Is it difficult to borrow a million?

O

onekeano

Guest
If I wanted to borrow a million for property development how much would I need to put up front from my own reserves?

Roy
 
I guess the first question the bank will ask is 'how will you meet the repayments' (particularly if you hit a dry 6-12 months with no tenants?
 
Rainyday

That wouldn't be an issue as it would be for building with a view to selling.

Roy
 
Oh yes - ability to repay will always be an issue. It may be a slightly different issue, i.e. how are you going to meet the repayments during the building period? How are you going to meet the repayments on the money you lose if the property crash comes? How are you going to meet the repayments on the money you lose if you don't know as much about building or property as you think you know?

I really can't answer your original question about the amount of deposit required. I hope others will help answer this for you.
 
Thanks Rainyday and Sunnyday,

One more question - the 15-20% isn't a problem, any suggestions one the best institution to approach for such a project?


Roy
 
Ulster Bank are looking for market share and are about the cheapest in my experience but I would recommend going to at least two banks and using them as leverage to negotiate the best deal. They are more open to giving you a discount than you might think (if you have equity/ cash to back things up).
 
I too use Ulster, and have found them "keen" to lend money in recent years. You should have a good business plan drawn up for your proposed project showing cash flow from start to finish, with as few assumptions as possible and as many hard facts (preferably written quotes) as you can get. At least for this type of situation, your earnings are not such a big factor, so the usual "multiples of earnings" is not so important. Good luck if you do venture ahead.
 
Thanks Sunny and Purple - have put the wheels in motion with Ulster and will calibrate against at least one more to check rates.

Roy
 
Do let us know how you get on - It would make an interesting case history.
 
Sure will Rainy...... it's based on a test project so it's a matter of scaling it up.

Roy
 
it's based on a test project so it's a matter of scaling it up
Click to expand...
What does that mean? Have you done something similar but with much smaller figures? If so, that should help your case going to the banks. Like rainyday says, please do post your experiences pursuing this.
 
Sunny,

"Have you done something similar but with much smaller figures?" - well closing something soon but this would be by a factor of 4....but same principles apply.

Agree that should be able to satisfy the institutions that we know what we're talking about.

Will post back in a few weeks on this.

Roy
 
Just reporting back on progress. First many thnaks to Sunnyday and Purple for the advice.

Turns out it wasn't too difficult to secure the funding having put the business case together with a relatively brief track record on a smaller scale.

Sunnyday - you were right 15-20% was adequate.

Many thanks again
Roy
 
Borrowing a million€

If multiples of earnings arent so important here..what about timing of repayments? I am planning a similar amount in a development type project and wonder on the repayment capasity while I am building, and before i have a return form selling on. Will they be looking for usual monthly payments of interest and capital, or interest only, or is there a mechanism for developers where the institutions wait it out for an agreed time?
 
Re: Borrowing a million€

In my case there will be monthly repayements which will consist of capital and interest, not sure if you can arrnage interest only.

Roy
 
Re: Borrowing a million€

Glad to see your making progress. Good luck!
 
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