How Gurgaon’s Real Estate Can Gain From Their Budget in 2017

Gurgaon – a big player in India’s real estate sector – has been grappling with difficult times especially since 2015, and in 2016 the sales volumes for properties in Gurgaon further went down and new unit launches were limited in the city.

Further, demonetization during the end of 2016 further affected developers in Gurgaon like in the rest of the country. There was stability noticed in quoted prices and discounts were still available, but people stayed away from buying residential flats in Gurgaon. Gurgaon saw a fall in investment in the residential properties as residential buyers, much of whom were primary end users were on the lookout for ready-to-move-in flats and were wary of promises of future infrastructure or property. Overall, Gurgaon’s market saw a great dip recently.

With the new budget placing affordable housing under the category of infrastructure, the government plans to get closer to its goal of providing affordable housing for all by 2022. This newly-granted infrastructure status also makes available cheaper funding options from real estate builders who can now access funds at a borrowing rate less than 10% for developing affordable housing, leading to a subsequent and definite reduction in purchase costs for homebuyers.

About 95% of the demand in the real estate sector has been of affordable housing. With reduced borrowing rates, the real estate developers can now focus on constructing housing projects where a major demand lies, and look forward to a healthy growth in this segment.

The budget has benefitted the end users the most. With enormous tax benefits offered to people in the lowest income bracket as a significant tool to push affordable housing, the dream of many to own a house now seems to get closer to realization. Also, with demonetization, banks have been further flooded with funds, and there are speculations that banks will low interests rates further and come out with affordable and attractive home loans. Future homebuyers have been watching the market carefully.

As a real estate market, Gurgaon has great chances of recovering from the downtime in the recent past. One of its driving strengths has been its ability to churn out high-quality office spaces, and now while building on this strength, if developers in Gurgaon prioritize constructing and launching ready-to-move-in affordable housing projects that end-consumers place high value on and subsequently reward, then Gurgaon will soon rise up as a strong real estate provider meeting the housing needs of its residents.

What to Do When You’re Turned Down For Your Commercial Real Estate Or Development Loan

What alternatives do you have when you are turned down for your commercial real estate loan by your bank or other lender? Your property has an appraised value, and you have equity in it that you’d like to cash in, or you’re trying to buy a new property and can’t get a lender to give you the purchase money loan. Maybe you’re a real estate developer who is used to getting your loans approved because of a successful track record, and can’t even get a meeting now. Or maybe you’ve been approved for a loan, but can’t stomach the rates or terms.

We’ve all heard more than we’d ever want to know about the liquidity and credit crisis, but what may not be as obvious is that there is plenty of money out there–for the right deal. Change creates new opportunities, and when the traditional financial institutions can’t or won’t take on more risk, there are many lenders and investors who will. It’s all about taking another look at your existing assets, both in real estate and in liquid or paper assets, and making the best choice available. The following is a simple list of ways to create alternative financing possibilities:

