As your apartment project moves towards completion with stock left to sell numerous lenders are now mandated to offer developers cost-effective residual stock funding.
This funding is usually required to repay construction debt and allow sufficient time to achieve sales of completed unsold stock. Residual stock loans can allow developers to move onto their next project without compromising sales prices.
Residual stock lending key information
First mortgage funding
Typically $2m to $30m loan value
Gearing to a maximum of 65% LVR against “in one line” valuation
Establishment Fees 1.5%
Rates 4.95%
Rapid decision and loan settlement
OUR PROCESSESS
CPC Development Lending Solutions secures market leading finance on your behalf – we get projects funded.
Working closely with our developer clients we are that new set of eyes that stress test your feasibility and project assumptions around revenue and costs.
We examine presales targets, project delivery team, transaction structure, funding request and timings. This allows your project to be presented professionally and takes it to the front of the queue leveraging off our strong non bank lending relationships.
For more information contact CPC today email [email protected] or phone +61 434 932 634
https://crowdpropertycapital.com.au/wp-content/uploads/2019/07/New-Project-Completion.jpeg23363500CPC adminhttp://crowdpropertycapital.com.au/wp-content/uploads/2024/07/CPC-LOGO_Landscape-Updated-Tag-OL-WHITE.pngCPC admin2021-05-09 11:25:042021-05-31 12:52:32Apartment & Townhouse Residual Stock Funding - Free up your Capital
The COVID-19 pandemic is reshaping economies around the globe with the local lending environment for development projects changing rapidly since March.
The property industry has already seen major impacts with lenders passing on riskier projects resulting in a substantial reduction in deal flow. One of the key changes over the last few weeks is the reduction in Loan to Value Ratios (LVR’s).
Lenders are requiring more equity from developers to protect their loan investment. We have seen a general reduction in risk/gearing with increased pricing. There are genuine post COVID deals being done now giving us and our clients the benefit of real time risk and pricing benchmarks.
If you are in the market for project funding there are options available as long as your project generally sits within the following criteria :-
First mortgage funding only
DA approved projects preferred with minimal planing risk
Experienced project sponsors with access to additional equity
Loan size $3m to $10m max
Gearing to a maximum of 55% LVR against GRV
Postcodes with no actual (or perceived future) oversupply
Purchaser demographic – local owner occupier focused, not reliant on investors
Generally 15 month max loan period
Zero pre-sales still available for smaller projects (2 – 10 dwellings)
Projects that sit outside of the above criteria may find it challenging in the current climate to secure funding. Some of our lenders at the moment are carrying out internal valuations as they reduce reliance on external valuer reports instead relying on their in house lending expertise and committees loan decision making.
CPC has a solid network of reliable private lenders who understand risk and property cycles – they are open for business and adjusting their lending criteria to strengthen their loan book in this current market cycle. The private lending market for developers remains active in pockets and generally excited by opportunities this dislocation is providing.
To confidentially discuss your bespoke funding solution contact us today on email [email protected] or phone +61 434 932 634
https://crowdpropertycapital.com.au/wp-content/uploads/2020/04/Approved-Rejected.jpg393620CPC adminhttp://crowdpropertycapital.com.au/wp-content/uploads/2024/07/CPC-LOGO_Landscape-Updated-Tag-OL-WHITE.pngCPC admin2020-04-22 23:14:042020-06-07 06:29:32Lower LVR's - The New Normal for Developers
A registered first mortgage funding opportunity exists to fund a development project 11kms south of the Sydney CBD.
This opportunity is lead by highly experienced property development executives who are able to better assess risks and provide funding on loans with Loan To Value (LTV) ratios and Covenants that are reflective of the specific projects risk profile. The maximum LTV on this loan is 42% secured via first mortgage.
The developer has acquired the site for $26.5M in 2016 (100% equity funded). The total required facility of $11M is secured against the existing five lots. The maximum LVR is assumed to be 42% (subject to valuation).
The development is a 6,000m2 site yielding 168 apartments and is located 11km from the Sydney CBD. The site is 350m from the train station and 2km from Sydney Airport.
The exit strategy for this loan is the developer completing his current project in another suburb of Sydney. The developer has a solid track record of delivering apartment projects in Sydney (2012-2016 delivered 480 units over 5 projects, GDV $213M).
