Ethan Tan’s Post

In my research, it's very apparent how important brokers are, on a qualitative level, to the finance industry. The latest stats back it up too; broker use is at a new high. Housing finance in Australia is a massive industry. There were $584 billion in new loans funded in the last year. And the use of third party originators (brokers) is growing. Brokers now account for 61% of new loans. 5 years ago, that figure was 50%. That amounts to $356 billion in new housing loans going through brokers. A 93% increase on 5 years earlier.

Interest rates play a pivotal role in commercial real estate (CRE) transactions, influencing both the cost of financing and the overall value of properties. When interest rates are low, borrowing costs decrease, making it easier for investors to finance deals, which can drive up demand and, in turn, property values. Conversely, rising interest rates increase the cost of debt, which can dampen demand, reduce buyers' purchasing power, and potentially lower property prices.For investors, interest rates affect not only their ability to finance deals but also their return on investment (ROI). Higher rates mean higher monthly payments, which can squeeze cash flow and reduce profit margins. Additionally, interest rate fluctuations can impact cap rates—used to assess a property’s value—leading to adjustments in pricing and investment strategy. Savvy CRE investors closely monitor interest rate trends, knowing that timing is critical when securing financing. A rise or fall in rates can make or break a deal, and the ability to structure financing strategically can often determine the success of an investment. Understanding the broader economic environment, working with experienced lenders, and forecasting potential rate changes are all essential strategies to mitigate the impact of interest rate volatility. #PDF #PaulFrankTeam #LearnCRE #ExpandYourBusiness #CommercialRealEstate #LearnCREwithPDF #PaulFrank #RealEstateTips #CRETraining #ExpandYourBusinesswithCRE #CoachFrank #PDFCommercial #PDFResidential #LearnRealEstate #CommercialModelExplained #LearnWithPDF

Let’s thoroughly discuss another financial term which is “Breakeven occupancy” Breakeven Ocuupancy is a crucial metric in commercial real estate development. It represents the occupancy level at which a property’s total operating expenses and debt service are covered by its rental income. The breakeven occupancy ratio is calculated using the following formula: Breakeven Occupancy Ratio = (Total Operating Expenses + Total Debt Service) / Potential rent income Components of the Calculation: Total Operating Expenses: These include property taxes, insurance, maintenance, utilities, and property management fees. Total Debt Service: This is the total amount of loan payments, including both principal and interest. Potential Rental Income: This is the total income the property would generate if fully occupied. Example Calculation Let’s say you have a commercial property with the following annual figures: Total Operating Expenses: $500,000 Total Debt Service: $300,000 Potential Rental Income: $1,200,000 Breakeven Occupancy Ratio = (500,000 + 300,000) / 1,200,000 = 67% This means the property needs to be approximately 67% occupied to cover all expenses and debt service Importance of Breakeven Occupancy Understanding the breakeven occupancy helps developers and investors assess the risk associated with a property. It provides insight into how much vacancy a property can withstand before it starts losing money. This metric is particularly important for: Lenders: To evaluate the risk of loan default. Investors: To determine the viability of an investment. Developers: To plan and manage property operations effectively. #realestate #feasibility #financialmodelling #breakevenoccupancy #debtservice #operatingexpenses

What to Do if You Can’t Repay Your Property Development Loan in the UK Property development can be a highly lucrative venture, but it comes with significant financial risks. If you’ve taken out a property development loan and find yourself struggling to meet repayments, you’re not alone. The UK property market is volatile, and unexpected challenges—from rising construction costs to delays in planning permissions—can derail even the best-laid plans. Failing to repay a development loan can lead to severe financial consequences, including the risk of repossession, legal action, and long-term damage to your creditworthiness. However, there are strategies to help you manage the situation effectively and potentially avoid the worst outcomes. In this article, we’ll explore actionable steps you can take to navigate this challenging situation and regain control. 1. Understand the Gravity of the Situation The first step is to fully assess the state of your finances and the severity of your repayment issues...................................................... To read the full article go to https://lnkd.in/evBJ7aDc For more information contact us #UKPropertyDevelopment #PropertyFinance #DevelopmentLoans #RefinancingUK #PropertyInvestingTips #FinancialRescue

