Team Tuesday: Meet our Lending Director, John Ring
Where did you begin your career?
“I began my career in the Irish Nationwide building society as a mortgage administrator dealing with mortgage applications from both the regional branches of the building society and mortgage brokers.
This was in late 1997 and I remember the starting salary was IR£7,500.”
What is the best career advice you’ve ever been given?
“I don’t think there is any one piece of advice that has stuck with me, other than the example good mentors have shown me throughout my career.
I’ve had great mentors who have helped me to understand that treating people with respect and honesty always wins, whether they are customers, stakeholders or partners.
Having seen the rise of the Celtic Tiger and the subsequent bust along with the financial crisis, I have had the benefit of seeing how people reacted on the way up and also on the way down!”
What tips would you give to someone starting in your profession?
“Build your network and don’t over promise.
Our business is relationship based and managing expectations is a big part of what I do so it is always great to exceed expectations with clients.
The contrary can be damaging to both you and your brand.”
What is your greatest professional achievement to date?
“My greatest professional achievement to date has been able to maintain relationships with various business contacts, some of which are over 20 years old.
It is great to work in an environment here at Onate, where your decision making and experience is valued.
Working with Dan Gandesha has been super. As with all great leaders, he positions you to ensure that you are content and supported in order to grow both personally and professionally in tandem with the business.”
Tell us something people may not know about you
“I haven’t joined the dry robe brigade yet, but have taken up sea swimming since Covid struck. I’ve found this a great way to switch off mentally and a super way to reset after a busy day.”
Case Study: Bridging Finance of €915k provided in MidWest
Debt Settlement loan for seven properties
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Onate provided bridging loans for €915,000
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16 day closing achieved
In Q4 2021, Onate was presented with the prospect of providing a bridging loan to finance a debt settlement from a fund which had purchased legacy debt. This related to a portfolio of properties in various locations across the Midwest and Dublin owned by a professional. The portfolio comprised seven five residential investment properties and two offices valued at €1.8m.
The main consideration the borrower had when selecting their lender was speed of execution. It was essential that the fund received the debt settlement amount by an agreed date in the near future.
Onate issued its Approval in Principle (AIP) within 24 hours. As soon as the borrower returned the signed AIP along with the Due Diligence fee, Onate moved quickly to have the portfolio valued, and to have the legal title for all seven properties reviewed by our legal team.
This was a challenging undertaking due to the number of properties involved and their diverse locations. However, despite the tight deadline, Onate were able to ensure that the settlement funds were issue within 16 days of terms being agreed.
Onate’s bridging loan of €915,000 facilitated the borrower in settling with the fund, gaining full control of the portfolio, and executing a phased sales strategy of the portfolio.
Over the following six months, the borrower sold five of the properties and redeemed their debt in full. This bridging loan from Onate allowed them to retain the two properties that are core to their business.
Case Study: Bridging Finance of €435k provided in North West
Four incomplete residential properties
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Onate provided bridging finance of €435K
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Shortage of residential properties fulfilled
In mid 2021, a financial advisor introduced Onate to the prospect of financing a debt settlement from a fund which had purchased legacy debt relating to four incomplete residential properties. The properties are situated in the North West of Ireland.
The properties were originally built during the Celtic Tiger era, but were never fully completed. The four properties, in a completed state, were valued at circa €965K. However there were a number of issues to resolve in order to realise this value.
These issues included access, works to be completed and connection issues to services. Due to these issues, the fund which purchased the debt came to a settlement with the borrowers to purchase the properties for €400K.
In parallel to this, the borrowers had been finishing the properties and resolving the connection issues with the services. Due to works recommencing on the property, this generated local interest in purchasing the properties by owner occupiers.
Onate stepped in and provided the bridging finance of €435K in order to allow the borrowers exit the position with the fund, gain full control of the properties and execute a sale process over a six month period. The properties were then valued at the original €965K.
This brought four new unfinished residential properties to the market. These properties were purchased by local families to help fulfill the shortage of residential properties in the area.
