How would you refinance your assets now?
Why that topic has been set about is because we’re looking at the matter of settling debt, Now, in order to settle debt, you need to have money. It’s all like talking to the banks and saying to them, Look, I will refinance or I will bridge out. I will get a share of my inheritance. But if you don’t have the money and you can’t pay them, the banks will proceed for repossession. They’re not going to wait any longer than they need to.
So this topic is important so that people out there who are in difficulties before the New Year take time out to think, how are you going to refinance your assets? How are you going to raise money and to be able to pay off the banks and your creditors?
Right. Okay. So there is a whole list of means to raise equity. And remember, each means is governed by the purpose. If you’ve got a refinancing issue, then there’s a different category of businesses Institute out there that are willing to lend money.
Principles for raising Equity:
- You need to be sure in order to raise equity that your assets collectively, wholly or severally or as one, are in a position to release equity. Raising equity is merely a title, but the actual issue revolves around having an asset that has enough money in it that you can take money out to solve some of your problems.
So we’ve got to block out the back again. Yes. So in order for you to actually ascertain whether you got the ability to raise equity, you will have a very glance and the values of your assets and the outstanding amount of money that you owe to the bank and any of the borrowers. Sorry lenders.
What is the market lending at? Do banks lend out more than 90% of the value of the asset?
Yes, some of them do. You’ve got to look at that as being the benchmark to equate from the debt value to the equity amount to the market value and take those key points, put them together and you should get a general formula of the amount of money you can raise.
It hardly makes any sense in going down the process of raising equity. If you’ve not done a basic appraisal of your assets. So you really need to get into the details of the properties after you do a very high level summary or calculating. So it’s always important that the property landlord is always reviewing every six months now the uncertainty of code, I would say every three months, maybe every quarter, doing a value and assessment of their assets.
The market is so volatile and by the end of 2021, whatever your property really was worth back in 19, is it really worth that? And then at the beginning of 2022, where are you going to be now?
What is the value of your assets now?
So it’s important that we do a regular review of the value of the assets so that we know there is a chance for us to raise equity. It’s hardly worth taking out the exercise if you know your properties are totally hilted. They’re already at 98% loan to value or 95% plus because you’ve been borrowing over the years and you own lots more money to the bank and the assets of work or XYZ or anything like that.
You should have a hard look every quarter and then once a year minimum to establish where your properties are now. The topic is raising equity. So let’s go to the reason you may need to raise equity, and one most important primary reason will be the requirement to settle debts on an outstanding debt. You don’t have sufficient cash in the bank and you want to take the money out of the assets because there was more now than there was when you purchased them. Bear in your mind, anybody who purchases a property is doing it for capital gains.
Nobody buys a property to lose money from the property or to know that they have more debt service. The objective of buying properties is to take advantage of capital things. Now the main problem you’ve got is the market has been extremely volatile in the past five years and we keep getting these real steep peaks and troughs around the value of property in the property market in general.
