showing up in an Armani suit may be a little expensive but you should definitely look professional.
If you are still unable to obtain the necessary finance due to whatever reason, join with a partner. This would definitely increase your odds as the bank will now consider two incomes, two personal guarantees and less risk. Such a move can work in your favour in obtaining the required finances for your real estate project.
Auckland development finance
A more likely source of commercial property development finance are secondary banks and private lenders. These companies exist for funding commercial projects like property development. It is their business unlike the main banks who are for the most part money transaction processing entities.
The private finance providers are not well known so you probably need to go to an Auckland development finance company who have contacts with these funding sources. They also have experience in these types of transactions and understand the challenges property developers face therefore they can be more accommodating to the needs of borrowers. You will still need a sound business plan, with debt servicing and a loan repayment plan but these finance companies only work with commercial finance projects. They may even be able to suggest amendments to your strategy to help you save money, reduce personal risk and increase the profitability of your development scheme. They might even be able to introduce you to other people who can help with your commercial development plan.
Future commercial real estate development finance
Once you have obtained the necessary finances from your lender, managing the first few developments should be done with utmost care. The proper handling of the first few properties will definitely help you to borrow more money from the bank in the future. If you succeed here, the bank will definitely come after you asking when you will be borrowing again. This is why you need to play your cards with extreme care when managing your real estate projects.
Summary – commercial real estate development finance
Finance in general but commercial property development finance in particular is a complex business. It will pay you dividends to work with professionals who know the industry since they can not only arrange development funding but they also have contacts for other services you might need. The aforementioned is only a brief overview into the hugely complicated commercial and development finance market. Talk to experts like Global Pacific Finance Ltd for example, about how to get development finance for your Auckland commercial real estate project.
When planning to obtain a commercial mortgage in NZ, think ahead about all the implications, so you do not find yourself signing documents that you do not fully understand. Do some research about the different finance options available. Since the finance market, especially the commercial and industrial markets are so complicated, make time to educate yourself. This will help to avoid falling into any potential legal traps. Learn too about the costs of raising a commercial mortgage. And above all, be patient and take your time. It is important to have clear ideas about what commercial mortgage borrowing means and what are the correct steps to follow. Here are a few ideas:
Do thorough market research on different commercial mortgage providers before deciding which one to choose. There are plenty of potential finance companies in Auckland and other cities in New Zealand. Some specialise in specific types of funding while others provide across the board services. Some are smaller operations and others are the business side of the big commercial banks. Think about which type of lender you will feel more comfortable with.
Before applying for a loan, it is important to have all your papers in order. This includes your last year’s accounts audited by our accountant. You should also have papers showing the reason you are asking for this loan, the pay-back and the return n the investment you expect to receive.
If there are any adverse credit issues then look to correct these. You can and even do a research about your company’s credit history so you are able to explain nay issues that may be recorded.
In case you are taking the mortgage on an existing premises you own in order to open a business, having a business plan is absolutely essential. However, if your business is already operating then as mentioned before, be sure to provide your latest accounts.
Make a realistic decision about how much money you can borrow. Also do not borrow more than you actually need. Remember that a commercial mortgage is a debt which carries liabilities and obligations. It also comes with increasing costs in terms of interest payments. So be sensible when assessing how much you want to borrow.
Make a file that contains all the documents, files and correspondence related to the loan. This will save you time when you are asked to provide copies of documents, or if you need to refer to any papers to respond to lenders’ questions.
Research the market and obtain costs from different lenders and brokers for commercial mortgage in NZ. While lenders will want to do research about you and your business, you should likewise research the finance companies. Ask as many questions as you can about that lender in order to obtain confidence in them. Ask them for references too from other clients they have dealt within the past.
Once you have decided to apply for a commercial mortgage, think about the monthly interest payment expenses. If you want, you can also search online for a mortgage calculator to help you determine an approximate amount.
There are many more data points to take into consideration when you apply for a commercial mortgage loan, besides the monthly payment. You still need to consider the loan term, the loan amount, the penalties, the type of loan and many others. It is a difficult decision.