Team Tuesday: Meet our CEO, Dan Gandesha
Where did you begin your career?
“KPMG, in their Technology, Media & Telecoms audit practice (I’m referring to adult career, see last question…!) ”
What is the best career advice you’ve ever been given?
“Obviously not delivered to me directly, but Mark Twain’s famous quote - “Twenty years from now, you will be more disappointed by the things you didn’t do than by the ones you did do” has been a powerful force, especially in taking the step to build a new business for the first time.
Onate is the second business I’ve helped to build, but this was still a helpful piece of advice.
Similarly as we adapt and evolve Onate, I keep this in mind.”
What tips would you give to someone starting in your profession?
“I characterise my profession as building companies and teams in finance and technology.
From that perspective, I would advise a focus on simplicity. Ask yourself, what is the one simple thing that this company or team is going to be great at?
In Onate’s case, that’s “delivering a fast yes or no & following through at pace”.
Knowing this core focus allows us to build our team, design our processes & select our partners with a clear vision of what we are all working to achieve.
It doesn’t suit many, but that’s ok. We’re focused on our mission and those that believe in it too.
It’s pervasive through everything we do.”
What is your greatest professional achievement to date?
“All of my professional achievements have been as a contributor to a team. I can’t claim to own the achievement personally.
I also see everything I do as a learning experience to take into my next challenge.
There tends to be a focus on recent activities as these are building on all the learning from years gone by. Within this context, I would definitely say the team we’ve built at Onate.
I enjoy my time at Onate enormously because at every level - our team interacting with borrowers & executing deals on the ground here in Ireland, our funding partners, our legal counsel, our Board & Shareholders - it’s a group that enjoys working together and clearly understands what we’re looking to achieve.
We’re rowing in the same direction. Which is far easier said than done.
There are always ups and downs in any team or business, but the foundation we have allows us to have more ups than downs, and work through the downs quickly and with good spirits.”
Tell us something people may not know about you
“When I was 12, I worked on Saturdays in a scrap yard. Safety standards weren’t great.
Tasks included reducing an old caravan to flat pile with just a club hammer and a chisel, and removing a gearbox from a crashed vehicle using an angle grinder.
The highlight of each day was a 6am bacon roll from the local food truck, where I expect food hygiene standards were lower than the scrap yard’s safety standards.
On the plus side, I knew how to put in a hard day’s work pretty early in life.”
Our Lending Process and How It Works
Updated February 2022
At Onate, we specialise in completing property bridging loans at a fast pace.
Our decision making happens entirely in-house, meaning we move quickly and provide certainty. We’ve completed loan drawdowns in just seven days, and regularly close transactions in two to three weeks.
Our loan appetite ranges from €150k to €4m, secured by a first legal mortgage charge. We have a minimum interest period of just 90 days, redemption thereafter does not incur exit fees.
Whether it’s loans for debt settlements, equity release, residential auction purchase, Pre ’63 residential, social housing or borrowers who have a complex credit history, we provide fast and flexible finance for a term of up to two years. We also provide bridging finance on sites with planning permission for primarily residential developments.
We lend up to 75% loan-to-value based on property type and location and we can lend nationally.
Here’s how the process works:
Contact our Team
Contact our lending team on +353 (1) 697 2588, or complete our application form and email it to us at hello@onate.com. If the loan meets our lending criteria, we’ll provide an immediate indication of our terms by email.
Agreement in Principle
Within one working day of receiving your request to proceed, we’ll produce an agreement in principle confirming in further detail the terms and conditions on which we are willing to lend.
Once Fee Paid
We receive formal credit approval and instruct our valuer and solicitor. We will also request any outstanding information on the borrowing entity and the persons that ultimately own it.
Legal Process to Completion
Our solicitors can turn around a loan in just a few days, provided they have all the information they require on the property. It is important your solicitor provides this information quickly, and is generally familiar with short term property finance. We can then send the funds to our solicitor for completion.
