Auction Finance
Financing auction, dilapidated, unmortgageable or distressed real estate + covering refurbishment costs for sophisticated UK and overseas investors is our core business.
Deal size: €10m-€500m
Auction Finance and Refurb Cost
- Buying properties from auction houses, administrators liquidators, distressed sellers require fast execution and certainty of decision. This is why, our clients appreciate the speed of decision from our funders. We use our expertise in delivering decisions in less than 24 hours and total execution time within 2 weeks, depending on available information.
- Our funders could finance up to 90% of purchase price of auction properties (up to 75% of open market value), with a view to funding up to 100% if there is an additional collateral.
- Finance 100% of refurbishment cost.
- Flexible approach to clients who receive loans, their personal backgrounds and credit history, while maintaining professionalism and privacy.
Examples of Projects Funded
- Loan size:
- €350 000
A commercial transaction where our client was able to purchase 3-bedroom auction property in Surrey for €350k (around 80% funded), spent further €100k for refurbishment (100% funded), converted to HMO, exit through mortgage.
- Loan size:
- €1 300 000
Client acquired a portfolio of residential properties at around 20% discount, €1.3m, immediately sold them one-by-one, generating around 20% profit in 6 months, 75% of acquisition cost funded.
- Loan size:
- €1 000 000
Client financed acquisition of leisure development site with self-built permits, €1m, sold plots one-by-one, generating around €1.2m in 12 months, 66% of acquisition cost financed.
As a Company, We Work with Specialised
Auction Finance Lenders, because They:
Move very quickly and know the commercial processes and time frame involved in auctions.
Offer rates as low as 0.43% per month (5.16 APR), additional fees apply.
Offer flexible approach to valuations and legal agreements, depending on financier.
Offer 1 month to 24 months loan period.
Are aware of ongoing and potential legal and planning policy changes that may affect the market on things like permitted development rights.
They ensure that the security against which they provide the leverage is of value or has prospects of obtaining value over time.
These firms are cash worthy and have strong financial security so as not to be short in honouring their side of the contract.
Move very quickly and know the commercial processes and time frame involved in auctions.
Offer rates as low as 0.43% per month (5.16 APR), additional fees apply.
Offer flexible approach to valuations and legal agreements, depending on financier.
Offer 1 month to 24 months loan period.
Are aware of ongoing and potential legal and planning policy changes that may affect the market on things like permitted development rights.
They ensure that the security against which they provide the leverage is of value or has prospects of obtaining value over time.
These firms are cash worthy and have strong financial security so as not to be short in honouring their side of the contract.
Confidence
Generally, commercial transactions like buying and selling require confidence. However, high end commercial activities like property auction, mortgage transactions, etc., require even more confidence. Once you decide to enter an auction room and bid to purchase a property, you’ll often discover a substantial potential to make a profit by buying the property below market, fixing it and then either selling or renting. Once the hammer falls, a buyer is given usually 4 weeks to complete on the property. However, to enter the auction and bid for a property you liked, you will need one thing – confidence that there will be a funding partner able to support you in this commercial journey. Auctions are straightforward transactions, but without confidence, acquiring your desired property may be difficult.
With a long-standing experience in auctions and auction finance, Stanley Corporation understand the auction process and works with some of the fastest moving lenders with very attractive loan deals and the highest level of commercial awareness in the industry. These lenders do not only help in funding and financing the purchase, but also potential refurbishment or extension costs in order to help the acquirer in their journey to turn profit on their purchase.
We use our business expertise and experience to provide premium services to our clients. We work with a number of fast-moving money-in-the-bank and flexible lenders who understand auctions and auction processes, and the property’s particular circumstances (for instance cladding issues or heavy dilapidation making it unmortgageable or rural location or Covid-related distress). These lenders are also up-to-date with the most recent information in the industry, which they use in determining the proper circumstances for issuing out loans. This also gives us tools that we use to issue loan offers and eventually grant loans on the property quickly, with clear indication of timing and information needs.
How much fees do auction finance projects cost?
The costs associated with auction finance are similar with bridging finance and development finance, and depend on the type of property, borrower profile and the level of leverage. However, for auctions conducted in last few years, the costs associated with short-term finance have been coming down. When talking about costs, we encourage the acquirer to consider the cost of money from the perspective of total business plan of a project.