The minimum investment is $1.1M and interest is 10% paid monthly in arrears. This opportunity is open for a limited time only, further details are below.
INVESTMENT DETAILS*
Loan Facilty Type
Registered 1st Mortgage
Interest Rate (investor)
10% per annum
Total Loan
$11M
Minimum Investment
$1.1M
Loan Term
12 Month Facilty from settlement date
Max Loan to Value (LTV)
42% (subject to valuation)
Targeted Financial Close
Settlement occurred 1st September 2017
WHO CAN INVEST?
An investment of $1,100,000 or more by any Australian resident or non-resident.
Any business that is not considered a small business (less than 20 people)
Professional & sophisticated investors
An Australian financial services licensee
A body regulated by APRA include banks, building societies, credit unions, and life and general insurers.
A trustee of a superannuation fund
An approved deposit fund,
A pooled superannuation scheme
A listed entity, or a related body corporate of a listed entity.
To obtain further an Information Memorandum (IM) for this investment please contact [email protected] or ph. 0434 932 634. *Refer to IM for additional information.
https://crowdpropertycapital.com.au/wp-content/uploads/2017/12/aerial-sydney-cbd.jpg636955CPC adminhttp://crowdpropertycapital.com.au/wp-content/uploads/2024/07/CPC-LOGO_Landscape-Updated-Tag-OL-WHITE.pngCPC admin2018-01-15 06:15:352020-01-08 15:55:211st Mortgage Debt Deal Southern Sydney Development Site
New research showing Australia has risen to become the second largest alternative finance market in the Asia Pacific sends a strong signal to the world about the underlying strength of Australia’s fintech and business environment.
Findings from a joint study by KPMG, the Cambridge Centre for Alternative Finance and the Australian Centre for Financial Studies, released today, reveals that Australia’s alternative finance market size grew by 53 per cent from 2015 to 2016 and has now reached US$609.6 million.
FinTech Australia CEO Danielle Szetho said the report’s findings showed how the Australian fintech industry – in areas such as invoice financing, balance sheet lending, peer-to-peer lending and crowdfunding – was servicing the nation’s strong economy and the needs of growing small and medium-sized businesses.
“The demand for our products and services is strong and our fintech lenders are rising to the challenge. This broad-based reports showcases the cumulative efforts of government and regulatory bodies like the Australian Securities and Investment Commission (ASIC) and Australian Prudential Regulation Authority (APRA) to support the accelerating momentum behind alternative finance in Australia,” Ms Szetho said.
More and more developers these days are asking themselves should I sell one (or more) of my sites and consolidate operations? Why would a developer sell their lively hood? Are they in trouble? Are they too stretched? What’s happening to their business?
There are many reasons why a developer may consider selling a site (raw or approved) but they have usually decided to curb expansion plans or had unforeseen delays on existing sites or need to free up capital to complete other projects. If the developer goes about it the wrong way it can greatly tarnish their brand and market perception.
Here are 5 things to consider before listing your development site with an agent:
1. Is there any demand for my site?
If your site is located in an area of future oversupply be prepared to not find a buyer. Banks and private lenders are ruling out funding certain suburbs of Sydney. Limited ability for an incoming developer to obtain finance means your pool of buyers is extremely limited.
2. What’s my pricing strategy? Can I still make money on the site?
If you have purchased a site within the last few years and got a DA approval then you know exactly how much the site owes you. Site values peaked in 2015 so many sites bought at the peak may not re sell for the same value. You should trying put aside your emotions, agents will always pump up the sale price but talk to valuers and development managers. They know how much a site is worth, you should be ready to accept a fair price. Don’t get greedy or your strategy may backfire.
3. Do I really want to advertise this sale with a major agency?
Signing an agency agreement with one of the big agents is like pulling your pants down. You are exposing your business to speculation that things are not going as planned and you will pay for the privilege. You will be assured of a vast database of buyers (none qualified) and you will run an expensive print and media campaign. A scattergun approach that exposes your business in this delicate situation is not the answer. A targeted and swift off market campaign is a better strategy to keep you divestment plans private, find qualified buyers and free up your capital ASAP.
4. My site is DA approved, it must be worth more?
In todays market more often than not developers are looking for raw sites, the market has peaked and smart developers are looking at sites for the next cycle. Expert developers will have their own brand and strategy and your DA adds no value to the transaction. The time and effort spent on getting the approval has no doubt been considerable but putting emotions aside and seeing it through the buyers eyes will help manage expectations.