Once you have taken into consideration all the above requirements, it is important to also think about the other fees involved in such a transaction. These will include such things as a valuation on the building you are taking the loan against, your lawyers processing fees, any insurance policies you might need to take out and some financiers, especially the major banks, will also have fairly expensive administration fees as well. You need to build these into your budget and cash-flow forecast.
TIP: Remember to ask about the APR (annual percentage rate) which combines the interest rate and all the charges, fees and any other additional payments, and turned into a yearly interest rate. The APR is an indicator that tells you what your true are costs and will give you the opportunity to compare the costs of different loans.
TIP: Never take decisions based on verbal offers. A professional lender will always send you a written mortgage offer.
If you want a commercial mortgage in NZ there are plenty of lenders you can contact. These include boutique finance houses, brokers or you can go directly to one of the commercial banks. If you prefer not to go to a major bank, then you can look at one of the commercial mortgage broking companies like Global Pacific. You can find more details on their website www.globalpacific.co.nz/.
Best Mezzanine Finance Options Available in NZ Today
Generating the capital necessary to start a business that needs a significant amount of money to get going is a difficult process for many people, especially those that have never started a business before. You may have the best business plan, be thoroughly researched and be highly organised with a compelling action plan, but without the financial capital to actually purchase what is necessary to get your business up and running, you may never see your company get off the ground floor. Fortunately, there are many lenders in the world today that are looking for start-up companies that they can invest in because they see profit potential. Unlike a regular bank that is simply looking at your monthly income, your credit rating, and your ability to make your monthly payment, these investors are looking at a much bigger picture, the potential for generating substantial amounts of revenue. NZ mezzanine finance options are available for many people, but they may not be the best choice for everyone. Here is a quick overview of what you can expect when you are considering mezzanine financing options, and how you can also benefit from using these investors.
Overview Of Mezzanine Financing in Auckland and New Zealand
When you are dealing with investors that will allow you to borrow money to start your company, some of them are not looking for collateral but a financial stake in the company itself. Many of them will accept common shares, representing their claim on the company, which will increase in value once your business starts earning profit. This type of lending is called unsecured lending because, unlike a traditional mortgage which uses the business owner’s home or company-owned buildings as collateral, these investors are essentially wagering that you will be able to get your company up and running, making substantial profits, which will also benefit them. However, to offer this type of financing without collateral, to compensate for the risk they are incurring, they will always request a much higher interest rate. If you have ever been in a tight financial situation where you had to use a payday loan company to borrow a couple thousand dollars on a moments notice, the high interest rates that are charged by payday loan companies are done for the same reason that mezzanine capital lenders charge high amounts.
Understanding How Mezzanine Loans Are Structured
The financing for mezzanine loans usually consists of what are called preferred stock or subordinated notes. These financiers are looking for a specific rate of return on their investment which can be paid in various ways. Similar to a regular loan, you can make periodic payments to the lenders for the outstanding balance that is owed to them. The amount of interest that you pay will be dependent upon whether you are borrowing money with a fixed or fluctuating interest rate. It is always preferable for the borrower to get a fixed interest rate so they will know exactly how much they have to come up with each time they make a payment. You can also do what is called a PIK loan (Payment In Kind) and interest rate which does not require a monthly payment, but simply adding what you owe to the actual principle amount of the loan you have borrowed. Each and every company that you work with is also looking for some type of ownership in the company that they are starting. In fact, the reason that they are lending you money is because they believe, to some degree, that your ideas and business will work. Mezzanine capital is usually provided with what is called an equity stake in the company itself, a form of collateral that is very different from a traditional loan.
Other Reasons For Looking At Mezzanine Finance Options
Finding mezzanine finance
If you are not starting a company, but you would like to acquire a company, this type of financing is often used for what are called leveraged buyouts. this money is used in conjunction with other forms of financing including second lien loans and senior loans, and are often used as a measure of last resort. If it is a very equitable deal, both the buyer and the mezzanine lender will see the profit potential, and will work together to make this work. Mezzanine finance options are also considered with financing real estate projects, sometimes used by developers to make sure that they have enough money to complete the project. The collateral and this type of financing is a stake in the property that is being developed, making this a very lucrative deal for mezzanine financiers. All of these reasons for utilizing mezzanine capital are always designed to help both the borrower and lender achieve a substantial amount of profit.
