Investing in the property or real estate market is one of the easiest modes of investing and yet it can be one of the most complicated too.
When you choose to invest in property then you have chosen to deal with many business financiers.
You have, in fact, elected to deal with the vendor financier, the venture capitalist and even the banker who will, in most of the times, fund projects either in whole or in part.
Bankers, especially, will investigate title or conduct a search and they may even do more depending on the funding required.
Let's take a look at the 7 insider bank secrets that will help you get the property investment loan you need: 1.
Make sure you have Proper Title to the Property As an investor, you must be able to prove to the banker that the property actually belongs to you.
The detail of title is one of the most critical elements for lenders of all types and especially banks.
You may know that in Australia, a large percentage of land is owned by the government (72%) while the population holds part of the remainder.
As most people will usually use the property that they have to secure the loans, it will only be proper for you as the borrower to "clean" your title from any encumbrances before hand.
2.
Enhance your Property Equity Property equity basically means the difference between the true market value of the home and any outstanding loan to the banks.
The more equity you have in your property the more the chances of getting on the good side of the bankers.
Equity will also depend on whether the loan advanced was through a reverse mortgage or the conventional type.
Advice on these will be of much assistance.
3.
Present a Business Proposal Presenting of business proposals to the lender is a sure way of convincing them to advance loans.
These will contain the nature of property business that you are engaged in, that is, buying and selling, developing to sell, developing to let/rent or simply developing.
Investors will also want to know your management skills and this encompasses your staff if the loan is being advanced to a property investment company.
4.
Try to Self Finance part of the Investment A property owner who seeks 100% financing from banks may raise eyebrows.
It will therefore be appropriate for you as an investor to show your commitment to the property project by financing at least 20% of the total required amount.
Indeed, a cursory survey of most bank products in Australia will show that as much as 100% financing is available; it may nevertheless have its hidden costs as the banker risks it all.
5.
Choose Good Locations For the purposes of risk management and perfection of security, bankers will want to know that the property that a borrower intends to invest in will have reasonable returns in order for it to service the loan advanced.
Apart from this, it should be possible for the bank to sell the property should the borrower default in the loan payment.
Location will therefore determine the existence or non existence of liquidity risk.
6.
Good Credit Rating Bankers share information on the credit worthiness of borrowers.
It will be in your interest as a property investor to build a good reputation for long term relations with banks.
7.
Approach more Lenders Never give up on your quest to get the loan.
The more lenders you approach the better your chances of obtaining that loan.