5. Understand your buyers financial position
Once your site is for sale you will receive a wide range of offers. Some will be high and others extremely low and opportunistic. You should take a vested interest in reviewing the companies behind all of your offers, you must understand your bidders. It is likely a high bid is from an operator who is willing to pay more to ride out the cycle, the risk is their financial capacity to settle. Most land banking developers will not need finance and they will not pay over the odds – they are probably your underbidders.
Written by David Lovato from Crowd Property Capital, CPC is a peer 2 peer platform providing capital funding channels for Australian property development. For more information visitwww.crowdpropertycapital.com.au
https://crowdpropertycapital.com.au/wp-content/uploads/2017/09/For-Sale.jpg199253CPC adminhttp://crowdpropertycapital.com.au/wp-content/uploads/2024/07/CPC-LOGO_Landscape-Updated-Tag-OL-WHITE.pngCPC admin2017-09-10 11:46:112019-08-06 02:04:05Selling your Development Site? 5 Things you should consider.....
P2P lending is the practice of lending money to businesses through online services that match lenders with borrowers.
As we move into the second half of 2017 more property developers are having to turn to P2P lenders as their access to traditional forms of capital is tightening.
The major banks are extending less credit to property developers, as a result credit is drying up to many development companies who are turning to these P2P funding channels – usually at higher interest rates.
Investors now have a wide range of options to obtain higher yields via participating in these loans but sorting the out the good deals from the bad is not easy as these investments are unregulated and carry substantial risks.
We take a look at 5 key things you should know about P2P lending before making any investment decisions:
Don’t chase exceedingly high returns
If a debt offering is returning over 25% and is a “mezzanine style” deal chances are its extremely risky. A developer may have no options other than paying high rates like these over short periods but these deals are highly leveraged and need greater due diligence.
Bottom Line – Avoid deals that promise high rates of return, they are extremely risky and you may lose your capital.
Know your investment timeframe
P2P lending allows developers to use your funds to grow their business by providing capital to buy new sites or pay their bills on existing sites.
You generally won’t have the option of getting your funds back prior to the expiration of the agreed loan period. Most developers will need these funds for 12-24 months or longer until they complete their projects.
Be prepared for extended loan periods as projects encounter delays such as wet weather or underestimating the time to completion.
Bottom Line – Understand what project you are investing in and the agreed timeframes for your investment returns.
Investment Security
Just like the major banks, P2P investors should be looking at security in the underlying asset to protecting their investment.
Lending on a first mortgage basis is the safest way to ensure your investment is protected. If a developer defaults on your principle or interest repayments you still have the benefit of first mortgage security. This puts your investment in a strong position as you have underlying ownership of the land.
Bottom line – First Mortgage investment provides investment security.
Research the developer
Like the stock market, investors need to do some research. You need to understand the basics of a property market and drivers of economic development. How much of a track record does this developer (your borrower) really have?
Where is the project located? Is it close to new government infrastructure? Is there a need for housing, education, healthcare or retail services in that particular area?
Does the developer have a proven development team with delivery experience on completed projects? Who is their preferred builder? What is the builder’s experience?
Bottom Line – You should ask all these questions prior to investing.
Deal with reputable P2P lenders
Your best chance of a good initial (and repeat) experience in P2P lending is to do your research. The quality of the offerings (not quantity) is key. Online operators should have a local presence which is regulated by ASIC.
Bottom Line – There should always be someone you can talk to on any P2P website. Pick up the phone, make contact and get to know who you’re dealing with, you will soon find out if they know what they’re talking about.
About Crowd Property Capital: CPC is a modern property marketplace fueling a shift into the world that’s less dependent on the traditional incumbents and middle-men. For further information on P2P lending contact David Lovato on +61434932634 or visit http://crowdpropertycapital.com.au
https://crowdpropertycapital.com.au/wp-content/uploads/2016/12/images-6.jpeg183275CPC adminhttp://crowdpropertycapital.com.au/wp-content/uploads/2024/07/CPC-LOGO_Landscape-Updated-Tag-OL-WHITE.pngCPC admin2017-06-18 10:10:442019-08-06 06:01:46Peer 2 Peer (P2P) Lending - 5 Things you should know before investing
25 Glasgow Avenue is for sale by auction 8th April 2017
A development site with the opportunity to build two executive residences (STCA) is for sale by auction on 8th April 2017.
