Just like you get a loan for the development of houses, there are specific companies that offer loans for the development of commercial properties. There are commercial property finance companies that give funding to builders and entrepreneurs that lets them purchase, develop, and refurbish old buildings. These buildings are then converted into residential spaces.
Most commercial property development loan providing companies lend funding to property
investors. The idea here is to focus on affordable rental housing for all.
These companies fund the entrepreneurs in their purchase and development of
rental properties. They usually focus on buildings in the inner cities of
Africa, and at times on areas (inside the city) which are close to big city
centres.
Their property
development finance schemes are made to provide opportunities to passionate
property entrepreneurs who show a flair for managing affordable rental projects
but are pulled back due to a lack of finances. They focus on enabling people
from different walks of life in creating and developing a property portfolio
and in developing affordable housing units in places where there is a dire need.
How do these companies
work?
Most of them offer a
business loan for property development through a mortgage bond. They operate as
an NBFC that borrows money from the capital markets and invests the same in
builders/entrepreneurs who are in the business of refurbishing rental
properties. Such companies also provide guidance, support as well as risk
management to new entrepreneurs. They advise the entrepreneurs during the
negotiation process, support them during the construction process and guide
them regarding the rent-up process using their knowledge and experience.
There are multiple
companies financing property development South Africa. These companies work
with entrepreneurs and ensure that their project is feasible. They work towards
a good fit between the project and the entrepreneur. They take care to see that
the local market conditions are considered and the purchase price is within the
current range. They also see that a balance is maintained between the finance
that is going to the purchase vis-à-vis the realistic expectation on possible
rental income.
How to get funding from
these companies?
If you are an
entrepreneur in Africa, with a flair for refurbishing buildings and are looking
for funding for the same, you can follow the below simple steps to apply for
finance with any commercial property development company.
- First and foremost, you pick a location that you would like to invest in. Choose this as per your experience and knowledge.
- Look for an existing building that you want to redevelop or pick a site for the construction of a new building.
- Do your homework. Research and find out as much as possible about the area, building, rates etc.
- Look for a company that believes in and supports new entrepreneurs in this business
- Ask for a meeting with their consultants and go prepared. Make sure you have all the paperwork in place.
- Based on the initial meeting, you should be able to apply for the loan and start the credit approval process.
- Read all the documents carefully, meet the required conditions of loan approval and sign on the loan agreement.
- Post this, your project property will be registered and construction/redevelopment can begin.
- Once the construction is completed, you’re rent-up and other cyclical processes will follow.
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