Tips To Find Development Finance For Auckland Commercial Property
Do you want to know where and how to find commercial property development finance for Auckland real estate investment projects? If you do, you have come to the right place. Read on to find out where, as well as how to find financing for real estate development.
Big banks and commercial development finance
One of the most common places people turn to when they need financing for commercial property development is the big banks. This is an obvious thought since the banks promote all kinds of different finance packages. As a result, the major banks often have different kinds of financing including loans that are specifically for people who need money for commercial ventures. However, it is worth noting that most banks do not really like property development as the risk associated with these projects is too high for their standard measures. Many banks will not even lend to commercial property development but those that do have some very difficult requirements for this type of real estate development.
Here is a tip to keep in mind if your own banks declines you. Often it is up to individual managers as to the projects they will fund. If you go to a competing bank they may look at your real estate project with different eyes. So for this reason alone, research as many big banks as you can. This may seem like a daunting task, but it isn’t that difficult especially if you do some preliminary research online. You can perform a search very quickly and compare big banks and their loans for commercial projects and their mortgages which you can use for viable development plans. The more research you do, the better the chances are you will find a good bank to do business with.
Private investors for development finance
Private investors can also provide you with the funds you need for commercial real estate development. There are a number of ways to locate private investors, with one of them being the Internet. There are many websites that are specifically designed to connect you with potential private investors. Also, word of mouth is another way to find possible investment sources, but keep in mind that getting private individuals to provide you with funding can sometimes be a daunting task.
Commercial real estate agents
Some real estate agencies may be able to guide you in the right direction. Real estate agents area always looking for leads and if they help you develop your property, then you will need to either sell it or find tenants. Whichever the case, you will need the services of a commercial real estate agency and, since they helped you find the finance, you are more than likely to turn to that agent to find buyers or tenants. Further, agents know all sorts of people in the commercial property field and have probably sold investment properties to investors who understand your market and so may be happy to be involved in your project.
Commercial finance brokers for development finance
Perhaps the easiest route to development finance in Auckland is to go to a broker. Finance brokers are used much more extensively in the commercial field than in the residential market. This is because these companies have access to many different types of lender that the general public is simply not aware of. They often have links to private investors mentioned above but they can also access the secondary and tertiary lending markets.
Further all of the people involved in this sector know and understand the risks far better than the regular banks do. This is their business and so they are more accustomed to the risks, the challenges and how to mitigate against those possible problems. They understand how the commercial property market works.
Another benefit of going to a specialist provider for commercial property development finance is that they have experience which they can pass on to you. This is really useful in preparing your applications and business plan. They will know what different lenders are looking for and can guide you to bias your presentation to the positive triggers of those funding sources. One such specialist development finance provider is Global Pacific Finance Ltd in Auckland although they do provide finance across New Zealand.
More tips and advice about development finance in Auckland
Have a good business plan before you go to see any potential finance company. You may need to tweak it but it will be the basis for the discussion.
Make sure you have an exit strategy or some other means by which they lender will get their money back. This is crucial. You may choose to sell the finished property development and repay from the proceeds. Alternatively you might want to keep the property in which case you can raise a commercial mortgage which you fund from rental income and repay the initial loan from the mortgage. You need to be sure that you can raise sufficient capital to afford to pay back the original capital.
Also, just do as much research as possible on all types of investors. This way you can see what sort of thing will interest different lenders and therefore be able to adjust your pitch to satisfy their preferences. The key is to get their confidence and all ay their fears of not being paid.
The last tip you should keep in mind is to apply for financing with at least three or four different banks or lenders. This will not only increase your chances of getting financing but if you are lucky you might have more than one offer and can therefore negotiate better terms.
Finding commercial property development finance for real estate projects in Auckland does not have to be hard. Follow the above tips and you will be fine. Just make sure to be persistent in your search for financing. For more information on Global Pacific, click here.