Monthly Archives :

August 2015

300 150 Prevance - Bridging Finance South Africa

Short Term Property Solutions

Go to Article

termloans2“We strive to solve your short term financing problems: our website is our window to the world: and the service we offer to our clients is of the highest standard.”

Fine words indeed.  Of course, some may raise their eyebrows and see them as swaggering, but the success of the company is more than indicative of their truth.

Lewis Freidus is Chief Executive of Prevance Capital, and through his passion and commitment to the business, he has elevated the company to the top rung of the short-term bridging financing sector in South Africa.

Previously a CA(SA), he and his wife have a married son (who is an actuary) and a daughter completing her B.Sc (Hons).  Having spent 10 years with Reichmans, which was listed during his tenure there and which was later sold to Investec, and then 4 years with Sasfin, also a listed company, he then moved to the Chester Finance Group (about 18 years ago), which was listed and then de-listed and which bought Prevance about 12 years ago.  The Chester Finance trade finance division and was then sold to Cullinan Holdings in 2014; but Lewis remained as head of Prevance Capital, ably assisted by a staff of 9, including dynamic young marketing manager Christo Jonker who has been in the business for some 10 years and now become Lewis’ right hand man. The company, small though it is, has achieved amazing results.

During my interview with him, Lewis stressed more than once the concepts “short term”, “property”,  “finance” and “solutions” as the defining characteristics of the business which operates nation-wide including transacting online, through their own custom built software portal.  It was interesting and informative to learn things I had previously not known much about, from a man who knows his business inside out and then some.Prevance has two arms: that of “traditional” bridging finance, which provides 3 distinct products, and the second arm which provides business term loans

There are 3 products of the traditional bridging finance.  The first encompasses finance offered to sellers of property, who need funding until the transfer takes place, which is usually in the region of three/four months; the second product takes the form of commission for the estate agents who are generally not paid until the transfer has been completed; and the third is that which accelerates payment of mortgage bonds from the bank during the interim period,

The niche term loans provided arise largely because of banks being notoriously slow and bureaucratic when it comes to granting loans to their customers.  We’ve all been there – the red tape is onerous (though necessary), and for short-term loans banks are definitely not the road more travelled.

The loans offered by Prevance are short-term and property-secured; they are commercial in nature and are available not to individuals but to businesses which are legal entities. To quote Lewis, “We fund opportunities for people to open/extend their businesses.” The security which Prevance demands for these loans is usually a mortgage on a property – however the company strongly prefers not to take a mortgage over a primary residence as it is unpleasant to evict families from their homes. So Prevance rather looks as holiday homes and commercial and industrial buildings as security properties.

Short-term in these instances can be as long as seven/eight months, and the ideal size of loan is between R2million and R8million.

Lewis mentioned three main reasons as to why business clients approach him:

(1) to fund an opportunity which they recognise

(2) to kickstart developments – developers are usually funded by banks but if a little more is needed urgently to ensure the success/completion of the project, then taking a short term, that is immediately available may be the way to go

3) to bridge a short term financing gap.

While those are the most common reasons, there are infinite other possibilities for the use of the funds; and because Prevance works quickly, gives excellent service, and avoids the hierarchy that one has to navigate when approaching a bank for short-term loans, the company is definitely the organ of choice for business people seeking quick efficient solutions to their business financing problems.

I asked Lewis where his clients come from, and he replied that many of them are recommended by conveyancing firms who areaware of the cash flow problems that may be experienced by people waiting for their deals to be concluded.  He stressed that he works only with honest conveyancers, who are the main source of new business for Prevance, and that’s where relationships are developed and strengthened.

Most of the company’s advertising is done digitally, and enquiries are received online and via the website.   That seems to have been achieved, judging by its success.

According to both Lewis and Christo, Prevance is the perfect stopgap for homeowners and/or medium-size businesses needing short-term interim loans to help their dreams become reality.  Its website is www.prevance.co.za and the company is based in Killarney Johannesburg.

Go to Article:

150 150 Prevance - Bridging Finance South Africa

Bridging Finance for Sellers

Having access to finance before transfer of a property has been finalised can make the transaction a lot less stressful.

Most distressed sellers automatically assume that any money woes will be resolved once their property has been sold. Likewise, even financially sound sellers don’t realise that selling a property and reinvesting in a new home can be an expensive exercise at least in the short term while the profits of the previous sale have yet to be released.