Steps to ensure the transaction moves smoothly:
Engage your Solicitor and ensure the property Deeds and associated information pack are sent to our solicitor immediately. It means our solicitor can raise any questions early
Your Accountant or Solicitor will need to set up an SPV (Special Purpose Vehicle). This is neither complex nor costly and can be set up within a couple of days
All-Party Call with Solicitors where the deadlines are agreed
Arrange access for our Valuer to be able to view the property early. The report can be turned around within five days
Speak to your Insurance broker and get the relevant I.D. and Utility Bill certified by your solicitor. Doing this early avoids any unnecessary delay to closing.
Provided the above steps happen swiftly, Onate will be able to complete the loan in short order. We’re here to help you, and move the transaction along as quickly as possible.
In The Media: The Irish Independent
“It’s very easy to take a simplistic approach when it comes to office work, such as do staff come in on time, do they put in long hours, are they always in their seat. Historically, that’s how we assess productivity – it has been a tick-the-box exercise.
When you have a remote team, that’s not an option. You have to treat people as grown-ups and trust them.”
Our CEO Dan Gandesha is featured in today’s Irish Independent. Dan discusses the remote-first culture at Onate and how it benefits the business and employees.
Read the full article here
Using Bridging Finance for Equity Release
At Onate, we provide bridging finance for various purposes such as debt settlements, property purchase or transition finance. Another common request is for an equity release facility. This is where a borrower already owns a residential or mixed-use property that is either unencumbered (no debt) or with only a small loan attached. In these circumstances, Onate can help the borrower to access the equity locked up in the property through a bridging loan.
Once released, these funds can be used for a number of purposes. A recent example saw a client invest in their business, as a working capital type facility for a specific project. Another borrower used an equity release loan to finish off works on a refurbishment project.
Another recent equity release loan meant completing works on an existing residential development. In a separate case, the borrower used the loan to fund a debt settlement on a different property. They couldn't use the debt settlement property as security due to title issues.
Equity release is often not the sole reason that a borrower comes to Onate. In many instances, a borrower may have already been engaging with our team before an equity release becomes part of their requirement. In all cases, we’re prepared for the various aspects of potential deals that come our way.
Our clients see real advantages to equity release finance. Often it’s not a source of finance that they would have considered before or even realised it was a viable option. Like other lending opportunities, we can look at proposals that traditional banks shy away from. Once the borrower has the title deeds to the property, Onate’s speed of execution comes into play. Borrowers can secure the required loan within 2-3 weeks, or in some cases, just days.
At Onate, our offering is structured to allow borrowers to quickly and easily release equity from their residential and commercial properties. Our team of experienced, specialist property lenders offer bespoke property bridging loans of up to two million euro to home builders, developers, property investors and entrepreneurs. We are fast and flexible, and we assess each case on its merits. All decisions are taken in-house which means we can move quickly and with certainty. We have an appetite to lend in all locations nationally – from cities and large towns to small villages and rural locations.
If you have any further queries or to see how our lending process works, visit www.onate.com
Read more about the many uses of bridging finance such as debt settlements and transition finance on our blog.
In The Media - The Business Post
We are delighted that this week’s edition of The Business Post featured Onate and our recent funding news.
Read the full article here: https://www.businesspost.ie/financial-services/bridging-lender-onate-targets-growth-after-securing-eur60m-funding-952924de
Complex Credit History & Bridging Finance
Regular readers of this blog or Onate's LinkedIn page will be aware of the many advantages of bridging finance, such as speed and flexibility. Another advantage is our ability to evaluate proposals involving what some would term a ‘complex credit history’ or ‘legacy credit issues’. This is something that a traditional lender may not be willing to consider. Yet, in most cases, a complex credit history alone will not be a dealbreaker for Onate.
Legacy Credit Issues
The majority of legacy credit issues that we see in Onate date back to the 2008 global financial crisis. It’s aftermath included over-leveraged exposures that began to unravel as property prices plummeted and market rents reduced. This left many borrowers in negative equity and with unsustainable repayment schedules. These non-performing loans (NPLs) fell into arrears, and were sold off to investment funds at a discount.
