Property Pre-Acquisition Mistakes

property-acquisitionThere’s a lot that goes into buying a property be it for residential, commercial or industrial purposes. One of the things that buyers often overlook is the pre-acquisition needs and requirements that are necessary for the transaction. Because of this, a number of mistakes are committed which lead to purchase failure or a poor deal. To avoid this, we’ve sought the lead team of experts from Alternative Bridging to warn us about these crimes and hopefully lead us to make better and worthwhile investments.

Forgetting and/or neglecting them

Not acknowledging them is the first step to failure. As mentioned, it’s not uncommon for many people to commit this mistakes given that majority of buyers are only focused on the asset’s price tag or its asking price. For example, a commercial building may be for sale at $100,000; however, there are extra costs to it that are spent and required prior to paying for the said value. There’s the money spent looking for the property, the expenses paid for professional serves to lawyers, real estate agent and chartered surveyor. Of course, there’s the security deposit and down payment.

Poor calculation and estimates

No one can predict every expense item to the dot but estimates serve as a good cue to guide us in our transactions and planning. When investing in an asset, a lot of information has to be taken in (e.g. market rates, economy, supply, demand, etc). Regardless, one has to be able to come up with realistic and close estimates to best prepare for these needs. Knowing the current market value of the property and the requirements mandated by the seller helps too.

Absence in the budget

Buyers need to prepare adequate funds. That means one’s resources should cover not just the asking price but also the unlisted pre-acquisition costs. Besides, one cannot acquire without having to drop bucks for the down payment or secure an asset with a deposit. Furthermore, many of these costs won’t even appear in the “for sale” advertisement or listing. Furthermore, one’s budget has to include ongoing costs as well but that’s a topic for another day.

Lack of preparation and source identification

Last but not the least, Alternative Bridging’s team warns us about inadequate preparation and planning. Pre-acquisition needs require money and with that the identification of cash sources. How does one plan to fund for these expenses? What sources will be tapped and what’s the status of their availability?


Visit http://www.alternativebridging.co.uk/development/ for more info.

How Business Waste Their Financial Resources

financial_resourcesCompanies are burdened with so many tasks and perhaps one of the more heavyweight chores would have something to do with financial resources. Making sure that every penny spent goes into the betterment of the business is a challenge and saying that is an understatement in itself. But with so many things to keep in mind, it’s not hard to miss out and forget what has to be done. Entrepreneurs can unconsciously waste their resources. How? Alternativebridging.co.uk gives us a few examples below.

  • Ditching the Planning and Budget Phase – Proper allocation of one’s resources is crucial to their effective and efficient use. If you do not plan their use well then chances are you could be spending them the wrong way. Some necessities may not be provided for while some are given an excess thus creating wastage. Financial planning and budgeting is crucial. The same is true with the proper recording and reporting of one’s transactions.
  • Hiring the Wrong People – A high level of turnovers is very costly not only financially but also time-wise. This applies not only for the finance division but for the organization as a whole. Qualified personnel provide value and they are part of the success of every business. Think about it this way. An inefficient staff won’t be able to provide a level of output that matches or exceeds the level of input and resources you provide for them. They’re incurring expenses without providing value and contributing to goal achievement.
  • Failure of Employees to Abide by SOPs – Standard operating procedures are set up for a reason. They’re there to help uphold standards, measure resources and ensure timely, efficient and effective use of all resources, monetary or not. Failure or even the lack of application and abidance to said protocols put financial resources at risk. How? Let’s take a wine bar for example. A standard measurement or serving is mandatory for all menu items. If staff does not follow this, inconsistency in quality will occur. Furthermore, there are chances that wastages and shortages in inventory will occur.
  • Going for Cost Efficient Measures in Expense of Quality – Many companies assume that by going for the cheapest solutions will always save them bucks. Maybe sometimes but not always. Quality is not cheap, but it’s not always expensive says Alternativebridging.co.uk. It can be reasonable too. Foregoing a quality machinery for instance and replacing it with something far cheaper but less productive will be more costly in the long run.

Dos and Don’ts to Commercial Property Bridging Finance

commercial-property-bridging-financeCommercial property bridging finance has become a great tool for many investors and buyers in their quest to finally acquiring the assets they’ve long had eyes on. But like any other weapon of choice, it must be used to its full potential and accordingly otherwise it will cease to be the winning tonic it was designed to be.

To help you with that, we came up with this list of do’s and don’ts when it comes to the use of property bridging finance.

Do understand how it works. As is with any other method, you’re going to have to carefully research, read and understand how it works, what its benefits are alongside its cons and costs.