These are not the only challenges sellers could face. Money issues have a knack of popping up when we can least afford them. However, selling a home isn’t a financial ‘get-out-of-jail-free’ card and the money needed to settle these types of debts is often locked into the profits of the sale. It takes time for transfers to go through and although the profits may be dangling like a carrot in front of the seller, he cannot access these funds until the transfer has been finalised.

The other problem that often rears its head is finding the right sort of cash when you’ve found the right sort of property. Deposits need to be paid in order to secure a property and nothing is more frustrating than finding the perfect home, but not having the finance available to ensure that the deal goes through.

Bridging finance is an ideal tool for resolving these issues and yet only three out of 10 sellers are aware that this type of service exists. The product, which allows sellers to obtain as much 75% of the net proceeds (after settlement of existing bonds and expenses) upfront is an ideal mechanism for consolidating debt or putting down a deposit on the next property they buy.

“Prevance has the perfect solution where you can get access to the requested funds within 24 hours of the purchase price being secured,” says Christo Jonker, the group’s marketing manager. “We pride ourselves on our service and have made the advance process as quick and as hassle-free as possible. The fact that our bridging department is among the fastest growing within the company bears testament to our level of commitment in taking the stresses out of bridging the financial gap when selling a home.”

For further information or to apply for a loan online go to: www.prevance.co.za and don’t forget to visit our Facebook page at https://www.facebook.com/PrevanceCapital for interesting and informative snippets.

152 75 Prevance - Bridging Finance South Africa

Spotlight on Rosebank

prevance.png

sell3

In recent years, Rosebank has seen a major commercial facelift, most notably in the redeveloped The Zone @ Rosebank and the migration of large corporate head offices, such as Standard Bank’s and Fluxmans Attorneys’, to the area. Now, residential property is following this redevelopment trend as the demand for high-end city living in the area increases.

As opposed to the slick corporate feel of Sandton, Rosebank has always danced to a different tune. It’s a bit older, a bit more soulful and a bit more about the arts and culture. Visit the Rosebank Mall, the Circa or Everard Read gallery to view works by local artists; listen to live music five nights a week at Katzy’s; or pick up handmade crafts at the Rosebank Sunday Market while listening to the local buskers strumming guitars. The streets are packed with creative, sharply dressed groups of students and 20-somethings and the feeling in the air is one of multicultural enterprise that leans towards the arts.

Up until fairly recently, Rosebank residential property has consisted predominantly of spacious mid-century apartment blocks with their characteristic stucco walls, parquet floors and high pressed ceilings. But all this is changing. Noting the increasing commercial development, property developers are seeing opportunities for great returns on high-density, upmarket residential developments as well. It makes sense: with its world-class shopping, restaurants, bars, schools (such as Rosebank College), hotels and the Gautrain all just metres away, Rosebank is an attractive option for city dwellers. And for those whose offices are now in the area, Rosebank has become an even more attractive prospect as it means their daily commute is that much shorter.

Lindi Mabena has lived in a one-bedroom apartment in Rosebank for the past 18 months.

“Living here is great because of how convenient it is.”

Lindi says. “I love having the shops and restaurants so close by. It’s also got a really vibrant feel to it, as though I’m right in the middle of things. I work in Midrand, so it’s really quick and easy for me to get to and from work everyday on the Gautrain without having to sit in traffic for hours.”

Mike Ruttell, executive director: development at Redefine, thinks this trend will continue, because Rosebank

“lends itself well to a work-live-play lifestyle.”

Redefine is busy with Park Central, its flagship residential development aimed at the high-end buyer. Due for completion in 2017, Park Central is situated on the corner of Baker Street and Keyes Avenue. It will have 445 apartments, ranging from one- or two-bedroom units priced from R1,75m, right up to luxuriously spacious penthouses pegged at the R16m mark. The development sums up modern city living – slick and stylish interiors, sky gardens, manicured parks and roof gardens and, of course, easy access to all of the area’s attractions.

The main problem with Rosebank, though, is that space is limited, which means that old residential buildings either have to be knocked down or refurbished. Ruttell says that the suburb’s older apartment buildings lend themselves well to upgrades or redevelopment and have huge potential for increased density and height. “Access to more bulk is attractive to residential developers due to the resulting economies of scale,” he says.