Residential property prices and rents began to rise in Ireland from late 2013 onwards. Both have continued rising to date. The residential property market has gone from strength to strength since then but credit issues from 2008 or 2009 can still prohibit people from accessing much-needed credit now. This can be the case whether they’re looking to purchase residential properties as an investment in their future, or to refinance NPLs sold by their original lenders.
Debt Right-Sizing
At Onate, we support borrowers in exiting funds while retaining ownership of their assets. Our refinance allows for the debt to be right-sized to a sustainable level. It also allows the debt to be further refinanced by a longer-term debt provider in due course. This might be after carrying out refurbishments or re-tenanting the property. This value-add strategy might not have been something that the borrower was willing or able to do while with the investment fund.
The end result is that the loan is no longer in negative equity, and repayments are now sustainable. The borrower, armed with this bridging loan and a clean track record of repayments to Onate during the agreed term, is in a much better position. This loan can now be further refinanced by some of these previously-uninterested lenders over a longer-term. This allows the borrower to plan for the future and once again view their property as an investment rather than a liability.
Our Approach
Proposals have many aspects, and addressing a legacy credit issue is only one element. Onate assesses proposals that traditional lenders struggle with. We do this by evaluating each proposal on its individual merits and on a holistic basis. As well as evaluating the borrower, we also take into consideration the property as asset-backed lenders.
At Onate, our team of experienced, specialist property lenders offer bespoke residential investment bridging loans of up to €2 million to property investors and entrepreneurs. We are fast and flexible, and we assess each case on its merits. All decisions are made in-house which means we can move quickly and with certainty. We have an appetite to lend across Ireland– from cities and large towns to small villages and rural locations.
If you have any further queries or to see how our lending process works, visit https://www.onate.com/blog/our-lending-process-and-how-it-works
Social Housing: Key to Affordability and Liveability of Irish Towns and Cities
The Simon Communities of Ireland’s recent Locked Out of the Market Report shows a further deterioration in the availability of affordable rental properties across the country.
This requirement for more housing stock is something we’re all too familiar with.
Affordability
Unfortunately this isn’t a new issue and will continue to be a problem for many years to come. We recently saw the launch of the Minister’s Housing for All plan which outlined the plan to increase the supply of housing to an average of 33,000 per year over the next decade, increase social housing delivery, address vacant properties, and to make efficient use of existing stock.
At Onate, we work with investors and developers who come to us with residential properties that may be in need of some refurbishment prior to being rented out or placed on the market. These investors see opportunities in buying and refurbishing properties, and by implementing their value-add strategies, they provide essential rental accommodation for the market.
These investors and developers want to be able to go to a local authority or housing association and put a long term (generally 20 – 25 years) lease in place. If it’s a housing association, they’re Government funded or partly Government funded so it’s seen as a very good covenant from an investor’s perspective when purchasing these properties.
Onate has worked with numerous property investors who needed financial support to allow them to refurbish their properties in order to get them back into the housing stock. Recently, Onate supported a client with a debt settlement which allowed them to refurbish their properties. Following the refurbishment, these properties – which had been in limbo for years while the owners had worked through issues with the bank – were put on the open market and sold to owner occupiers.
Liveability
These vacant or tired properties are situated across the island of Ireland, including city centres. By buying these city centre properties and making those refurbishments, investors are bringing people back into the city centre and in turn, supporting local businesses. This is something that’s happening right across the country but unfortunately not at a quick enough pace to meet the demand. If you take Limerick Chamber’s Future Development of Limerick City report, they found a need to ensure that housing supply increases in order to meet the forecasted population growth for Limerick which is 1,000 new homes per year for the next 20 years.
We’ve also recently seen Waterford’s Vacant House Repair and Lease pilot initiative. This ensures refurbishment to suitable vacant properties is funded to bring them up to the standard required for rented accommodation. The cost of the works is deducted from lease payments over an agreed lease term and is aided by the City and County Council.
