Consider all options on commercial property purchases
“FNB Namibia’s brand equity is firmly premised on the concept of ‘help’ and that help includes educating customers on our products and services,” says Axel Cramer, head of commercial property finance at the bank.
“Whether customers go to the bank or phone their banker for more information, or read up on products and services online, or in printed media or listen to Q&A programmes on air, we have a commitment to advise our customers in response to some of the most pertinent questions they might have.
“One of the most frequently asked questions is around commercial property and what it actually is. This is a property that is legally zoned (permitted) to have a business conducted from it.
“Properties that can be financed through a commercial property loan include shops, offices or blocks of flats; Warehouses, showrooms, factories or similar industrial premises; sectional title complexes (zoned for business purposes) including individual units in these complexes and existing residential properties which are primarily used for business purposes and which have business rights or consent use,” he says.
Anyone wishing to apply for such a loan should know who to approach, advises Cramer and explains: “The criteria for a loan will depend on who you approach. Do some research – websites are generally a good source – about who you can approach and what they expect from prospective lenders.
“Have your business plan ready and all the research you have done on the property you intend to buy. A lender will want you to convince them that this is a good investment, so compile the documents to this effect.”
He clarifies that it was not as difficult to find someone to back customers as it used to be as any bank or a financier that dealt with commercial property would be willing to look and listen.
“There are also various private and government-supported funds geared towards SMEs that may give you a loan. Have a look at our Finding Financing category for the names of organisations to approach. And – just like you would if you were buying a home, you can shop around and see which bank will give you the best interest rate.”
Prospective customers should also know what costs would be included in the loan as most financier’s charge administration fees and VAT and it was important to find out if this would be part of the loan or have to be paid separately.
“Further – the costs of legal fees associated with the loan, such as transferring attorneys should also be taken into account. Other considerations include a deposit payment, repayment period, possibly suretyships and insurance of the property.
“Lastly we are also always asked if there is a service provider that offers finance, broking and management solutions all in one. Investments are structured using equity, shareholders’ loan accounts and term loans or any combination of these. Individual solutions are structured once the level of risk and the potential return investment of the venture have been assessed.
“The structure of each investment is made using FNB Namibia‘s unique investment models, designed for the entrepreneur with viable multi-tenant property investment opportunities – and which caters for the needs of the entrepreneur and business person with a viable business who wants to purchase his or her own premises.
“As with any purchase of this kind, it’s important to get sound financial advice from an expert in this area. Before you even consider buying a property and approaching a financier for a loan, get a financial planner in conjunction with your property expert to look at your finances and determine whether it’s in your best interest (and the best interest of your business) to buy a property,” concludes Cramer.