Located in the heart of Bondi Beach moments to the sand, surf, boutique shopping, and cafe precincts the property offers investors a solid value proposition.
Key investor information
Existing 3 Bedroom house on a 418m2 parcel with 18m frontage.
Raw development potential for two executive residences with car parking, extensive landscaping and plunge pool (STCA).
Strong rental yields post-acquisition, highly rentable existing 3 bed residence moments from the beach.
DA precedent for dual occupation design based on neighboring properties.
Whether your objective is to develop to sell both dwellings or live in one and sell the other this is a compelling investment opportunity.
The below information provides a concept design that has been produced in consideration of existing planning controls.
An artists Impression of the possible redevelopment of 25 Glasgow Ave Bondi Beach (STCA)
Basement and Ground Floor Design
The concept design allows off street parking for two cars, generous open plan living areas combined with a spacious outdoor rear deck area, plunge pool, and outdoor shower area. The front study could also be used as a 5th Bedroom.
The first floor and an attic level.
The first floor consists of three well-proportioned bedrooms, the master and rear bedroom have their own private balcony. Functional use of the roof has allowed a large 4th bedroom or teenage retreat in the attic space.
The above table summarises the proposed design based on the current planning controls of Waverley Council.
For further due diligence information on this property:
Disclaimer: No enquiries have been made with Waverley Council regarding the suitability or acceptance of this or any potential Development Approval. While much care has been taken to ensure that the data presented is accurate investors should make their own enquiries. This information should not be relied upon for valuation purposes.
Existing property at 25 Glasgow Ave Bondi Beach
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Knight Frank have just released a report into emerging trends of Chinese developers in Australia, the report shows statistically an insatiable appetite for site acquisition throughout the country. This long term trend is set to continue and it’s impacting local developers as they become the under-bidders and miss out on new sites.
The following are key takeaways from the report:
Chinese developers are buying larger sites, average dwellings per site in 2016 = 502 (versus 2012 = 103);
Chinese site acquisition represent a massive 38% of all direct residential sites in Australia (versus 2% in 2012)
Chinese developers are interested in larger sites and are diversifying from apartment sites into house and land product.
These statistics underpin the strength of demand for Australian residential assets. This interest driven by China is a net positive for our region as it ultimately results in increased economic activity which in turn creates jobs.
https://crowdpropertycapital.com.au/wp-content/uploads/2017/02/Year-of-the-Rooster.jpg225225CPC adminhttp://crowdpropertycapital.com.au/wp-content/uploads/2024/07/CPC-LOGO_Landscape-Updated-Tag-OL-WHITE.pngCPC admin2017-02-02 20:08:512023-06-05 02:28:27The Rise of Chinese Developers in Australia
In what was one of Shark Tank Australia’s biggest shutdowns of the second season, founder of Crowd Property Capital (CPC) David Lovato reflects on what was a cringe-worthy flat out rejection on national TV.
“From the moment I entered the shark tank I realised they hated the idea of backing a property industry start-up. I was a made to look like a property industry villain and walked straight into a bear trap.
I didn’t get any feedback from the show until the actual airing. As soon as I watched it I knew it was bad. Instead of my mates giving it to me there were crickets; not a word of banter but rather uncharacteristic blokey support which was concerning”
Fast-forward 6 months and the impact of getting on the show (and failing) has inadvertently become a major factor towards the early success of CPC. The online property development funding platform has taken on board the collective criticism from the sharks and changed the focus of the business model.
Originally the CPC platform was pitching to smaller retail investors, the focus is now purely on the sophisticated investor interested in lending debt capital to developers solely on a 1st mortgage basis.
The reality is, property development and investment are inherently risky and investors entering this space usually have substantial funds to invest, an appetite for risk and it’s not usually their first deal.
“There has been a lot of buzz around the ability of the online community via P2P and crowdfunding to open up the property industry to smaller retail investors. I learned from the Shark Tank that even the sharks don’t fully understand the risks and returns in property development; so obtaining investment from smaller “unsophisticated” retail investors is a hard sell.”