Don’t pick just about any provider. You can’t jump at the first bridging company you find. You’ll need to do research on that too. Only work with the best and to do so you’ll need to do some homework.

Do have an exit route planned out. Property bridging finance is a short term loan and a borrowing will have to be paid out. Luckily, users get very flexible options. You may choose to pay prior to maturity or at maturity date upon the availability of your main funding source. Having your exit route planned prior will make things less likely to go haywire.

Don’t forget budgets and allocations. See to it that the amount you get out of the bridge will be used as best as can be by making a smart budget and allocation of its use. You simply cannot afford to waste a single cent.

Do understand your needs. Is property bridging finance really for you? Does it actually fit your needs and requirements in your planned asset acquisition? You’re going to have to get a firm grip of your needs so you can identify which methods are best for your case.

Don’t over or under borrow. The former will get you more burden than you bargained for while the latter will make your efforts remain futile. This brings us back to the previous tip. Know your needs well.

Do use it on the interim only. Commercial property bridging finance is a type of interim and temporary borrowing so you cannot use it for the long term. It can end up being more of a burden than a lifesaver should you opt to use them in place of your permanent financing. Use them as should be.

Check out http://www.alternativebridging.co.uk/ for more on bridge loans.

Why Make an Asset Acquisition Budget

 acquisition

We’ve been told time and again that planning our finances is important and today we’ll be reiterating that. Of course, we’ll shine the spotlight on acquisition budgets and to do that we’ve asked help from Alternative Bridging to serve you with the following reasons.

First of all a budget spells a plan, a map even. It gives you a written and visual guide as to what you should do and when you have to do it. It also serves as a great reminder so that you get to avoid any detours and derailment. It helps allocate and match resources to needs thereby making acquisitions run smoother and less of a headache.

Second, it communicates the plan. In order to create one, there has to be some sort of brainstorming among the significant members of let’s say the family or the organization as in the case of businesses. The budget here can be used to communicate plans and tasks to everyone as it sets not only a monetary value but also a timeline of things and a list of needs.

Third, they help assess how much more financing is needed. We all know how real estate acquisitions go, or at least have an idea about them. They come with wicked prices. Some may be more affordable than others but then again, we could all agree that they are significantly valued. By planning things ahead of time, one can better examine and predict whether or not one’s current resources will fit the price of the property that one has set their eyes on.

Fourth, it eliminates and decreases wastage. Money is never easy to come by. It’s not every day that we win the lottery. In fact, most of us never do. This makes it a no brainer as to why we wouldn’t want any amount of wastage when it comes to these types of transactions. Plus considering the item in store, this is just no time for fun and games. With a budget, any misuse of the funds is prevented.

Lastly, it speaks of reality. Ever heard of the expectations versus reality tag? Well, the thing is we tend to have too much expectations about things even ourselves that we tend to cloud reality and make it too idealistic. With a budget, Alternative Bridging says that we get to better assess our financial capabilities and best match that with our needs to find a property that suits us.

A Guide to Interim Finance

interim-financeBusiness and personal financing are inarguably sensitive topics and they’re pretty tough to handle. But you know what they say, sometimes you just have to face the challenge and do it we must. One of the often confused and misunderstood types of financing would have to be those that fall under the interim category. Today, we’ll discuss more about it together with Alternative Bridging to hopefully clear the cloud and make everyone more acquainted with it.

First of all, interim financing pertains to the process of obtaining short term and temporary loans to fulfill an impending transaction. It is used to cover a user’s cash needs until a permanent and bigger source of fund becomes available.

In essence, interim finance isn’t a standalone credit. It works alongside one. Still confused? Let’s take an example.

Let’s say that a father wishes to buy a new home for his growing family. In order to finance such acquisition, he decides to take a mortgage and at the same time, sell the house they are currently living in. He searches for options and finds the perfect one. The only problem is, the realtor has informed him about the period by which he must be able to make the security deposit and down payment otherwise the next buyer in line will be entertained.

Now this is his dilemma. Although he has already applied for a mortgage, the process took long and cash release isn’t going to be anytime soon. As for the sale of his current house, no buyer has shown up yet. Plus, let’s add in the fact that his pre-acquisition costs are piling up. For starters, he needs to pay the chartered surveyor who will examine the asset prior to the purchase for safety and validation purposes and also to be informed about other important details about the property. Then again, there’s the down payment and security deposit. What is he to do?

This is where interim finance steps in says Alternative Bridging. Also known as bridge loans, they will cater to the short term and immediate liquidity needs of the father. That is the pre-acquisition expenses mentioned earlier. The loan shall cover such expenses and then it is scheduled to be closed out at a maturity set to the date when the mortgage is expected to be available. This way, the father will not have to risk losing his dream home for his family just because his main fund line didn’t arrive early enough.