Signs that national commercial real estate prices as well as consumer confidence have bottomed out. CRE still has challenges of course, so SVN's latest economic update is worth a quick read! https://zurl.co/5mCB #svn #economy #cre #commercialrealestate

🏗️ Financial Distress in Construction: A Deeper Look The Begbies Traynor Red Flag Alert research is clear: the number of construction companies in "significant" financial distress has soared by 38.6% in Q1 2024, with the sector also leading in "critical" financial distress. This distress paints a concerning picture of an industry under immense pressure, mirroring broader economic challenges faced across the UK. Intermediaries and Business Owners; we're on hand if you have any questions regarding construction and/or business finance solutions. https://hubs.la/Q02vvQPN0 Despite entering 2024 with a semblance of optimism, businesses, especially in construction, continue to grapple with the same severe pressures that have been compounding since last year. The reality is that many of these companies are burdened with unsustainable debt levels, originally accrued as survival tactics during the pandemic. Now, these debts are threatening their very existence. At Provide Finance, we've witnessed firsthand the struggles and the resilience of businesses trying to navigate this environment. We've been actively working with our clients, not just in construction but across sectors, helping them understand and leverage the breadth of financing tools available to them. This includes everything from government-backed funding schemes like the Bounce-Back loan scheme and the Growth Guarantee scheme to specialised financial solutions tailored to enhance cash flow and alleviate debt burdens. 🔍 We've found that many business owners and property developers are unaware of the resources at their disposal. Solutions that can provide significant relief in such circumstances. For those feeling the weight of financial pressures and looking for ways to navigate through, we're here to help explore your options. 🔗 In response to DFT's latest article: https://hubs.la/Q02vvQZZ0 #ConstructionFinance • #BusinessResilience • #EconomicRecovery • #ProvideFinance

Due to higher and prolonged interest rates and tighter lending conditions, US developers have experienced a significant increase in the time it takes for an average apartment project to move from construction authorization to the start of construction. This duration has risen to nearly 500 days, representing a 45% increase since 2019.

Bridging finance and complex case expert Market Harborough Building Society has reduced its monthly short-term rates by up to 0.02%. The specialist lender’s bridging finance rates now start from: 0.62% variable* and 0.66% fixed* for up to 50% LTV 0.68% variable* and 0.72% fixed* for between 50.01% – 60% LTV 0.74% variable* and 0.78% fixed* for between 60.01% – 70% LTV *Rates are approximate with interest charged daily. This news comes after the award-winning lender announced last month that it had enhanced its short-term range, with products available for loans up to £5m and its maximum loan to value (LTV) extended to 70%. https://lnkd.in/evRUkNCP

Real estate finance is ever changing, and as expected there could be some relief in terms of lower interest rates in 2025 https://lnkd.in/gq-HbcTB

Are you a property developer facing challenges with unsold units? Recently, we’ve seen an increase in property developers seeking financing for properties that are built but haven't sold as quickly as expected. These developers often need to extend their marketing efforts while addressing current financial needs, such as expiring finance terms or capital to fund new projects. Here’s how we can help: We offer the ability to raise up to 75% gross of the current value for a term of 12 months, with no early exit fees. This solution allows developers to pay off existing finance and access additional capital to purchase or develop other properties. As properties sell, the debt is reduced. In some cases, when the debt reaches a certain level, we can even arrange sale splits - so for example, a 60/40 split: 60% of sale proceeds to pay down debt and 40% for reinvestment in further development. Need funding for incomplete projects? We can also provide financing for developments that are not fully completed, offering up to 65-70% gross of the value to help you finish the build. Typical fees include a 2% lender arrangement fee, as well as legal and valuation fees. If you’d like more details or to discuss financing options for your development projects, feel free to reach out. Schedule a Call: https://bit.ly/2VOv9tS Website: https://lnkd.in/dUPWQwDi YOUR CAPITAL IS AT RISK IF YOU DO NOT KEEP TO THE TERMS OF YOUR AGREEMENT THE MONEY HUB LIMITED ARE A LICENSED CREDIT BROKER AND NOT A LENDER.