When it comes to social housing, each city can approach the issue differently, but their focus and our focus remains the same - getting much needed quality affordable residential units back to the housing market.
At Onate, we’re working to do this. Our product can help bridge the refurbishment and sale or rent of residential units and our team of experienced, specialist property lenders offer bespoke residential investment bridging loans of up to two million euro to home builders, developers, property investors and entrepreneurs. We are fast and flexible, and we assess each case on its merits. All decisions are taken in-house which means we can move quickly and with certainty. We have an appetite to lend in all locations nationally – from cities and large towns to small villages and rural locations.
If you have any further queries or to see how our lending process works, visit www.onate.com
Transition Finance for Property Developers in Ireland
Bridging the period between development finance and sale, using a bridging loan in Ireland
There is rarely a day that goes by where we don’t read about the lack of stock in the housing market, delays in housing projects, issues with planning processes or about growing social housing waiting lists. In addition, there are vacant or derelict properties in every city, town and village in Ireland. These are properties that – with a little vision and some financial backing - could be brought back into the housing stock.
The housing market needs increased stock, and home builders and developers need financial support in order to meet this demand. New opportunities are missed, and future projects postponed, due to delays in completing current developments. These missed opportunities lead to higher costs down the line as land prices rise and the costs of materials and labour increase. What might have been a lucrative opportunity at one point may not even be profitable 12 or 18 months later.
It’s also becoming increasingly difficult for developers to access finance when it comes to smaller schemes or one-off house-builds. The pillar banks don’t seem to want to support home builders or provide finance for anything but the largest projects. The alternative lenders have multi-million Euro minimum loan sizes which excludes a large proportion of the home building market. At Onate, our minimum loan size is €150,000 so we can support the home builders and developers that the other institutions won’t.
We are also seeing a trend of sales taking longer to close. This obviously has a knock-on effect on cash flow. As initial sales are often used to fund the completion of the next phase of a development, this delay directly impacts project profitability. As it stands, sales can take 12 to 16 weeks to close. One of the main drivers seems to be a lack of focus on speed of execution by some financial institutions, which can take the form of a delay in issuing formal approval or a delay in requesting or providing the title deeds to relevant solicitors. At Onate we place an emphasis on execution, and speed is one of our key selling points. We take a holistic approach to each closing and ensure that all parties know what they need to deliver to meet the expectations of our clients.
We have recently been speaking to a number of investors and developers who cannot sell completed houses as they are awaiting Irish Water and ESB connections. In one case, the developer had been waiting over three months for these utilities to be linked up. This developer was stuck in limbo as they couldn’t sell without utilities being connected. At Onate we can take a more commercial and pragmatic approach than the pillar banks, and are more than happy to provide finance on houses that are awaiting utilities connection.
All these issues - whether its lack of support from banks, problems with existing development finance providers, or delays with connecting utilities and in closing sales - all come down to one thing – cash flow. This is where Onate can help.
At Onate, our product can help bridge the completion and subsequent sale of residential units and get much needed stock on to the housing market. Our team of experienced, specialist property lenders offer bespoke residential investment bridging loans to home builders, developers, property investors and entrepreneurs. We are fast and flexible, and we assess each case on its merits. All our decisions are taken in-house which means we can move quickly and with certainty. We have an appetite to lend in all locations nationally – from cities and large towns to small villages and rural locations.
When opportunity knocks, we answer fast!
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In The Media: Onate’s John Ring in The Irish Times
Onate’s Senior Lending Manager John Ring appeared in this week’s Irish Times Me and My Money column.
Read the full article here
Sign up to our newsletter: onate.com/newsletter
Using Bridging Finance for Auction Purchase in Ireland
Purchases of auction properties usually need to be completed within a short space of time and long term financing such as mortgages can be difficult to put into place quick enough to meet deadlines.
