The disparity between some of Melbourne’s local neighbourhood retail shopping centres and the appetite of local investors continues to bewilder some.
Whilst retailers in general terms continue to complain about the lack of trade and the ever increasing costs of day to day business whether it be the rent or the cost of labour via penalty rates…it seems that unless you are operating a café…you are struggling.
For those baby boomers nearing the end of their working days or those parties that are planning for that retirement period in future years…be careful. The acquisition that you entered into already may be one of the worst financial decisions you have made or perhaps you may have created an untenable retirement period already for the future years ahead.
Let’s face it, the real estate market specific to Metropolitan Melbourne has witnessed a sustainable increase in levels of value unparalleled for many years. More so since the Global Financial Crisis (GFC). The dollar quantum increases in value in fact, is outstanding and no one in their right mind could argue that those parties that have already prudently acquired real estate over the years will benefit when retirement arrives.
Difficulty in obtaining funding for a project to get off the ground is a difficult task in any property cycle. The base rules of most multi unit apartment developments have been fundamentally the same over the last five year period. Developers need to own the land outright, pre sales are a requirement, the construction/builder is to be known to the marketplace and the entity needs to be able to show debt coverage of a percentage plus basis over the total development period. The simple truth is for a project to get “off the ground”, an intending funder has undertaken their due diligence process.
To state the obvious, ensure that your finance is in place. Obtain a pre approval letter from a financial institution/s stating the amount and terms prior to setting out on you journey to acquire.