Since the Shark Tank pitch last year, David’s taken a measured approach to growing the CPC investment platform.
Teaming up with existing established private lenders, CPC has found its place in the market by offering 1st mortgage security investments yielding between 8 to 12% annually. The CPC website www.crowdpropertycapital.com.au showcases some of the available debt finance deals. This web-based platform provides wider access to potential investors both locally and offshore. All investments are debt style and start at a minimum of $500,000 AUD.
“CPC is essentially evolved into what I’d call a “trad-tech” investment platform. We are focusing on partnering with established private lenders to increase their investor base as there is a huge demand at the moment for non-bank finance.
With the major banks reducing their exposure to development debt finance local developers are seeking additional funds to complete their project pipeline.
Traditional private lenders have numerous quality deals with great returns that they are struggling to fund purely due to the gap that has emerged in the market from the majors scaling back. With the property market so hot at the moment, we are focused on cherry picking the best deals. Quality, not quantity is key.”
As a bumper year for property investment comes to a close emerging trends towards non-bank finance in the property space gather steam heading into the new year.
Developers need more funds to deliver their projects as the major banks pull back on finance.
As more investors get comfortable with researching higher yielding investment opportunities we take a look at the key things you need to know about Peer to Peer (P2P) debt style lending in the Australian property market.
Don’t chase high returns
If a debt offering is returning 18-30% and is a mezzanine type deal chances are its extremely risky. A developer is only paying this pain money as a last resort as accesses to cheaper funds are no longer an option for him.
If things go wrong you are at the bottom of the pile and you will probably not see a cent.
Know your investment timeframe
Investing in a P2P loan means you are essentially becoming the bank and loaning money, borrowers (in this case property developers) are looking to use your funds and in return you are providing them with a fixed rate for your money for a fixed period of time.
You generally won’t have the option of getting your funds back prior to the expiration of the agreed period. Most developers will need these funds for 12-36 months until they get settlements at the end of the project.
Seek investment Security
Just like the banks, P2P investors should be looking at security in the underlying asset to protecting their investment.
Security can be achieved in a P2P debt loan by being the senior debt provider and in exchange receiving the 1st mortgage over the property. Combine this security with lending up to a maximum of 60% of the Gross Realisation Value (the assets value once the development is complete) and your investment is cushioned with a relatively good factor of safety.
Lending on a first mortgage basis is the safest way to ensure your investment is protected. Generally returns around 7-10% per annum can be expected in today’s interest rate environment. If a developer defaults on your loan the benefit of first mortgage security is you have the ability to act swiftly and recoup your investment should things go wrong.
Research sectors and markets
Like the stock market, investors need to do some research. You need to understand the basics of a property market and drivers of economic development.
Where is the project located? Is it close to new government infrastructure? Is there a need for housing, education, commercial offices, healthcare services or retail services in that particular area? What are the underlying economic forces that give this project the best chance of success. Does the borrower have a proven development team with delivery experience and track record.
You should ask all these questions prior to investing.
Deal with local established private lenders
Your best chance of a good initial (and repeat) experience in the relatively new online P2P lending market is to deal with local established operators.
If you come across a P2P website pick up the phone, make contact and get to know who your dealing with. You will soon find out if they know what they’re talking about.
Established operators operate in an ASIC regulated environment usually within Managed Investment Schemes. Invest in contributory mortgage schemes as opposed to pooled mortgage schemes. With a contributory scheme you are investing in a mortgage fund with the benefit of your investment being limited in default liabilty to only your project as opposed to multiple projects.
Private lending by pooling funds to loan to borrowers is not a new concept, it was once only available to wealthy individuals who had the contacts to achieve higher return. Now with the Internet opening up investment markets and major banks pulling back funding these P2P opportunities are becoming more readily available.
For further information on P2P lending contact David Lovato at Crowd Property Capital on +61 434 932 634 or visit http://crowdpropertycapital.com.au
https://crowdpropertycapital.com.au/wp-content/uploads/2016/12/images-7.jpeg191264CPC adminhttp://crowdpropertycapital.com.au/wp-content/uploads/2024/07/CPC-LOGO_Landscape-Updated-Tag-OL-WHITE.pngCPC admin2016-12-05 12:14:042019-08-06 05:55:105 Tips for Better Understanding Peer-To-Peer (P2P) Property Lending in Australia