Auctions are attractive to buyers because of their speed. Purchases of auction properties usually need to be completed within a short space of time and long term financing such as mortgages can be difficult to put into place quick enough to meet deadlines.
The auction process is very different to buying from an estate agent. When you buy at an auction, you are typically required to sign contracts and pay a deposit there and then. Things move quickly from the hammer falling and the sale being finalised. Auction properties are sold as they are so once you are the successful bidder, you are legally required to complete the sale.
At Onate, we work quickly in order to make transactions happen, a vital component for anyone purchasing an auction property.
Here is Onate’s guide to auction property purchase:
Before the auction
Before you attend an auction, there are steps you’ll need to take in preparation:
1. Call the auctioneer and arrange a viewing of the property.
2. Know your maximum budget and what costs you’ll need to set that budget aside for. For example: solicitor fees, surveyor fees, stamp duty and insurance. Also once you have viewed the property you will have an understanding of the general condition and whether you need to allow a budget for refurbishment and general upgrading.
3. Tee up your solicitor to seek out and review the contracts and title documents at the first opportunity. These should be reviewed and any queries raised prior to the auction.
4. The property and property map should be surveyed by an engineer. If it seems too good to be true, it more than likely is. Any defects must be uncovered before the auction takes place because once the deal is done, you’ll have no recourse against the seller. The engineer must also check that the title map for the property corresponds to the property itself, and carry out a planning search with the Local Authority Office to ensure the property is compliant with planning and building regulations.
5. It’s advisable to investigate whether there are any planned developments in the area. You can do this at the Local Authority Office.
6. Your finances must be in order. Make sure you have mortgage approval before you buy at auction. When you successfully bid on a property, you will need to:
sign the property purchase contract
pay the deposit
pay the balance on the closing date as set out in the contract.
7. On the day of the auction, make sure you have your details correct and that you feel comfortable with the process. Look out for amendments to the contract as this is a regular occurance. Speak to your solicitor about any changes.
At the Auction
If you are the highest bidder, you will sign binding contracts for the property and pay a deposit of 10% of the purchase price. The purchase usually completes 4 to 5 weeks from the auction day.
If you are the highest bidder but the reserve price (the lowest price the seller is willing to sell the property for) is not reached at auction, the property will not be sold to you. Your details will be taken and the seller will make a decision about their next steps with the property.
Stamp Duty
Stamp Duty is a tax charged on the documents that transfer the ownership of property from one person to another and is paid by the purchaser of the property.
The Stamp Duty level that you pay depends on:
· whether the property is residential or non-residential
· the property value.
As mentioned, it is best to determine your bid level, costs and finance amount required before the auction. It is at this stage that talking to us at Onate can be beneficial.
We are in a position to determine what level of finance we will be able to offer you on a particular property. This could be up to 65% of the purchase price depending on where the property is located. In the event that the property is vacant, we may be in a position to provide you with some interest roll up while you refurbish the property for tenants.
As you sign contracts at the auction, you will need a lender that can move quickly to close out the transaction and we have proven experience in the marketplace of doing just this.
Our offering is flexible and is a practical tool to assist you on your auction journey.
Debt Settlements - What You Need to Know
Positively, every debt problem has a potential solution. Whether negotiating with your original bank or with a new fund that has purchased your loan…
Positively, every debt problem has a potential solution. Whether negotiating with your original bank or with a new fund that has purchased your loan, the process of securing a debt settlement agreement (“DSA”) is seldom straightforward. It can be made more achievable by engaging with a trusted and experienced adviser early on to work with you alongside your accountant, solicitor and new lender.
Instinctively people see a sale of their loan to a new fund as negative. It doesn’t have to be. For many, this represents a great opportunity for a fresh start. While your previous bank may not have wanted to or were prevented from agreeing a DSA, the fund which may have acquired your loan will likely have a very different mandate.
Through constructive, early and proactive engagement with your new loan owners or their appointed agents, your advisers may reach a compromise much quicker. Negotiations can be tough but they tend to conclude quicker than with a traditional lender.
