WHO is going to be the first to call the bottom of the property market?ŠIn many people’s opinion, it has already happened in pockets of the North West, even if they are not willing to vocalise it.
The full cycle of economic contraction has yet to complete and, while the next three to six months are unlikely to be full of promising news, opportunities are increasing for those looking to make long- term investments.ŠMany savvy investors, who sat out the last and most fevered years of the property boom, are returning. They understand that more profit can be made in a falling market than in a rising one.
As they return, they are bringing with them a growing demand for alternative funding options, such as bridging finance, to take advantage of these opportunities.
Bridging finance refers to short-term loans, commonly used to allow transactions to complete while other borrowing facilities are arranged.Š It has long played an important role in helping investors to turn around property deals quickly and, with many people finding traditional funding negotiations to be more protracted at the moment, it is gaining a much wider appeal.
This is being fuelled in part by a glut of opportunities to acquire distressed sale properties.
As organisations, such as institutional investment funds, seek to secure quick sales to liquidate their assets, there are attractive value deals for those with access to finance.
It’s here that the characteristics of short-term finance are a major advantage. The speed and flexibility with which bridging loans can be arranged – sometimes within a matter of days – means the borrower is effectively a cash buyer. As such, purchasers are able to complete deals quickly and negotiate significant discounts with the vendor.
Likewise, with the return of double-digit rental returns to the residential market, many investors are looking to acquire residential properties at auction.
With many such properties requiring a level of refurbishment and a turnaround to sale within 28 days, bridging loans are again proving popular.