Chris Renecle, MD: Renprop, has a different view: he believes that most of the older residential buildings in Rosebank will be demolished and rebuilt at higher densities, because of the land value. “Refurbishment is not a cost-effective option,” he says, “and the economies of scale will play a role in these future development decisions.”

Renprop is developing The Tyrwhitt, a similar development to Park Central with its range of one- or two-bedroom units and penthouse apartments. This follows Renprop’s successful development of The Vantage, which was completed in 2014 and whose apartments sold out soon after its launch.

How construction will happen is still open to debate, but both Renprop and Redefine agree that the apartments are attractive to several types of buyer. Ruttell says Redefine’s biggest market is the younger or first-time buyer, so it expects to see smaller units being introduced to the market. Renecle sees investors as the other major target market: “Our developments are priced in such a way as to ensure investors achieve capital growth before they take transfer of their units,” he says.

Renprop and Redefine also see a market for buy-to-live purchasers in their developments, particularly in the high-rise apartments. Ruttell says that Redefine foresees the growth of a strong home rental market in the area and that the group expects it to last for a long time. “We have first-time buyers,” he says, “but in lesser numbers, as the lead times from building to launching some of them could be a while.”

Meanwhile, the demand for high-end density residential living in Rosebank continues as more and more people look for a village-in-the-city lifestyle, where the commute to work is shorter or nonexistent and all amenities are on their doorstep. For now, at least, the future of Rosebank looks as bright as the bright young things that fill its streets, shops, nightclubs and offices.

Property prices in Rosebank

  • A typical property for sale in Rosebank is a two-bedroom apartment at an average asking price of R3,407,500.
  • 8% of properties for sale are houses, at an average asking price of R3,55m.
  • 92% of properties for sale are apartments.
  • Average monthly rental for a one-bedroom apartment: R12,250

Demand

Properties for sale in Rosebank comprise 6% of total sales listings in Rosebank and Parktown. They receive:

  • 4% of the interest
  • 4% of the total rental listings

than properties elsewhere in Rosebank and Parktown.

This article originally appeared in Neighbourhood, Sunday Times.

150 150 Prevance - Bridging Finance South Africa

Funding those Bargains

REPORT

Call it Murphy’s Law, but good property deals often seem to come around at the least opportune moments when access to ready cash is restricted. Most investors remember well those times when they lost out on the ‘deal of a lifetime’ and unfortunately, it’s something that often leaves a bitter aftertaste.

Having the right sum of cash at the right time is key to any investor’s success. However, unlike the Richard Bransons of the world, there will be times when traditional methods of raising funds will be blocked and a different avenue will have to be pursued. This is particularly relevant when buying a property on auction.

The terms and conditions when buying a property on auction differ significantly from traditional property sales. It’s customary for auctioneers to demand at least 10 percent of the purchase price, as well as the auctioneer’s commission, at the fall of the hammer. Thereafter the usual terms are payment of the balance and all associated costs within 30 days.

In other words, you need to be able to lay your hands on cash – and quickly. Traditional sources of finance may well cost you the deal because of administrative hold ups and delays. This is where a bridging finance product such as that offered by Prevance Capital comes in to play.

“Those who are interested in buying homes on auction can set up a facility with Prevance Capital ahead of time,” says Christo Jonker, marketing manager of the group. “Like any regulated financial institution, we require some form of security for the funding, and this can take the form of a first mortgage on an existing property.

“Once this has been accomplished, the operator has the fire power to bid for a property at an auction, secure in the knowledge that they have the financial backing in place if theirs is the winning bid. This would give an investor a possible advantage over his competition in the bidding process.”

Jonker says that once the deal has been finalised, Prevance will then fund the deposit, the balance of the purchase price and other costs involved and will give the operator around six months to dispose of the property and repay the finance to Prevance.

Obviously interest will have to be paid on the credit facility, but this pales into insignificance when compared to the potential profits to be made on some auction properties.

Serial investors seldom work with one property at a time. These entrepreneurs are fully aware of how necessary it is to invest in multiple properties simultaneously in order to maximise profit. Even for those who have access to equity, gearing this with bridging finance will ensure much higher percentage returns on their investment.

The extended funding period of up to six months facilitates renovating and selling a property without undue pressure. Reselling an investment property for a market-related price via the traditional estate agent route takes time. This is exactly what bridging finance allows entrepreneurs to do – take the time to market their investment correctly in order to achieve the best selling price possible.

Head Office : 011-274-1700