This extends, not only to distressed properties but all properties that are being sold by the various auction houses currently operating in the market.
In order to take advantage of these opportunities, the buyer has to put down normally a 10% deposit on the fall of the hammer and needs to come up with the balance of the purchase price within approximately 30 days. Furthermore, the buyer has to fund the outstanding clearance amounts and transfer costs, etc.
This places any potential buyer under pressure unless he has the funds available.
Even for experienced operators in this market, there is a limit to the amount of funding they have available. There may be additional opportunities which may fall by the wayside.
So Prevance Capital, who are long established in providing bridging finance solutions for property related transactions, have come up with an innovative product for those entrepreneurs who would like to take full advantage whenever a property deal presents itself.
How it works is that the entrepreneur sets up a facility with Prevance Capital in advance. What Prevance normally requires is a first mortgage bond over some existing property as security for the facility.
Once this is in place, the operator has the fire power to bid for a property and, at an auction, knowing full well that they have the full ability to perform should the hammer fall in his favour. This would give him possible advantage over his competition in the bidding process.
Once the property has been bought, Prevance will then fund the deposit and the balance of the purchase price and other costs involved, and give the operator around 6 months to dispose of the property and repay the loan to Prevance.
This removes all pressure from the operator and enables him to market the property for a longer period and obtain a better price. He may even want to renovate the property.
This is a major headache off the operator so he can focus entirely on these deals ensuring a higher profit.
In addition, he may be able to manage a few properties at the same time increasing his returns. Even for those operators who have their own equity, by gearing this up will ensure much higher percentage returns on his investment. So why not leverage existing properties where the banks are reluctant to provide mortgages?
Prevance Capital believes in partnership and looks forward to developing long term mutually beneficial personal and business relationships with its clients.