  • 1 Which institutions have turned you down, and why? Knowing what has not worked can turn you in the right direction, so make sure to ask as many questions as possible when you’re turned down, including asking if they can direct you toward a lender who might be able to do your loan. While most of the following criteria usually play some role in qualifying for a loan, some lenders focus most on CLTV or LTV (combined loan-to-value or loan-to-value), some on DSCR (debt servicing coverage ratio), some on IRR (Internal Rate of Return), some on Cap Rate, some on credit, and some on the overall financial strength of the borrower. Knowing this is often the key to getting to the right lender.
  • 2 If your loan was approved but you didn’t like the rates and terms, see how much room there is for friendly negotiation, and don’t delay. It’s vital to keep on good terms with anyone willing to loan money these days–don’t burn a bridge if you can help it. I personally know many developers with “sticker shock” who expected to return to the approving lender several weeks or even months later (after they shopped around and couldn’t find anything better, or were turned down by everyone else), only to be turned down this time because the lender starts to wonder if there’s something wrong with the project that they didn’t see the first time, or because conditions have changed.
  • 3 You may have to put more cash down if you’re making a purchase. Risk-averse lenders want a much more attractive LTV loan-to-value before they will step in with the rest of your purchase money funds. If you’re refinancing, remember that a risk-averse lender is very cautious about appreciated value and would rather see more of your own cash in the property.
  • 4 If you don’t have the additional cash, take stock of your other assets. There are lenders who will loan against many different types of assets such as merchant accounts, future cash flow, marketable securities, other financial instruments, cross-collateral real estate, insurance settlements, and factoring receivables. For certain types of projects, such as energy and green-type projects, as well as films, there are tax credits, carbon credits and various types of bonds and partnered participation sponsored by municipalities and states.
  • 5 When considering a purchase, or perhaps if you are designing a new project to build, you may want to look at which property types lenders are looking to finance before you make an offer. Even if you have talent, a niche, tons of experience, or a crystal ball that works, why swim against the current when you could go with the flow?
  • 6 If you’ve gone through all your regular banking relationships, you may want to consider working with a licensed broker. Although you pay for the broker’s services, remember that a broker is keeping up with many more lenders and investors than you generally could, and they can help steer you toward those whose guidelines you fit.
  • 7 One resource that can work well (if done with the right institution) is a leased financial instrument, such as a SBLC or a CD. Some larger real estate transactions can be closed either with this kind of credit enhancement, or with funds deposited in escrow when other funds will be available at closing. It’s also sometimes possible to run a useable line of credit against a certain type of leased instrument when the financial institutions on both ends agree to the terms. Be very careful to have approval from the bank providing the credit line prior to making any payment.

It’s important to be creative as well as realistic when trying to get a commercial real estate loan, and to be willing to accept the changing financial terrain while being open to new suggestions. Look for solid professional advice to improve your own personal and professional goals. Sometimes when you look at things differently, the solutions to the problem become much clearer and perhaps better than the plan you first had.

Colleen Zaruba copyright 2009

Race Cars, Cheetahs, and Fix and Flip Loans: The Need for Speed

Speed matters. It can be the difference between winning the Indy 500, catching tonight’s dinner, or making a profit on a real estate fix and flip project. Many real estate investors turn to hard money loans to finance the purchase and renovation of rehab properties, and the need for speed is one of the chief reasons why.

How can you “win the race” in the real estate renovation world?

Renovation projects are extremely time-sensitive, and require funding sources that can respond quickly. Here’s why:

· Quickest Money Gets the Deal: In a high-density area like Washington DC, the competition for suitable fix and flip properties is intense. When foreclosed, abandoned or dilapidated housing stock comes onto the market, it’s often the developer with the quickest access to funding that snaps up the property. If you can’t arrange funding within a couple of days, you might miss a great deal.

TIP: The U.S Department of Housing and Urban Development’s website has a portal that lists all foreclosed properties in the country. Check it out to see what’s available near you.

· Timing your Sale: In most areas, the optimum time to sell a fixer-upper is constrained to a several-month buying season, usually starting in early spring. This means you ideally time your purchase and the completion of rehab to coincide with the selling season. A speedy private loan, available as soon as you need it, is the key to proper timing of your rehab project. A recent Zillow study puts the magic window to sell between mid-March and mid-April, depending on variables such as location and weather. Homes sold during this window sold 15 percent faster and for 2% more. That’s real money in your pocket.

· Flexibility: Fix and flip or construction loans are often structured with a draw schedule, so that funding is released each time you reach a given benchmark (permitting, framing, etc). This ensures a steady flow of funds throughout the project. However, cost overruns and construction delays can occur, and developers often increase the project scope or timeline after initial funding. Whatever your reason for needing additional funds for your project, waiting for a new loan can slow the project down. Hard-money loans can be structured to include several phases, drawing on phase two or three only if needed, and money can be disbursed as quickly as the same day, so that there need not be any interruption to your project.