Buying a place in the bush - the finer details!

Hi Geoff,


The bush sells itself, but is nice to know I may have influence.

So, How much do you need to raise? For properties zoned as Agricultural farms (like this one) and over 25ha it becomes quite difficult to raise cash and unfortunately takes longer than a normal home loan.

So yes 90 days may be needed. But to be fair houses and stands can take that long at times as well. It all depends on how quickly we can information to the bank regarding your financials, tax, banks account statements etc.

I utilise the services of Global Fundi for financing advise and while they do not raise finance for larger farms can offer excellent advise and recommendations. They can also assist to bring finance into the country at very favourable rates. I will ask Chris to contact you, as he can explain the best options for doing so.

Kevin the seller was thrown a curve ball this morning!

He has been on a waiting list for buffalo calves because he would like them to get stuck into the long grass to reduce fire hazard. 6 became available and will cost him R16,000 each totalling R96,000. Obviously if he sells the farm he does not want to add more game to the offering and the value of this game cannot be included in the asking price. He wants to know if this will be a deal breaker. I would be a pity for him to loose such an opportunity stock is not easily available. The average auction price in 2010 for 56 auctions was R35,000 for a fully grown buffalo. They want to BOMA them on Friday and have Vets and staff lined up to do so. Let me know your thoughts?

Wish all deals were this cool!!

The banks get tough in their home loans lending

100% home loans - diminishing as we speak - but still possible.

Interest rates of -2% below prime - forget it - you are lucky if you get prime and it will get worse for a while.  But our rates are at their lowest in 30 years so that's great news.

1  * Bounced cheque on your last 3 months bank statements - better you wait until the next three months cycle before you apply for a mortgage.

Adverse on your credit report - get it sorted and get it removed and get letters and even then you are bound to be declined by the banks first.

A Judgement - get someone else to buy the house because you are just not going to get a loan, unless you own your own bank.

Get a credit check if its the last thing you do and understand it.

Self employed - well you need about three tonnes of documents including 3 years financials, 6 months business bank statements, blood tests and 6 financial sponsors - very tough at present.

If you earn as a salaried employee an amount of between R 10 and up in overtime, commission you better get your 6 months payslips, commission statements and letters from your company proving that you earn occasional extra income otherwise your whole profile will be seen as suspicious and you WILL be declined.

if you are non-res, non SA type make sure that you have approval to bring your money in, an excellent money transfer service, attorneys that are jacked up and 50% is the max you will get and probably from 2 banks only.

So folks that's the good news....and its bound to get better.

Want a home loan - well use a mortgage originator because they are the only people who will tell you like it is as they earn their hard earned living from this business.

Forget about -2% below prime.

No more -2% You!

Well we have been telling our clients for months now.  Our rate cycle is at its lowest in 30 years (remember 24%)  eeeish.  The war on rates is a thing of the past and the average rates clients are getting in the past 10 months is more like prime less 0.3% or 8.7%.  Vacant land you pay a premium and in part of ensuring deals still happen the mortgage brokers are trying to "convince" banks not to lose clients to rates.  Well no-one cares about that anymore.

Standard Bank rates for non- Standard clients is definitely higher - thats the way it is.

First National Bank is seriously evaluating whether lending at prime is still a viable option for Home Loans and may soon add a percent to the cost of its borrowing rate for most new customers seeking new home loans and to existing customers wishing to take on further loans.


The rethinking comes as the cost of funding and the rate at which the bank borrows is becoming more expensive for the long term.

“We have to reevaluate the rate at which we are offering home loans, partly because of the cost of raising money from the market ... we should on average be at prime plus or prime plus 1.5% or 2% ... It is imminent and we have to make the change,” CEO of FNB Home Loans Jan Kleynhans told Moneyweb.
“We believe home loans are still under priced and we believe it’s going to change. We don’t think it’s sustainable at the current levels.”

Asked if FNB was not worried that it would lose customers due to the adjustments in the lending rate for home loans, Kleynhans said:

“There is that risk but if input costs are too high then we have to make do with those tough decisions and face reality. We have made significant price changes before and the market followed and made the adjustments. We think it will happen again."

When I hear this I truly understand the frustrations that will happen between clients and banks and mortgage originators friends and families - the fall out will be great.

Gone are the days when the mortgage originators pay commissions for deals, they are working far to hard to get the deals for agents and it will not be long before the banks will fall back to a select few as lead generators and drop the commission agreements they have with real estate agencies. 
We know that the other banks or some of them have  already repriced at prime-plus.

Kleynhans added that everybody knows about Basel III. In most market segments, consumers need credit first and then looking at the rate offered by the bank. The demand for credit is a bigger issue than what the cost of credit is, from a consumer perspective, and that’s why we think it’s time to make this next adjustment.”

The cost of doing deals are lying squarely on the banks backs and many mortgage originators are doing the same by carrying the upfront costs themselves, providing quality and very clear applications giving the banks the advantage of making a simple aye/nay decision.  This does not mean an increase in commissions at all for the MO's, purely a simpler more cost effective approach.
Kleynhans said, despite the evaluation of prime lending, FNB offered the customer a value added service when buying a house and was not just a pure credit provider for home loans. He said the bank offered would-be buyers in-depth information about the market value of a new home and the prospects of capital growth in that particular suburb.

