Your various Queries on Finance ...
Hi JIT:
Sorry -- but it was a hectic morning ... and I wanted to try
and address your queries as best I could in the time I had.
The situation Centro find themselves in ought not spread any
wider; and is basically self-inflicted.
Put simply, it looks as though they got their equity raising
and debt activities out of sinc.
But, by any gauge, their underlying properties are all quality
assets. And yesterday's AFR (pages 38 & 48) included a fairly
well-credentialed list of possible overseas suitors.
On your wider questions about finance ...
These deserve a far more-detailed answer then this will
provide. I guess that's one of the benefits of being able to
spend an entire day with Investors at my Workshops - when you
can explore these types of issues more fully.
Unfortunately, I find the problems most Investors face tend
to stem from paying scant regard to their actual funding
requirements. I think you are already aware of my 9-Step
Investment Formula -- where two of those steps relate solely to
funding your deal.
STEP 3: "How to Sleep Soundly" ... shows you how to ensure the
banks will lend you what you need and expect -- based on the
contract price.
STEP 6: "How to Lock-in Your Loan Terms" ... covers a clever
technique, which helps to avoid any last-minute surprises.
After nearly 40 years, I've had the chance to examine hundreds
of deals; and get to understand the fundamental aspects of what
you'll need to succeed in Commercial property.
All I've done is break down and reassemble them into
9 simple Steps; and package them in a way that probably
challenges conventional logic.
Sure, I'm causing vendors and lenders to change their way of
doing business. And even some agents are complaining that I'm
divulging their "property secrets".
But, as I am acting for the Buyers ... that's not my concern!
And structured properly, you should be able to remain in control
of your funding needs.
Therefore, the short answer to your question is that none of my
clients have so far had any difficulty in arranging their funding.
Specifically on smaller, Private Syndicates ...
Late last year, I put together a purchase for a small private
syndicate at $3.575 million in Moorabbin. They were able to
arrange some non-recourse funding for that at 8.2% ... fixed for
4 years.
So, I think the media is distorting things a bit on the effect
of the sub-prime crisis.
But I have a greater concern
And that is with the effect rising interest rates will have on
the value of house prices. I am not really talking about the
much-publicized "trophy" homes. Rather those under $1 million.
For the unsuspecting Commercial investor, the flow-on effect
could be quite devastating. Because ... many investors have used
the equity in their family home as security for their Commercial
property investments.
Here's a link to where I've covered this in more detail:
http://his-best.biz/2007/06/26/family-finances-are-being-stretched/
One other thing to watch out for ...
It's not quite ready yet ... but I'm putting together a rather
crucial Video for my clients, on the real trouble spots around
Australia.
If you, or anyone else, are interested ... I could let you know
when its available -- and don't worry, it will be FREE.
I've quickly set up somewhere for you to leave your details --
that way, I can let you know as soon as it's ready ...
http://his-best.biz/warning-video/
Hope this helps to answer your questons.
All the best ... Chris