In bridging the theoretical explanation
above with reality, let us consider a
hypothetical example
Buy the house for 100% cash (which means he will use his own capital) and refurbish also using his own cash. Here, he makes €100k profit. Hence, he makes around 20% on his €400k invested capital over 9 months’ period or 1.2x on his money.
He puts down €100k equity and obtains a loan, or a series of loans amounting to a further €300k at about 10% cost (although high number and in reality, it is lower, we have taken a round number for simplicity and includes all fees and expenses etc.). In this case, upon the sale of the house, he offsets the loans that amount to his capital (the €300k borrowed capital) and then further €30k finance cost. He is left with €70k in profit. On this €100k invested equity, he just made 70% return or 1.7x on his money.
Advisable Process
We serve as the link between customers and financers, and help in bridging the lenders market with the real estate entrepreneurs and investors in financing required projects. We have worked closely with both property developers, sophisticated landlords, private equity houses, but also with first-time investors who want to make a profit as a side business or build cost-efficiently a property portfolio. All of our clients have utmost confidence in our services, as we value their interests and respect their privacy. When working with us, you are certainly in a good and reliable company.
In order to make an auction finance process more certain for you, we recommend preparing for the auction investment process well in advance, because once in auction room and the hammer has landed, the clock starts ticking and the person needs to act in order to honour his contract, with the person or company that owns the property. A number of steps are advisable to be followed, to guide your activities before and after your transaction is completed.
Before entering the auction, it is necessary to take your time in making your research and proper enquiry. It is also necessary to have prepared your business plan thoroughly on the types of properties you want to target. Things to consider are:
Things to consider are:
- Location
- Residential or commercial
- State of repair the property is in
- Permitted development or extension rights: for instance: residential to HMO or office space conversion (may need a special license) or commercial to residential conversion
- Price range and your budget
Develop the business plan and line all ducks in a row in terms of who does what. If your business plan is to buy bad condition houses, split them into flats and then rent and then refinance through a BTL mortgage, you will need to have the necessary information on how to do that, where to do that and who will do the works. This means a thorough research into local planning rules, conversations with architects, contractors and project managers.
Once you know what you want, where you want, and what you will do with it, start your property searches and contact auction homes, register with them, receive their catalogues and property listings. This will help you and guide you in getting a thorough understanding on the availability, and a general view of the status of the property you are interested in.
Once you see a property you like, prior to the auction, we recommend that you make some form of enquiry on the state of the building, by visiting the property and arranging a structural survey, just to make sure the property is structurally strong. We also recommend reviewing the asset-related legal pack which should be provided by the auctioneer and consult a solicitor about the property to eliminate any legal risks. Statutory and policy obstacles can be quite frustrating if not addressed properly before getting into the action. It is also recommended to put in place a building insurance once the property is acquired.
Contact us with details of the property, post-acquisition process, and other necessary terms. You will need typically around 10% of property cost as a deposit to be provided on the same day, so make sure you have it. We will then contact our lenders and make necessary enquiries on your behalf, collecting indicative terms in order to secure the property and the necessary loan to finance the works. Summarily, we help in bridging your acquisition process with your post-acquisition requirements.
Enter the auction on the day and time when the property you are targeting is required to start bidding. Have a clear idea of a maximum price you are willing to pay. Our recommendation is also to make a thorough comparative market analysis (through research and enquiry) so that you have a clear idea of property’s value, which should give you a clear maximum price indication before the bid begins. Once the bidding on the property starts, place your bid (or bids), but do not exceed the price you are willing to pay.
Once the auction is won, contact us, and we will start the required financing process. Our contact information is duly contained on our website. In our business operations, your privacy, business terms and personal information are protected by us. The terms of our privacy policy ensures that your information remains safe, and is only revealed if requested or required.
Summarily, it is important to seek the service of experts when entering into delicate business transactions, to guide your steps and ensure that you make the right decisions. We understand that there are a number of possible reasons why an individual or a company can decide to acquire property by auction. Whether is to be converted into a block of flats, or to serve as a beautiful home with a view, or to finally have an abode of your own without the burden of a mortgage, we advise that you allow us guide you through these processes, and transform your newly acquired property to what you truly desire.