EQUITY RELEASE TO SUPPORT INVESTMENT OPPORTUNITIES
Client Scenario: In two separate instances this month, clients were seeking to leverage and expand their investment portfolios. In particular, they were considering freeing up some equity that was tied up in residential real estate, to take advantage of new investment opportunities arising in their business.
However, equity-type investments like these carry a certain level of risk, and the bank wasn’t willing to lend the required funds on the basis of projected performance. Their bankers were happy to lend once the clients could show they didn’t need the money. That’s where Merx was able to step in.
Merx Solution: Unlike traditional banks, we take our clients’ plans and projected returns seriously. In both instances, we assessed the viability and risk around our client’s investment opportunities and were able to conclude that they would be repaid within six months.
So we were happy to facilitate the release of equity from their existing properties to support those new ventures, and proceeded to fund 100k and 150k respectively, each secured by second mortgages on their current real estate portfolios.
PROPERTY IMPROVEMENTS
Client Scenario: This client planned to renovate one of their Auckland-based rental properties to maximise returns. However, the bulk of their income was offshore and, despite their property portfolio was able to generate good income in New Zealand, their offshore income didn’t count towards meeting the banks’ servicing criteria. Due to this financial roadblock, they couldn’t access the funds they needed to get the renovation work underway.
Merx Solution: While this client didn’t have enough servicing capacity to fit into traditional banks’ criteria, we verified that their property improvement plans were on solid footing to generate a significant ROI. After assessing the expected value and return-on-completion, we agreed to fund $500k, secured by second mortgages on the existing rental portfolio. The client will repay the funds within six months – enough time to get a new valuation and achieve increased servicing from their newly-renovated property.