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You don’t get a second chance at a first impression
Once you’ve found your next investment property or development project – or even whilst you’re still wading through numerous opportunities hunting for a suitable property – you will most likely need to secure finance to acquire and launch your investment.
There are many ways you can finance property, but when it comes to issuing a property finance application to a lender or investor, it’s important to do it in the right way that presents you in the best possible light.
You don’t get a second chance at first impressions and failing to provide the relevant information or present your case in the best way possible could mean you miss out on opportunities, do not secure the best terms available, as well as waste time and money.
So, what do funders look for when they assess an application?
The most important thing any funder will analyse is the level of risk involved in lending you the funds you need.
The criteria will vary depending on the property, the scope of the project and your experience. For example, if you’re a property developer you will need to understand what lenders specifically look for when investing in development projects, which is very different to how they assess a lower risk ‘vanilla’ buy-to-let investment.
Essentially, the lender will make an assessment on whether you can service the loan and ultimately pay them back in full and on time. They look at the viability of the project itself as well as the experience of you, usually referred to as the borrower or sponsor.
Until you build a good reputation with the funders and develop a strong track record, they will require lots of information about you and your project as well as a detailed feasibility study in the form an investment memorandum. This will include a project summary, team overview, narrative on the closing date and project timeline, project P&L, investment rationale, details of the location, risks and mitigants, cashflow forecasts and much more. Crucially, you will need to pre-empt and address all the lenders potential concerns in advance. When it comes to development finance and/or high leverage finance options (especially equity) you will need to be even more thorough in the information you share with your potential funders.
Many do not appreciate this, but it is true that a lender will also assess the professionalism of your finance presentation, and this is where what you say and how you say it can make or break a deal.
There is an art to presenting all the required information in a way that is detailed, user-friendly, aesthetically pleasing and clear to understand. This can determine the rate, security package and general terms offered to you by a lender. Simply put, a strong proposal maximises your chances of securing the best finance available to you. It can be the difference between receiving a market-leading rate and great terms or having your application declined.
Funders are looking at hundreds and thousands of applications in a year and you personally may have more than one opportunity running at a time. Consistency in your presentations help when presenting multiple deals each year to funders. The funder will know where to find important information in your presentation allowing them to make quick decisions. You want them to feel both at ease and excited when they receive your application. Knowing the funders’ requirements and expectations should be at the forefront of your mind when assessing any potential project and preparing an application.
Speed is also a crucial factor when it comes to applying for finance. As an investor, you need your funds when you need them and not a day late. Knowing how to professionally present a case to a funder is one thing but doing it fast to meet deadlines without compromising on quality requires skill. With experience comes speed and this is one of many areas we can help…
At Merryoaks, our team of experienced property finance consultants know exactly what is required to successfully secure the funding you need.
We will work with you to produce a high-quality application that emphasises the strength of your project. We know what lenders like to see and can structure a comprehensive application that is correctly presented. This reduces minimal friction and back-and-forth between you and the lender and ensures the best results.
We can guide you through this process whilst you focus on maximising your business growth, increasing your returns, and making the most of your most valuable commodity, time.
To find out more about how we can help, speak to the team today.
