Laying the right foundations for property investment and development funding
Many property investors set themselves up for failure before they sign their first document. Investors often only check the top-line figures in a term sheet, letter of offer, heads of agreement or memorandum of understanding before signing it. They don’t pay attention to (or are unaware of) the other terms which will apply. These other terms represent years of legal precedent yet their meaning may not be what you think. Unpacked, these terms can become traps for an investor. They can delay a property acquisition or development and cost significant money.
For example:
• Pre-sales may be unacceptable to the financier
• The financier may have the right to change the terms of the loan at any time
• The financier may be able to withdraw from the loan at any time
• Circumstances outside the control of the borrower may be events of default.
We help property investors lay the groundwork for getting the best funding outcomes for their investment or development. We offer personalised commercial and legal strategic advice on funding matters. Our service leads to the signing of better initial commitment documents and formal documents that follow.
You will be in the best position to successfully negotiate changes to funding documents if you know what the main non-financial terms are or will be before signing any documents and deal with issues of concern at that time.
Peter Faludi has over 30 years of legal and transactional experience in property investment and development funding. He is well known for identifying the issues you must consider for your unique situation to save time and money later in the process. He explains complex issues so you can understand the relevant issues without the legal jargon.
Peter has helped clients avoid significant losses and save time through his experience. He gets things done.
Talk to Peter Faludi about getting the best funding outcomes for your property investment or development
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What can go wrong with your property investment or development funding without experienced advice
It’s critical to get experienced advice on funding as early as possible when investing in a property or undertaking a development. Without it, you could sign a term sheet, letter of offer or other initial commitment document that ties you to an agreement that you will find is unsuitable too late in the process. You could end up losing money, valuable time, or even an entire deal.
For example, a borrower recently signed a term sheet for a $20m loan to refinance some equity used to buy a Sydney property. The borrower had signed the term sheet without getting experienced advice.
The term sheet restricted the borrower from buying another property or borrowing other funds without the prior consent from the lender.
This created a serious problem because it limited the borrower from pursuing its strategy of buying more properties to build its portfolio.
Despite trying to renegotiate the term sheet, the lender did not agree to any change. The lender only had credit approval for the deal based on the terms of the signed term sheet. As a result, the loan was not provided.
This is a common experience for many investors. They focus on the headline figures but miss the detailed terms or do not fully understand them. Although the terms look harmless, they can represent significant responsibilities that can limit an investor’s business. It takes experience to pick this up. It takes even more experience to be able to advise an investor or developer on terms which are not even mentioned in a term sheet, letter of offer or other initial commitment document but will be included in formal documents.
We help you avoid these pitfalls. Drawing on 30 years of legal and transaction experience, we help save significant time and money whilst optimising investment funding outcomes.
Get Peter Faludi to examine your funding terms before you accept them. You will be surprised at what he finds.
We’re here to support your property investment and development funding outcomes
There are lots of things you need to consider carefully before signing a term sheet, letter of offer or other initial commitment document.
• Is it necessary for any party to the transaction to obtain FIRB approval?
• What are the main matters you must deal with in your documentation to protect your interests?
• Is it possible to get finance for your project in the current market and, if so, where?
• What restrictions or covenants are likely to be included in funding documentation used for the project?
• Given the nature of the proposed project, are your current advisers sufficiently skilled and experienced to protect your interests? Can they identify and explain the pitfalls in the terms (contained in initial commitment documents and those likely to be contained in the formal documents.) and Can they implement the transaction in a cost-effective and timely manner to protect your interests?
These are just some of the questions you need answers for when laying the groundwork to protect your interests and allow you to carry out your project as you had planned. Each client will have a different answer since the right approach depends on your unique situation.
We work with third parties supporting property investors or developers and with the investor or developer itself. We draw on deep experience advising on property and development finance to ensure you lay solid grounds for investment success in a cost-effective manner.
Talk to Peter Faludi about what you’re missing before signing your next term sheet, letter of offer or other initial commitment document.
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