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Post by Deleted on Sept 30, 2016 7:20:31 GMT
I've noted that SS has started offering us deals from a wealthy developer who needs to borrow money.
Now, I struggle with the concept. If you are wealthy....
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arbster
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Post by arbster on Sept 30, 2016 7:29:11 GMT
I've noted that SS has started offering us deals from a wealthy developer who needs to borrow money. Now, I struggle with the concept. If you are wealthy.... You can be wealthy without having sufficient liquid assets to pursue all your target projects. Also, many wealthy people have the appetite, ambition, contacts and experience to identify and execute new opportunities that will return profits significantly in excess of the borrowing costs of even bridging finance.
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Post by Butch Cassidy on Sept 30, 2016 7:36:57 GMT
I am happy to lend to asset rich, cash poor entrepreneurs but am fed up when these very same wealthy individuals with substantial PG & asset backing get into trouble & this wealth is eventually called upon it suddenly evaporates into a blizzard of sob stories, IVA's & bankruptcy proceedings. A cynic might almost think it was illusory in the first place, or that that the wife & family members sudden financial fortunes were a not totally unrelated event.
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Post by martin44 on Sept 30, 2016 7:40:32 GMT
I've noted that SS has started offering us deals from a wealthy developer who needs to borrow money. Now, I struggle with the concept. If you are wealthy.... You do not become wealthy losing your own money. 
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freddy
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Post by freddy on Sept 30, 2016 7:44:21 GMT
I've noted that SS has started offering us deals from a wealthy developer who needs to borrow money. Now, I struggle with the concept. If you are wealthy.... You do not become wealthy losing your own money. Exactly. Why gamble with your own money when you can do so with ours.
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fp
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Post by fp on Sept 30, 2016 11:41:26 GMT
I've noted that SS has started offering us deals from a wealthy developer who needs to borrow money. Now, I struggle with the concept. If you are wealthy.... I know quite a few who use finance to build projects, its not unusual.
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nick
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Post by nick on Sept 30, 2016 11:59:33 GMT
I've noted that SS has started offering us deals from a wealthy developer who needs to borrow money. Now, I struggle with the concept. If you are wealthy.... I know quite a few who use finance to build projects, its not unusual. As long as your expected return on the project is greater than the cost of financing there will always be incentive to maximise leverage. The development rule of thumb used to be one third purchase price, one third development cost, and one third profit so providing the market is not in decline and the developer is experienced, they should be comfortable leveraging up to 70%+...........
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Post by Deleted on Sept 30, 2016 12:54:46 GMT
I know quite a few who use finance to build projects, its not unusual. As long as your expected return on the project is greater than the cost of financing there will always be incentive to maximise leverage. The development rule of thumb used to be one third purchase price, one third development cost, and one third profit so providing the market is not in decline and the developer is experienced, they should be comfortable leveraging up to 70%+........... Ah, I know a few wealthy men and they are borrowing money at much lower rates than we are receiving. My point is, if you are wealthy why are you paying such rates to borrow?
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nick
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Post by nick on Sept 30, 2016 13:20:40 GMT
As long as your expected return on the project is greater than the cost of financing there will always be incentive to maximise leverage. The development rule of thumb used to be one third purchase price, one third development cost, and one third profit so providing the market is not in decline and the developer is experienced, they should be comfortable leveraging up to 70%+........... Ah, I know a few wealthy men and they are borrowing money at much lower rates than we are receiving. My point is, if you are wealthy why are you paying such rates to borrow? The LTV at 70% is high and the lender isn't providing a personal guarantee so I don't think the rate is particularly high. I assume the reference to his wealth is in the context of his success and experience in the industry, but absent a PG, his financial standing provides limited direct comfort, although he is likely to have more options available to refinance if things don't go to plan. I'm sure if he was willing to backstop the debt with a PG he could probably secure a lower rate elsewhere, but I assume he wants to limit his downside to the 30% equity he's putting into the deal.
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ramblin rose
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“Some people grumble that roses have thorns; I am grateful that thorns have roses.” — Alphonse Karr
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Post by ramblin rose on Sept 30, 2016 15:19:33 GMT
As long as your expected return on the project is greater than the cost of financing there will always be incentive to maximise leverage. The development rule of thumb used to be one third purchase price, one third development cost, and one third profit so providing the market is not in decline and the developer is experienced, they should be comfortable leveraging up to 70%+........... Ah, I know a few wealthy men and they are borrowing money at much lower rates than we are receiving. My point is, if you are wealthy why are you paying such rates to borrow? Do your wealthy friends have what would be considered a traditional, reliable income? That is usually what gives you access to borrowing at lower rates. My personal experience is that if you are neither a wage slave nor drawing a pension (e.g. you are living of some form of investment income only or similar) it doesn't matter how savvy, successful or wealthy you are, it is nigh on impossible to access mortgages or other more normal forms of borrowing. I've even struggled to get a rental tenancy recently despite having more money at my finger tips than probably any body else likely to have been in the running for it. Basically, if you don't fit the bog standard norm, you aint going to access money from normal places. If you know different (and I'd love it if you do  ), please point me at the source for my own future reference.
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Post by Deleted on Sept 30, 2016 15:36:13 GMT
I'm not sure Rose. Both the guys I know are worth (worth! ) over £500m, they seem to have no issues borrowing at low rates and neither work. Maybe SS think wealthy is something different. Certainly I wouldn't count anyone wealthy until their first £100m. |
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ramblin rose
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“Some people grumble that roses have thorns; I am grateful that thorns have roses.” — Alphonse Karr
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Post by ramblin rose on Sept 30, 2016 16:58:33 GMT
I'm not sure Rose. Both the guys I know are worth (worth! ) over £500m, they seem to have no issues borrowing at low rates and neither work. Maybe SS think wealthy is something different. Certainly I wouldn't count anyone wealthy until their first £100m. Are they married? 
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pom
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Post by pom on Sept 30, 2016 17:19:21 GMT
Ah, I know a few wealthy men and they are borrowing money at much lower rates than we are receiving. My point is, if you are wealthy why are you paying such rates to borrow? Do your wealthy friends have what would be considered a traditional, reliable income? That is usually what gives you access to borrowing at lower rates. My personal experience is that if you are neither a wage slave nor drawing a pension (e.g. you are living of some form of investment income only or similar) it doesn't matter how savvy, successful or wealthy you are, it is nigh on impossible to access mortgages or other more normal forms of borrowing. I've even struggled to get a rental tenancy recently despite having more money at my finger tips than probably any body else likely to have been in the running for it. Basically, if you don't fit the bog standard norm, you aint going to access money from normal places. If you know different (and I'd love it if you do ), please point me at the source for my own future reference. I seem to recall there was something in the news a while back about a multi-millionaire who couldn't get a mobile phone (on contract)..
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Post by pepperpot on Sept 30, 2016 17:19:46 GMT
I'm not sure Rose. Both the guys I know are worth (worth! ) over £500m, they seem to have no issues borrowing at low rates and neither work. Maybe SS think wealthy is something different. Certainly I wouldn't count anyone wealthy until their first £100m. Are they married? Don't see what their sexual orientation has to do with it?
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guff
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Post by guff on Sept 30, 2016 19:51:29 GMT
Might I humbly suggest that orientation should be an important consideration in your due diligence girls and taking the fine example set by cooling_dude, I hope you'll share the information with everyone.
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), please point me at the source for my own future reference.