At Onate, we regularly finance these transactions. This involves us lending to the borrower to help fund their debt settlement and regain control of their assets. For precisely this reason, we have teamed up with CKS Finance to write this piece on debt settlements.
Have realistic expectations and expect to be asked questions
You wouldn’t sell an asset for less than it is worth so don’t expect your new loan owner to accept less. A credible debt settlement offer, coordinated by your adviser in conjunction with your solicitor and accountant and signed off by you, will be required. If new funding is needed, early engagement by your adviser with a potential funding partner will also be necessary.
A good adviser will ask you the hard questions before they go to bat for you with your new loan owner. They will ensure they fully understand your personal and/or company finances and will seek a huge level of detail to do so. While this can seem excessive, it is a critical part of very necessary due diligence in order to maximise the chances of reaching a DSA on your behalf.
Your adviser will go through a full financial assessment process with you covering all options for dealing with your debt. This may include completing a Statement of Affairs (“SOA”) or a Standard Financial Statement (“SFS”), before submitting an agreed proposal. Your adviser will then consider and discuss the debt management options available to you.
A DSA may require you to sell properties, or you might need to refinance the properties with a new lender. It might also involve some combination of interim and bullet repayments or it may simply be a single lump sum to settle the debt.
As an independent adviser regulated by the Central Bank of Ireland, CKS Finance works with many different funders, both traditional and alternative, to secure the most suitable and competitive package for their clients. Here are some of the most common pitfalls and misconceptions they regularly see:
1. Focusing on what a fund may have paid for your loan will not help
What a fund paid for your loan is the legal right to recover the full balance plus the interest outstanding and in the absence of clear and concise financial evidence to the contrary, this may be the starting position.
2. No two deals are the same
Forget about what you heard down in your local (beer garden) about John getting an 80% write off or Mary securing a “soft deal” from one of the funds. Every debt case is different as are the individual circumstances and family position of the people behind each loan.
3. Avoid surprises and be transparent with your trusted adviser
By not disclosing key information to your trusted adviser, you can undermine their ability to negotiate on your behalf so give them a full suite of information - warts and all! If your adviser finds out from the bank or fund information that you didn’t disclose to them, then this can have a very adverse impact on debt negotiations.
4. Be prepared to go the distance
Debt resolution can be a long, protracted and difficult process so you need an adviser who has the patience, stamina and necessary expertise to drive the process forward.
A so-called “vulture fund” may be in the market to try to make a quick profit or they may be happy to wait, collect the rent or income and allow the property market to appreciate before they push for a sale or exit with the borrower to maximise their return.
Completing the deal
It is important to remember that negotiating a DSA is only one part of the process. Unless you are simply selling assets, your adviser will likely also need to raise finance to complete the DSA and they may need to do so within a tight timeframe, if you are to avoid penalties or a breach of agreement. A good adviser will have kicked off the funding process in parallel with the settlement discussions.
Funding for a DSA is often required quickly and bridging finance like that provided by Onate can serve a valuable purpose, especially where residential property is concerned.
Working with your trusted adviser, Onate can engage early to help clients finance settlements on residential investment properties. We can also look at funding settlements that contain a minority of commercial property within them. Being in a position to make a fully funded DSA proposal is a major benefit and likely to assist a swift conclusion at a more attractive price. It also provides time to build a more sustainable, longer-term debt solution.
This article has been written in collaboration with CKS Finance Ltd.
This article does not constitute formal advice but is intended to provide some helpful guidance and information on the area of debt settlement agreements.
If you have any further queries or to see how our lending process works, visit www.onate.com.
New Lending Manager Joins Onate
We are delighted to announce the appointment of Hugh Lyons as Lending Manager. A native of Dublin and a graduate of UCD, Hugh joins Onate from Finance Ireland.
Announcing the appointment, our CEO Dan Gandesha said:
“Hugh is a valuable addition to our team, he brings a wealth of experience and I’m delighted to welcome him to Onate.”
