Join me as I discuss current issues and innovations relating to finance and property and how these may affect you, the property investor and developer.
Each episode features a special guest, we have a casual discussion in my guest’s field of expertise while enjoying one of my favourite pastimes, which is Gourmet French cooking at home in my kitchen.
Episode 6 - December 2021
Special Guest Melvin Seeto, Director of GM Capital
Topic of Interest Overcoming obstacles in Property Finance
Who it may affect Commercial, Industrial, Retail, & Residential Property Investors & Developers
This episode’s dish Pears poached in red wine and spices
topic overview
The Australian Credit Market is a tiered arena where funds may be available for any number and risk quality of transaction.
It is truly a “courses for horses” approach where the skills and experience of a qualified, accredited, and licenced professional finance consultant are essential in structuring an appropriate, customised finance solution that is most suitable to a borrower client’s particular needs.
A qualified professional finance consultant does not sell “products”; but instead structures finance “solutions” to best address the assessed needs of a property investor or developer client who requires finance accommodation in order to achieve the desired investment outcome under terms and conditions that are most suitable and appropriate to the borrower.
Increasingly, qualified professional finance consultants are becoming an integral component of the serious property investor’s and developer’s team of professional consultants, alongside the architects, lawyers, and taxation accountants, for example.
Lenders across all four market tiers do range in sophistication, appetite for and understanding of risk, the pricing and management of risk, and the number and nature of factors assessed in making an investment decision.
The pre-GFC era of circa early-mid 1990s to 2008 saw a flood of ‘brokers’ enter the finance intermediary sector, almost all heading for the home loan market with many having little to no prior finance qualifications, training or experience. Gradually, a number of these discovered the bigger ticket value transactions (and commissions) in commercial lending and the cross-over began.
Although the population of brokers has been culled several times as the industry moves towards regulation, in order to avoid being funnelled away from what may be more appropriate credit providers and into inappropriate arrangements, it is paramount that a borrower engages a qualified and experienced professional finance consultant, and for greater surety of outcome one who is licenced and accredited with major financial institutions and who complies with governance and compliance auditing requirements.
Several practices common to ‘brokers’ are discussed, particularly the “blanket bombing” of the market place often with incomplete “applications” and enquiries that lack full financial and feasibility analysis, research and disclosure, risk identification and mitigation measures that are found in a bank-style Commercial Credit Memorandum. This practice is destructive to a finance application and detrimental to a borrower’s project and reputation in a credit market that, despite its 4-tiers, remains a small market where people do know each other and do talk and compare notes…
In this episode of In JP’s Kitchen, the Australian credit market is reviewed together with its components and participants and how a qualified, licensed, and experienced professional finance consultant is indispensable to the credit process. Join us to find out what this may mean for commercial, retail, industrial, and residential property investors and developers.