Commercial Property Finance Problems Solved With a Fast Cash Sale
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Are you an owner of commercial property, looking for commercial property finance? It could be that you need to raise new finance from your property, or to refinance loans. Before you stride out into the commercial property finance jungle, however, it would be sensible to review the state of the financial property market, so you know what your options really are.
The first thing to look at is what the motivating factor for your foray into commercial property finance is. It could be as simple as needing to raise equity from your commercial property. If you do have such a need, your property can be seen as a potential source for funds - you just need to secure a loan against the property to receive the funds.
Alternatively you may already have a commercial property loan but are seeking to refinance it, in the hope of releasing funds after paying off the original mortgage. After a couple of difficult years for commercial property values, some areas of the UK market have seen a rise in value this last year. If there has been significant capital appreciation since the original mortgage, or debt repayment has proceeded well, then the funds released by a refinance may be significant.
Some commercial property owners have also recently been placed in the difficult position of having to pay off their loan to the bank, because of a breach of covenant. This situation has been caused, in part, by bankrupt tenants, after the first wave of recession hit. But also, some tenants have reacted to their own difficulties by taking up of Company Voluntary Agreements, or CVAs. Once agreed, and after a partial closure of tenanted units, those companies can continue trading, but leave the property owner saddled with unpaid rent and with no recourse to pursue them for lost rents. This loss of income can rapidly lead to a breach of covenant.
The big problem in acquiring commercial property finance at the moment is the continuing severe supply constraints. In the immediate aftermath of the credit crisis of 2007-8, banks tightened their lending criteria significantly. They also reduced the number of finance products available on the market, and those that were left became very expensive.
You may think that this is yesterday's story, but in fact credit conditions have only loosened a little over the last year, and a further tightening is imminent. The Bank of England, who issues quarterly reports on the health of the credit markets, has been less than glowing in its forecast for commercial lending:
"Price terms on new lending to small businesses were reported to have tightened somewhat, consistent with unchanged availability and higher-than-expected demand..." (Credit Conditions Survey - 2010 Q1)
In other words commercial property finance will remain expensive, because the available credit supply is not rising in line with greater demand. If you are struggling to find commercial property loans, what can you do to ensure the funds you need from that finance are found?
Well in the simplest scenario, selling your property may be an attractive option- commercial property values may be at a local high, and future revenue streams from the property uncertain. Now is a good time for investors to be getting out of the market, and avoid being encumbered with expensive commercial property finance.
The next problem is trying to find someone to buy your property. As many investors are reluctant or unable to buy, due to a lack of finance and confidence in the market, you need to know who is interested and able to buy. SellMyCommercialProperty have cash funds available to buy all types of commercial property throughout the UK and are looking for opportunities now. What do you have to lose, call us today for a no obligation chat.
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