The bank also has an arrangement where distressed property owners sell their properties to avoid legal obligations. If there is a shortfall between the selling price and the loan amount, FNB recovers difference at zero percent rate for ten years, according to Kleynhans.

Nedbank too, have an awesome reseller service of distressed and PIP properties with a wonderful hands on approach.
The head of FNB Home loans also noted that the bank was not expecting much growth in the mortgage market as household budgets remain under pressure from expenses such as transport, electricity, municipal rates and education costs. Kleynhans said currently FNB declined 50% of home loan applications due to poor credit records and unrealistic expectations by consumers looking for more credit than whats available to them.

FNB, ABSA still entertain 50% loans from non-residential clients at fair interest rates for now but the key is doing a 50% money transfer of deposits and the send money to South Africa as per Reserve bank requirements.
He added that unlike five years ago when the majority of its home loan applicants got 100% funding, this was no more the case. Kleynhans said about 20% of new mortgage applicants were given 100% funding and those were people with “squeaky clean” credit profiles and good income statements.

The customer’s ability to pay and the suburb where the house was situated also contributed to how funding should be structured.

In terms of market conditions this year, Kleynhans said defaults were extremely low and people who were still struggling with arrears were those who got their loans in 2007-2008.

“We are not seeing new arrears from new loans that have come through last year. I think we are lending appropriately from a point of view of affordability ... We always worry about the level of expenses and the cost of living consumers are bearing.

Despite the call to customers to fix their rates, Kleynhans said FNB was fixing a few home loans as some people did not fully understand the value of fixing now

Its time to be  smart in our financing.!!!

Make the most of Auctions

Many houses, apartments, luxury villas and dream safari lodges (to name a few) are being auctioned! Whatever the reason - the focus of this chat is how to make the most of these auctions if you are looking for an investment!!!  

Auctions are an age-old proven method of selling property. No matter what the reason behind the sale - the point is that the property NEEDS to be sold URGENTLY!! Property auctions are great ways for investors to purchase property inexpensively. So how can you go about this - here are some tips that may help you!!!

Tips

1. Know all the details of the auction - try not neglect the little details - this is a great way to gain as much info on auction property as possible prior to auction date! This is a great way of sifting out the properties you are not interested in.
2. The info made available is often vague and limited - investors must always dig deeper to learn the affordability and potential problems prior to investing in auction property. Prior to the auction keep in mind:
1. Get finance in place or a loan pre-qualification before the auction to speed up the purchase process.
2. Invest time in researching properties online independent of what is available from the actual auction company.
3. Get a comprehensive valuation of the property, decide on a reserve price for sale and a ceiling on a purchase price for buyers.
4. Understand the deal fully - costs, deposits and the finance process.
3. Auctions offer a great mix of potential investments - look for the category that interests you! Categories include - residential, industrial, retail, office and hospitality! Many quick sell auctions information are available online are from the commercial banks and private lenders hoping to sell property quickly. These may not be advertised as heavily. Keeping tabs on foreclosures happening in the local area can help investors find potentially valuable properties operating in the auction arena.

Use online auction real estate listings and services and other foreclosure services to find potential auction properties before other investors purchase them. Foreclosure listings are public information but are generally difficult to find.


Markets
The global financial crisis/recession has made trading conditions difficult resulting in adverse effects on the property market and for property owners. No matter what the reason or category - a lot of properties have  come onto the market in an auction-type sale. At present the market is in a long slow recovery process and will not have a dramatic change over the next 6 months.

It is expected that genuine recovery of the property market will only start to show towards the end of 2012. Investors who invest long-term who demonstrate patience will always reap long-term benefits in real estate no matter what category they invest in.

For investors, auctions are a great ways of buying investment properties (throughout the world) and the time to do so is now!!! With the predictions as they currently are - you should reap major benefits in the last quarter of 2012!!

If this interests you - look at using money transfers as the way to purchase the property! Using this method will save you hugely - you save when you use online money transfer services and save on the auctioned property!!!

Dubai property market on its way up! Time to invest NOW!!

Moving into the 2nd half of 2011 it seems the UAE is on the move back up the property and opportunity ladder and out of the global recession and its aftermath! There is change in the UAE after feeling the heavy burden as a result of the recession. New projects are in the pipeline and previously disrupted projects have regained momentum which already seems to be attracting new opportunities and generating new areas of employment - yes there is a definite change being observed. UAE is attracting  foreign investment as a result. If there was ever a time to make an property investment move. Now is your time!!!


Qatar and Bahrain are investing and making additional plans to invest in Dubai which should further increase the investment possibilities in Dubai and employment opportunities will most likely be rolling out in the near future.

So where does property fit in - well with an increase in opportunities - investment and properties are on the rise. A significant number of people around the globe are heading towards Dubai. Demand is matching supply, property prices have started stabilizing and it is a great time to get involved before the prices start regaining strength. It really is the right time!!

Invest, send money or buy property in Dubai, UAE.