Finding mezzanine finance in NZ
There are a few finance providers who can provide this type of funding to New Zealand businesses. Most are unknown to the general public. You can ask your lawyer or accountant for references as they will frequently deal with different finance firms on behalf of their clients.
Another option is to search Google and look for “mezzanine finance in NZ” or” mezzanine finance in Auckland”. One of the service providers you will find is Global Pacific. They are among the leading finance companies in the country and work with many clients on all sorts of commercial projects. These range from property development, through company acquisition to equipment financing and many other types of commercial funding work.
If you have a requirement for mezzanine finance in NZ, be sure to visit the Global Pacific website for more information.
Financing Your Business Equipment with Third-Party Credit in NZ
If you run a business, you are fully aware of the financial challenges of running as well as trying to expand the business. Money is the vital element that plays a role in building a reputation for the business. But at most stages in the development of any business getting access to funds to finance the growth is a challenge. Whether you are a start-up, an established business or a mature company, cash is always a problem. As a result companies often need businesses equipment finance to fund their next stage of development.
Let’s take a restaurant as an example although much of the following applies to any other small business operating in New Zealand. Some trading days are just bad, making things worse for an already financially tight situation. The restaurant will always have a flowing stream of cash but unfortunately too often it is with more flowing out rather than in. You just wish it was the opposite of this. All these issues leave you wondering where you can get that much needed money to buy the new cookers and other kitchen equipment for your restaurant.
These ideas might come across as negative views, but they are undeniable truths; even the most successful establishments will face financial struggles as they try to expand the business. So, the big question remains – which is the best way of financing a restaurant business?
Loans are always a quick call, but it that should a second thought looking at it from a lender point of view.
Deloitte & Touche LLP did a Restaurant Industry Operations Report in 2004 that indicated 4-7% pre-tax profit margins for restaurants. This finding suggests that lenders view even profitable establishments to be a huge risk. Then again, as is the case with loans, the bigger the risk the higher the interest payments are. This situation goes to show the level of financial strain that a low margin business like the restaurant trade faces.
On the other hand, financial creditors or lenders will gravitate towards your request for a loan if you own the restaurant business. You can place the business as a security against the loan but this is yet another risk. The lender will view it from its resale value, which might also not be that high as you hope. This will depend on the chances of finding a potential purchaser who can buy the property and there may not be as many as you expect. This will then lower the resale value of your establishment and hence the possible loan amount.
So, when seeking some financial support for funding plant and equipment finance, the ideal course of action is to talk with a third-party lender who has the expertise in the restaurant industry.
Accounts Receivable Factoring
Factoring is the sale of accounts receivable at a discount in order to accelerate the cash flow in the business. This is an option to take if a business seeks to get the money it needs to finance its expenditures without having to wait for outstanding invoices to be settled. For this reason it is also called cash-flow finance or invoice discount financing.
This makes accounts receivable factoring a good option for any business that is looking to get some quick cash with little risk and relatively low cost.
Private lenders to NZ businesses
Another source of finance is from wealthy private finance sources. These may be business people, trust funds or people with high nett savings. Often these people are looking for a better return than they can get from a bank deposit. And often they also have experience they can offer too which will further help the business owner. However for this article we will only consider the finance aspects.
The problem with this type of finance is that it is not widely advertised. Some magazines will run adverts but largely this source of funding is hidden from the public eye. So to get access to it you need to work with intermediaries who can either make an introduction or will carry out the negotiations on behalf of both parties.
You can look for commercial finance brokers who can act for you to gain finance from these wealthy financiers. Another benefit is that these private lenders are frequently willing to look at investments or loans which the main banks will not consider including equipment financing.
Typical funding projects
If your business needs some unusual and expensive plant or equipment, a bank may help but they will take a charge over the piece of machinery. You may need funds for:
Road and construction machinery
These can all be funded using private funding for NZ equipment finance.