Choosing Asset Financing

Asset FinanceFinancing is not easy especially in terms of buying a property. We only wish it was but alas, genies don’t really exist in real life. The thing is, choosing a method to use is very crucial. Given its importance one simply could not wing it. Sure, it’s no walk in the park but that doesn’t mean that the task is impossible. It’s doable albeit challenging. Today, we asked some advice from the experts regarding the matter and below are the tricks they dished for us.

  • Assess your needs. – Not all financing are the same and each one of them has been designed to cater to a specific set of needs. This makes it important to know what one needs first. This way, it will be easier to match it with the right method of choice.
  • Know your credit score. – This refers to a number that represents a risk a lender takes when one borrows money. It is calculated using one’s payment record, credit length, debts taken and so on. It has a huge impact on whether or not you are approved or granted a loan. Knowing where you stand will help make better direct one’s efforts.
  • Think about time. – Financing can come either in short or long term. The choice depends on one’s needs as well as one’s capacity to shoulder the burden. Assess which one would work best for your situation. Don’t just dive in.
  • Weigh down your options. – There are many choices and it’s easy to be overwhelmed. This is why one has to weigh down and scrutinize every available option first before concluding on a decision.
  • Assess interest structure. – Not all financing is designed similarly and this applies to its interest fees and credit structure. Make sure to carefully understand what each alternative has to offer. Some may appear drastically different while others only by a few degrees.
  • Consider the repayment terms. – Like interest structure, repayment terms and options for different financing methods and even providers will differ. See to it that one fully understands this to avoid any headache later on. Ask if needed and do not hesitate to demand for any clarifications.
  • Choose a trustworthy provider. – Lastly, the experts stress the need to look for a trustworthy provider. Choosing the right type of finance is one thing but then it is equally vital to look for someone that can provide it with quality.

Get to Know Interim Financing

interim-financingInterim financing, have you heard of it or does it sound entirely alien? Regardless, we teamed up with Alternativebridging.co.uk for a more in depth view about the subject. Have you got your pen and paper at the ready? Because we surely do, time to take down some notes!

Interim financing is described as the process of obtaining a smaller temporary short term loan arranged to cover one’s cash needs until a larger long-term loan is finalized, approved or made available. In other places, interim finance is referred to as bridge, caveat and swing loans.

As its name suggests, it works to bridge or connect the gap between two points of time namely when cash is needed and the availability of permanent funding. It can be utilized by both individuals and organizations for purposes of personal or corporate transactions.

Interim financing can be pretty much used anywhere and to further illustrate its use allow us to share two examples, one from a personal point of view and the other at a business perspective.

Example #1 – A couple wishes to buy a new home for their growing family. They plan to finance it partly with savings and a mortgage. The husband takes out a mortgage and waits for the approval and cash release. The problem here is that buying a property comes with initial costs. It’s not just the purchasing price of the home. Although the couple managed to save up, it won’t suffice to cover the initial expenses such as the security deposit and down payment. To solve the problem, they take out a bridge loan.

Example #2 – A shoe manufacturer gets a huge order from a new client. The thing is it doesn’t have enough liquid cash to cover the costs of raw materials. The client is willing to provide an initial part payment however it shall be made available in a week’s time. Production has to start immediately as the machineries and labor will only be able to produce a specific number of outputs per day. To keep production from being disrupted and to meet the deadline, the shoe manufacturer takes on a swing loan to cover for the initial cost of the raw materials.

Interim Financing is nonrestrictive meaning that it can be used by borrowers in whichever way they want, allocating it to their various needs. Furthermore, it has flexible payment options allowing users to close it prior or at maturity.

Alternative Property Finance: Expenses That Make Use of It

property bridge loansWhen acquiring a real estate asset, financial needs will vary. In most cases, they can be categorized into short and long term needs. A popular and widely used example of the former would have to be alternative property finance.

Such method has been used by many investors to help them in their purchases and deals particularly in terms of short term requirements. As a form of interim financing, bridging loans connect the gap between immediate needs and a permanent yet to be available financing source. We all know that majority of fixed asset financing mediums take time to be made available considering the values concerned. To remove the risks, the drawbacks and the delays, the said method is utilized by many.

Now that we’re into the topic, you may be wondering what immediate and short term requirements would be provided for by bridging loans. Below is a list of some of them.

