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Bayside Commercial Mortgages managing director Kevin Wheatley shares how to get the most out of a commercial loan.
Let’s say someone comes to us with a development property. We’re working on three of them now actually.
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The first step is to ask the borrowers or the client to send you a detailed feasibility report. I will sit down, look at the feasibility, look at the floor plans and I’ll apply my build per square metre ratio matrices.
If I’m comfortable, once I’ve costed the development, that there’s not going to be any additional funding required, I’m then confident enough to put a submission together and present it to a financial institution knowing that we’ve got the complete business model and construction in line with the feasibility costs.
I’ve had commercial deals take me up to nine months. I’ve had them take me three weeks.
The one I worked on in Elizabeth Street, Brisbane – a 27-storey new Ibis hotel – took me around five months to get the costing model right.
It’s very detailed and complex, but the short answer is: find the detail in the costing so that when you go to the bank, you can make sure the financial facilities that banks are about to provide you with are going to help complete the development.
We treat every deal on a case-by-case basis, whether it be a $100 million property development or an asset fund – we conduct our due diligence with every borrower.
We try to not only look at what they want to borrow and for what purpose, but what we can structure for them that’s going to give them a lot more of a financial advantage than any other institution is going to provide them with.
For example, one of the biggest mistakes SMEs make is they listen to the banks that really don’t place them in a position that’s going to allow them to move forward in a fiscal view. I notice a lot of small business owners fall victims to banks through their excessive fees and charges.
If we structure them right from the start-up, they’re going to be in a lot better position.
