How do Socially Committed Commercial Property Finance Development and Investment Companies Operate?

Property development companies are abundant in present-day South Africa, offering entrepreneurs a highly lucrative avenue for generating substantial profits. For most companies, profit is the primary concern. However, there are a few socially committed companies that follow a completely different approach. They also focus on the well-being of the people and make property development more meaningful.

Helping hands for the most deserving

Big cities are home to expensive properties. Many commercial property finance development and investment companies target these areas to generate maximum revenues and profits. They are least bothered about inner cities where homeless people are searching affordable housing projects. These people are not aware of the amazing potential of declining suburban regions in South Africa. In fact, many such areas provide excellent opportunities for developers. Responsible developers focus on inner cities to build properties, especially refurbished buildings, to offer a secure and comfortable living environment for most deserving people.

Cost efficient housing projects

Leading banks and financial companies offer loans to property development companies who focus on declining urban areas. Such a commercial property development loan helps them construct cost effective rental housing projects. Several people with a limited income use these types of properties to create a safe environment for their families. The main attraction of these properties is the low rent. However, they provide clean and healthy environment for the inhabitants.

Renovation of dilapidated structures

The current emphasis of responsible property developers is on the revitalisation of run-down buildings. They focus on enhancing the overall quality and look of these properties to make them attractive residential units. Poverty remains a persistent challenge in South Africa, with ongoing efforts to address and combat its impact. Trustworthy property developers who focus on social development contribute immensely to this cause by building safe and economical shelters for needy people. Their effort needs to be appreciated because it is the right step towards improving the lives of people in South Africa.

Tailored financing packages for inner-city housing projects

The funding problem of inner city housing projects is still a major concern. Although many companies take up these projects as a part of their social commitment, they are finding it hard to discover suitable property development finance options. The housing projects in the inner cities provide excellent opportunities for property developers. Although more and more companies have started investing in these types of projects, there are numerous areas to be explored.

Luckily, specific non-bank mortgage lenders have shown interest in offering loan solutions for these investors. Builders can leverage these funds to acquire and restore deteriorating buildings in urban areas experiencing decline. These regions, in particular, witness a growing need for affordable residential units to accommodate the constantly changing housing demands of the South African population. Trustworthy property development companies blend their commercial interests and humanitarian principles responsibly to become a driving force for social change.

Everything You Need to Know About Commercial Development Finance

Commercial property finance companies allow business owners or developers to build commercial properties. They can sell, rent, or use these properties for running their own business. There are multiple commercial property finance development and investment opportunities for passionate builders. So, property entrepreneurs can take help of a commercial property finance company to refurbish and convert buildings. Here’s a detailed guide on commercial property development finance:

What is commercial property development finance

Property development finance is a kind of business finance that is used for funding a commercial, mix-use, or residential property development. Commercial property development finance deals solely with financing commercial properties. If you want a commercial real estate loan, you have to choose a trustworthy lender.

Three reasons why builders purchase commercial properties

Selling buildings- Commercial properties are more profitable than residential properties. So, many entrepreneurs build or refurbish commercial buildings for selling them. They need the assistance of reliable Commercial Development Finance companies to arrange the funds. They can earn huge profits by investing in this section of the real estate market.

Renting buildings- Building commercial properties and then renting them is a great way on increasing income. If a commercial building is well-furnished and in a good location, it will serve as an excellent source of a steady income. A commercial property finance company generally does a research on the rentability of a particular property before giving the money. They do so to ensure that renting the property won’t be difficult for the builder.

Establishing a base for their business- Many people also buy commercial properties for personal use. They neither sell nor rent these buildings but use them to set up their business. In such scenarios, the lender doesn’t check the rentability or chances of selling the property. On the contrary, the renting agency focuses on the business owner’s ability to run a business successfully.

How much money can you borrow?

The maximum loan you can get on property development depends on various factors. The commercial property finance company will consider several points to be certain of your eligibility. There are good companies that don’t just give loans but also provide guidance, risk management, and support to budding entrepreneurs.