Global Pacific Finance is one of the leading commercial finance brokers in NZ. They can help many businesses to find equipment finance in NZ.
A lot of businesses have their companies operating in rented premises yet are they overlooking the advantages of owning the building by means of a commercial mortgage? Generally it is a cheaper option to run a business out of rented premises yet there are numerous benefits to buying a property. If commercial property piques your interest, then this article might help you decide on the best way of getting a commercial property mortgage.
The advantages of a commercial mortgage.
When renting a property for business use, obviously you have to allow for the regular payment of the rent. This is easy to build into your cash-flow projections. Moreover rentals keep rising at regular intervals often at pre-agreed rates, like CPI or an agreed inflation amount. These are written into the rental agreements before they are signed.
Commercial mortgage for warehouse – image photoraidz
However, typically the lessee also has to pay for repairs, maintenance and other variable costs. These can play havoc with cash-flow plans.
The rental can be avoided if you have a commercial mortgage on your building.
There is also the added advantage of the property appreciating in value with time, as most real estate does. If you are leasing the premises, the owner gets the benefit of that growth in value of the property. If you are the owner of the building then you are the one who makes that financial gain.
Commercial mortgage gives you a piece of mind that owning a property does. You do not have to base your business on the vagaries of a landlord. This is not a small measure; imagine the costs of relocating if the landlord decides to sell.
The interest that you pay towards the mortgage is tax deductible, making for a more prudent tax planning.
One final major benefit of being a commercial building owner is that if by chance you happen to buy a large enough property that more than houses your business, the vacant premised can be let out to tenants. This brings in additional revenue as rent and spreads your risk. Currently there is a severe shortage of office space in Auckland so the chances of being able to rent out spare space are quite high.
The disadvantage of commercial mortgages
As with any type of loan, a commercial mortgage has its limitations too.
Firstly, most deals have to be started off with a down payment. For a commercial building this is typically 40% of the value of the building as most lenders will only go to a 60% mortgage.
This can be a substantial amount of money to be paid out at a one time. It can be even more stressful if you could use that money to invest in your business. What return could you get from growing your business compared to the saving in rent?
If your business is one that is seeing fast growth, then buying your building may not be a good idea.
This is because of the difficulty, costs and time necessary to dispose of any property but this is magnified when trying to sell a commercial property.
Further, being a landlord comes with the added responsibility of making sure that tenants maintain their premises, carry out regular fit-outs as required by most leases and that of course they pay their rent on time. This may cause an additional burden to a person who already has a business to run.
The costs involved with a commercial mortgage
Due to the risks and the costs involved, a commercial mortgage often carries a higher rate of interest compared to other types of mortgages like a residential home loan. No business can be a guaranteed success, and if your tenants are not able to make the rental payments, you are left to carry that repayment cost to the lender.
The legal costs for buying a commercial building are also much higher than for purchasing a home. You need to factor this into your initial costs. The legal fees associated with the leases though are usually paid for by the tenant.
Who should go for a commercial mortgage?
Seeing as the value of commercial premises rises as the rent increases and the value of the property is improved, it makes an attractive investment to certain types of people.
If you have an established company with strong cash-flow, then you could consider taking out a commercial mortgage to buy the building that you use for your business.
Another ideal opportunity to invest in commercial property by means of a commercial mortgage is if you have a Family Trust which has a strong capital base. It is common in NZ for Trustees of trusts to invest in commercial property to provide both capital growth and a solid rental income.
Obtaining a commercial mortgage
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The world of commercial property investment is very different from buying a rental house. For example, the requirements for a commercial mortgage in NZ are much more difficult than a residential mortgage. For one thing, the deposit is usually 40% so you must have a much bigger amount of spare cash you can invest.
You also need to understand how leases work, the notion of Capex, commercial property valuations and many more.
One way to get going is to talk to an Auckland commercial mortgage lender such as Global Pacific Finance. They arrange finance deals of all types including commercial mortgages for investment or property development. If you are thinking of buying the building you operate from or want to get into commercial property investment, give them a call or visit their website to start with.