Research Costs – Finding the asset you need and would want to buy is not as easy as doing your weekly grocery. You have to consider many things and put into account a number of important factors. You’ll have to research too and with all these comes the costs of such activities.

Professional Fees – You will hire several professionals even before you get to close on the property you like such as but are not limited to the following.

  • Lawyer: Contracts and titles need expert knowledge. Legal requirements and papers will need a professional to handle them.
  • Agent: If you’re not capable of or don’t have the time to go research properties yourself, you’re likely to hire an agent or broker on your behalf.
  • Surveyor: Before you buy an asset, you have to get a surveyor to assess and examine it physically, financially and legally.

Security Deposit – This is a part of the selling price that buyers pay the seller to show sincerity of the purchase. This prevents the latter from selling the asset to someone else.

Property Taxes – Depending on the location, value and type of asset you are buying, you are bound to pay taxes for it upon purchase. This is something that you have to prepare for beforehand.

Down Payment – This is the initial payment that the seller requires especially if you’re not paying for the acquisition for full in cash. Without it, you won’t be able to garner the rights to a purchase.

All these and more shall be provided for by alternative property finance companies like, www.alternativebridging.co.uk.

When To Use Commercial Bridging Finance

bridging-loansYou’ve probably heard about commercial bridging finance and got yourself scratching your head wondering what it’s all about. Worry no more because we are here to help you get to know more about it and guide you in determining whether it fits the bill for your needs. Are you ready? If you are then read on!

Commercial bridging finance is first and foremost an interim financing method. In other words, it is a funding mechanism designed to provide short term loans to fund immediate liquidity needs until permanent long term finance has been acquired and made available. This is very common in real estate acquisitions considering that they often require significant amounts of cash to fulfill the sale requirements and buyers will likely use permanent sources that need more time to process or to be made available such as but are not limited to bank loans, mortgages, proceeds from a sale and future income.

As its name suggests, commercial bridging finance is directed to the acquisition of assets intended for business use and purposes such as office space, showrooms and shops to name a few.

As mentioned earlier, it is obtained to bridge the gap between a need coming due and one’s yet to be available permanent source of funds. This makes it a stop gap measure that will help businesses in ensuring an absence of any operational delays and disruptions.

Moreover, it is used to prevent risks such as those acquired from opportunity losses. These are those costs that one absorbs after having foregone a great deal or opportunity that would add value and benefit the business.

Commercial bridging finance is also a powerful tool that enables buyers to save time. Most commercial assets tend to appreciate in value overtime especially if they are strategically located within the heart of the city, a business hub or wherever there is heavy foot traffic. Buying now will almost always cost cheaper than doing so tomorrow or in the days to come.

It is also used to save up on costs particularly that on rent. Since entrepreneurs can already acquire and move into the new asset with the help of commercial bridging finance, they no longer have to rent a space while evacuating the one they are in to make way for its sale. This is beneficial as it helps cut down costs and hasten the move without deliberately creating too much downtime and disruptions in operations.

Corporate Benefits from Bridging Loans

Bridging loans are a type of short-term credit designed to bridge the gap between two transactions thus earning it the title of a stop gap measure. Companies use them to cover shortfalls that occur when a need arises but the intended mode of finance falls short of time, either unavailable or still in the process of being so.

To better illustrate, www.alternativebridging.co.uk give you an example. First we have a clothing shop that’s on its expansion phase and is planning to move from their current office to a bigger one to support the larger demand. It applies for a bank loan in order to acquire the new office that it has chosen. However, it is of no secret that such type of credit can take a considerable amount of time from application to approval. The process is really meticulous and long. Now the shop faces a risk.

What if the loan does not arrive on time and one cannot provide for the down payment within the seller’s allotted period? What if another buyer shows up with the money? Surely, it’s going to miss out on the opportunity to acquire the said asset. To avoid that altogether, a bridging loan may be used. It can provide for the upfront expenses like the down payment to lock in the deal and paid out using the bank loan as soon as the cash has been released.

Bridging loans benefit companies not only in the avoidance of opportunity loss as illustrated in the example above but also in many other ways as follows.

bridging-loans-ukIt requires far less requirements allowing for the entire process to become relatively fast. This is in stark contrast to traditional credit like bank loans and mortgages that take weeks or even months before cash is released. A bridge can take as fast as a few days time.

It is short term in nature. In other words the liability or burden only lasts for a short while, months for most, and would not span for years and be a familiar item on one’s financial statements. We all know that the longer a loan lasts, the more burdensome they become.

Repayment is very flexible. Companies who take out bridging loans have the liberty to pay it out even before maturity if it can and wishes to or later on once the long term and main mode of financing has already been made available.