The Takeaway

If you require commercial property finance, you must have a vision to be able to convince the finance company. It is also crucial to find a reputed company that offers flexible options to property entrepreneurs. One of the perks of taking a loan from such a company is that their services are more specialized than what you get from banks. However, the interest rates charged by these companies vary wildly. So, it is important to take your time and find an agency that offers low rates.

Different Types Of Property Development Finance Options At Present

Property development is when an existing building or a vacant lot is altered, developed, or improved for enhancing its value. While there are various reasons why property development is alluring, the primary attraction happens to be manufacturing equity and profits faster. Property development will provide you with an opportunity of generating more cash quickly compared to what it usually requires for market development through normal market forces. It is a fact that most property developers must be able to obtain some sort of finance. Luckily, lots of options will be available for satisfying the requirements of most individuals. Below are several options for property development financing that you must be aware of.

Cash

Cash will be the easiest way of financing property development right now. It will be possible for the property developers to forego interest by resorting to this particular option. It will be a sensible idea to give priority to cash in case you can afford it while getting funds for the property development project.

Bridging loans

This will be one of the most effective property development finance options in case you are going to borrow for the short term. This sort of loan is usually associated with monthly pricing instead of yearly rates of interest. Moreover, you usually use it in a property chain when you are purchasing a new property without selling your present house yet. Bridging loans will provide you with credits for a short time until your present property has been sold and the money has been obtained by you for repaying that amount.

Buy-to-let mortgages

When thinking of commercial property finance development and investment, there are usually a couple of primary routes for property developers. They can either purchase properties for rent or renovate properties for sale to get a profit. A buy-to-let mortgage will be ideal for you in case you want to purchase a property for rent. In this case, the rates of interest are somewhat high and a larger deposit will be required with some additional charges. It is also imperative for the borrowers to ensure that apart from covering the mortgage payments, the proposed rental earnings also cover the additional charges such as taxes.

Buy-to-sell mortgage

It is a fact that most standard mortgages are going to commit you to a couple of years before you are entitled to sell. However, it will be better to go for a buy-to-sell mortgage in case you are interested in fast turnaround times following property renovations. Nevertheless, a buy-to-sell mortgage will perhaps need a bigger deposit because of the fact that higher fees are typically attracted by them. In case you want to get loans for property investment opportunities in South Africa then this sort of mortgage will be the most attractive to you. This is because it will allow you to sell anytime you like.

Things to consider

It is essential to consider how much time will be taken for the project to finish before obtaining a financing loan. Also, you must take into account the amount of money required for completing the project.

A Few Options Offered By Property Finance Companies South Africa

Most of the property developers out there will need access to worthwhile property development finance options. These options will enable the developers to penetrate the market for the first time or expand their property portfolios. Fortunately, there aren’t any limitations to these options. If you contact the right financing company, you will receive precisely what you seek. Here you’ll learn more about your options.

Second charge mortgage

Also called a second mortgage, secured mortgage, or second charge loans, this option is essentially a top-up to your existing loan. You won’t have to re-mortgage to free up your funds to enhance an existing property to add value. Instead, you can opt for a second charge mortgage from Property Finance Companies South Africa. This particular loan variant can be useful to you if specific circumstances recently changed for you For instance, you’ll find it valuable if you become self-employed or become the owner of a small business.

High street mortgage

Among property development finance options, this one is probably the most common one. A high street mortgage is available from most banks. The application will depend on your ability to return the loan and the value of the property you’ll purchase. High street mortgages come in multiple forms, including those in which you have to pay the interest only. This mortgage option is for you if you want to reside at the property while it’s under development.

Commercial mortgage

A commercial mortgage is akin to a high street mortgage, except the property against which you secure the loan has to be explicitly commercial. It can be a factory, an office, or a shop. Commercial mortgages have other differences too. For instance, the lender will pay more attention to the assets and income of your business instead of your personal income during the application process. Property Finance Companies South Africa may ask you to present a business plan for the future when applying, especially if you’re a relatively new venture.

Buy-to-let mortgages

Usually, property developers want to renovate buildings to sell them for a profit or purchase properties for renting. A buy-to-let mortgage will come in handy if you choose to buy properties for renting purposes.