Project description
Our projects often deal with financing of real estate transactions.
Clients are private investors or business people who want to build up assets with real estate and use existing real estate as collateral for the purchase of new real estate, as far as possible.
It is important to demonstrate to the financing banks that the total collateral provided and income justify granting a loan for the new property. In the business plan, we therefore present the relevant variables such as market values of all properties, loan-to-value ratios, interest and redemption payments and the surpluses from rental income and costs.
In this way, we help clients to achieve or enhance financing by presenting their bank with a meaningful business plan that provides answers to the bankers’ many questions.
What lenders look at in a real estate financing plan
For real estate projects, banks assess the project itself and the sponsor. A convincing plan documents the purchase price or construction cost, the location and market analysis, the planned use and the expected rental income or sales proceeds.
The financing structure is the core: equity ratio, loan amount, interest and repayment, security such as land charges, and a sensitivity analysis showing how the project performs if rents, vacancy, construction costs or interest rates change. Timelines for permits, construction and letting should be explicit, as delays are the most common risk.
Lenders also look at the track record of the sponsor and the cash flow after financing costs (debt service coverage). Presenting these points clearly shortens the credit process and strengthens the negotiating position.
