The ramifications of the global financial crisis (GFC) have been many. Lower interest rates and lower petrol prices are two of the positives, but higher unemployment and a tightening of credit policy by the banks are two negatives.

According to John Lindeman from Residex, there are now some excellent opportunities for property investment in Australia. Yet there has, generally, been less investment in property, except for first home owners. John believes investors are waiting on the sidelines for the first home owners to exit the market, at which time they will re-enter the market and pick off investment properties.

These would-be investors, who are actually benefiting from the GFC, due to secure income and employment, now appear ready to invest, but are hitting a snag - money for property loans and, to a greater extent, commercial property, is getting increasingly difficult to find.

So what can they do?

Traditionally, they went to one of the big four banks, or to the smaller lenders such as Aussie Home Loans and RAMS. Yet, now, the latter are both owned (or partially owned) by banks, CBA and Westpac respectively, finance brokers have had to look further afield for lenders.

There are two new options that I have come across in my business. The first is overseas banks. This is not an option for people who can’t get a loan because they have no deposit or not enough income, instead, it’s for those that happen to not fit Australian banks’ revised lending policies. Any loan for more than $10million, for example, is currently extremely difficult, if not impossible, to arrange with an Australian bank. Yet there are some excellent funds from overseas banks (which, in some cases, have AAA credit ratings - higher than any Australian bank) which sell loan products in Australia through brokers.

The other option available through finance brokers is private money, both from Australia and overseas. This is where the investor lends their own money and takes on the risk of the borrower by carrying out their own due diligence on the customer and their risk profile. They often have a lot less red tape than a bank.

Some of these lenders will also do joint ventures where, if they believe enough in a project, they will take an equity stake, meaning that they take a share of any capital gain of the property.

No one knows when or if the banks here will loosen their credit policies again. Some believe it won’t happen for a long time, if ever. The only thing we know for sure is that it’s imperative for Australia’s future economic growth that investors and developers are able to raise funds for their projects.

By Virginia Graham from www.modelmortgages.com.au

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