Happy Friday everyone. As a friend said to me, as long as one foot is in front of the other, we will get there… with kindness, patience and tolerance.
This case study covers a few areas: the correct broker; the correct broker and the correct broker!
I was offered this case about 6 months ago, maybe a bit more, but the client decided to go with a broker that wasn’t comfortable with his own expertise this area, but the client really trusted him.
The project is a large single property, ground up build. Exit is sale and the client is a professional in another, busy industry.
I was approached again at the beginning of November, it had been with a lender for over 4 months and it had collapsed. The lender had declined the case. It was problematic in that the build warranty hadn’t been started and also it could be considered as owner occupied at the end – the property was larger than his own, and in the local area. Giving the correct evidence and assurance that it wasn’t was key.
The client had also run out of money and needed a speedy completion or the contractors would walk, and that can be a nightmare even without Covid to worry about!
We were able to utilise as much from the previous lender as possible – valuation report and QS updates, which eased some of the costs. I put the client in touch with a very short term investor to cover a cash gap and then got to work on smoothing out the rough edges. The build warranty should be started at the beginning, it’s not impossible to get it late, but it does increase the cost. The lender, LendWell, were as always, fantastic. They keep things in a sensible straight line. If there are any bumps then they are there to have a sensible conversation, and are always working towards completing the case. With other lenders it can feel like they are trying to find a problem.
We were able to agree a facility which got to client 25% of the GDV for 12 months. His build time had only got 4 left so this leaves plenty of time for any hiccups and sale.
Having a broker that is not transactional meant I, the Director, got totally involved. Managing the build warranty; warranty for a swimming pool and even working with the contractor. Keeping things smooth and transparent.
We completed on the 18th December. The investor was paid from the drawdown funds and everyone could breathe again.
It really wasn’t a straightforward case – part built properties can be problematic, so you really need to know what you are up against.
The client learned a few lessons as well. Every day is a school day, they say.
I can’t emphasise enough the importance of the right person for the job. It is coming up time and time again and your time and stress never seems to be in the equation. Someone said buy cheap, buy twice.