Developer partnerships – the key to investor returns
Bowery Capital explains how the firm can offer savvy investors an alternative form of investment to traditional options like bonds, stocks and bank term deposits by partnering with high-quality developers and property investors.
Low interest rates are here to stay
The recently announced federal budget forecasts inflation to remain low for the foreseeable future. While this is good news for consumers, it is not ideal for investors and self-funded retirees.
A benign inflation outlook suggests a continuation of record low interest rates, making it difficult to generate income from traditional investments like bank term deposits, debentures, bonds and dividend stocks. Against this backdrop, private mortgage investment is likely to see its recent surge in interest continue.
Private mortgages generally offer investors six to 10 per cent returns secured by first-ranking registered mortgages over residential and industrial property – with higher returns for second mortgages.
Deal access is critical
Accessing high-quality transactions is critical to mortgage funds and private lenders. “We work to find our investors the right projects to lend on, and the right developers to partner with,” said Bowery Capital co-founder and director Vann Fisher.
“With vast amounts of investor funds chasing deals, we have to maintain our due diligence and ensure we continue to offer our investors transactions that meet theirs and our standards,” continued Fisher.
Bowery Capital targets loans between $2 million and $15 million for property acquisitions and development.
For property developers and commercial property investors, the appeal of a non-bank lender like Bowery Capital is the certainty that comes from dealing with an experienced team with a deep understanding of the property development market.
Flexibility and timeliness are critical to the company’s clients, according to Bowery Capital’s head of loan origination, co-founder and director Mark Murray. “Many developers and property investors feel abandoned by the major banks – they don’t really embrace small-to-medium scale developments and when they do, they can be very inflexible.
“We like to partner with successful developers and property investors for the long term. It is critical to understand their business needs and demonstrate that we can help them succeed in a timely manner,” said Murray.
One market closes, another one opens
Record low bank deposit interest rates may have rendered that investment class non-viable; however, the major banks’ move away from property development and commercial property investment funding has opened up a more lucrative investment market.
By partnering with quality property developers and commercial property investors, non-bank lenders like Bowery Capital present investors with a series of secured investment opportunities with returns that comfortably exceed bank deposit returns.
As Fisher explained: “Our job is to turn a series of property development loans of six to 18 months duration, into an ongoing income stream. When one investment matures, we find another one to ensure our investors continue to receive attractive returns with registered mortgage security.”
It appears Australia will be in a low interest rate environment for some time, and that presents real challenges for investors and self-funded retirees. However, private lenders and mortgage funds like Bowery Capital, by partnering with high-quality developers and property investors, are providing an alternative for investors that continues to grow in popularity.
For more information, call (03) 9596 9193, email info@bowerycapital.com.au or visit bowerycapital.com.au
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