In our previous article, we talked a bit more about our wholesale investment opportunities, and the ‘why’ behind this proposition. As we mentioned, to us this transition has been about introducing well-secured and fair yielding opportunities that we couldn’t find elsewhere. We are always interested in exploring other avenues (if available) and keeping a fresh perspective on things. And in this spirit, we’d like to hear your thoughts:
Where do you go to for yield in this market? What kind of yields are you able to achieve on your investments currently?
Please send your feedback to andrew@merx.co.nz. It’s these discussions that make our work, and by proxy our industry, better.
SMALL PROPERTY DEVELOPMENT
Client Scenario: Recently, we have been approached by a number of small property developers who, in the current environment, have been finding it difficult to raise funds from mainstream sources. With their projects being small subdivisions of only one-to-three houses, these clients have found limited options in securing finance through more traditional lenders. So, they contacted us to get things moving.
Merx Solution: At Merx we assess projects on their fundamentals, and most importantly, we appreciate that no one has ever started big. Among the projects we have funded this month have been three different spec house developments: single houses built on stand-alone residential sections, in quality residential locations.
The required funds for these projects ranged from $250k to a million. LVRs at or under 55 per cent on completion. The security is first mortgages and interest fees are capitalised to the loans, so clients don’t pay interest costs in cash during construction, but all servicing and repayment is from the proceeds of the property sale. Overall, an appealing solution for small property developers (e.g. builders) who are looking at generating income through the development and sale of single, stand-alone houses.