There is an abundance of opportunities available for investors at the moment & we are looking at all options, working the feasibility & selection process to make sure we & our clients are getting the very best of these.
However, with opportunity comes risk & uncertainty. It’s in these risks there is often the best potential in a property. We take all the precautions we can. Advice from third party consultants, reviews of past projects & generally tapping into ours & those around us experience, knowledge & problem solving capabilities.
There is one area that is a real challenge for us. Funding these projects.
Lenders are notoriously risk averse, understandably of course, but we have to find a way to help them see the opportunity for what it is.
We are working significantly in the mixed use & commercial conversion to residential projects at present, this has presented us with a challenge.
Lenders, even the most dynamic & forward thinking, are cautious in this area. Their worry is over the state of the high street & the appetite for new business’ to want to return to traditional high street shops. This has a direct result on the percentage you can borrow against these projects of Loan to value (LTV). This is often closer to 50% than the traditional 70% of a straight residential conversion.
In addition, where we are retaining commercial spaces within the completed project, there is sway towards more cautious exit lending also.
Our solutions based approach means we don’t just give up on an opportunity, it does mean we look even more carefully at the project & make sure we have assessed & investigated all exit strategies aggressively.
Top tips for assessing these projects;
Borrowing Costs & LTV