Hugh Lyons added:
“I’m thrilled to join Onate at an exciting time in the company’s journey. It is testament to how well Onate is growing, and I’m glad to be joining the team to help continue to push that forward.”
At Onate, we empower property entrepreneurs and investors by providing fast and flexible finance secured against residential investment property (‘Residential Bridging Loans’).
The loans are for up to two years in duration and €1.25m in value, with a fast process enabled using modern technology solutions.
Onate’s Residential Bridging Loans in Ireland - An Innovative SME Funding Solution?
When it comes to SME financing, there’s a whole world of options out there.
However, if a business is planning new operations or significantly scaling up, historic cash flows may be inadequate to support the extra debt requirement.
These times occur in the life of any business, and typically the capital comes from the business owners.
But what if the business owners don’t have this cash on hand?
In the eyes of Philip Maher, Director at Mazars, “having options available for your client in situations like this is critical. Typically the cash requirement is too large for a personal loan, and a traditional mortgage is a slow process”.
Philip recently contacted Onate and successfully secured a one year bridging loan for an SME business owner client for precisely this reason.
The subject property was a residential investment asset already owned by his client, although it had some title issues to be rectified which Onate worked through pragmatically to resolve. Onate took first charge security over this property in order to provide the loan.
Philip added that “I always advise my clients to be mindful of the exit for any loan. With Onate, that doesn’t need to be fully lined up, but a credible plan does need to be there. In this case there was the ultimate sale of the investment property or refinancing with a longer term lender - both of which are easier now Onate has helped work through the title issues with the property”.
For this particular borrower, and in almost all instances we see at Onate, access to funding with a speedy turnaround time is important. Onate works quickly with the borrower to successfully complete the transaction, providing the capital the company requires. The borrower must be an SPV (as discussed here), although the property can sit outside the vehicle in certain instances.
In terms of Onate’s involvement in this transaction, the client is delighted with the outcome. Philip commented:
“This was exactly what my client was looking for. It’s a particular type of product, it’s bespoke. As the professional advisor, you want to have a number of options because it makes your job easier to move it all forward. With Onate’s high transparency, there’s visibility and clarity, you know exactly what you’re getting. It’s upfront and you can’t ask for any more than that.”
This was written in conjunction with Philip Maher, Director at Mazars.
Onate’s Guide to Pre ‘63 Investment Property
Prospective purchasers of Pre ‘63 investment properties in Ireland regularly come to Onate.
Whilst Pre ’63 properties often make attractive investments, owing to their high rental yield, they can be difficult transactions to execute. So what follows is our guide to ensure buyers are aware of the key issues and common pitfalls to look out for along the way.
Onate has the experience and can-do attitude to work through many of these issues, and is ready to support experienced borrowers in this area.
What is a Pre ’63 investment property?
The term “Pre ’63” or “Pre-63” is used to describe a property that was sub-divided into multiple units prior to the introduction of the Local Government Planning and Development Act of 1963 (the “Act”). The typical Pre ‘63 Property is a large two or three storey Georgian property, containing multiple flats, or bedsits. Following the introduction of the Act, a property owner wishing to convert their property into multiple units required planning permission to do so. This permission is often difficult to secure for older buildings, hence Pre ‘63 properties are frequently in high demand with investors.
What do you need to consider before embarking on the purchase of a Pre ‘63 property?
Pre-1963 declaration
A purchaser acquiring a Pre ‘63 property (and their Lender) will require evidence that the property was in use as multiple units before the introduction of the Act.
This evidence will generally take the form of a “Pre ‘63 Declaration”, or, as the case may be, multiple declarations. This declaration (or declarations) is required to confirm the use of the property for the period commencing on or before October 1st 1964 to date.
Ideally, the declaration should be provided by the owner(s) of the property for the entire period. If declarations from the owner(s) are not available, the person providing the declaration would need to demonstrate a credible basis for their knowledge of the use of the property during the relevant period.
In order to satisfy a prospective purchaser, the declaration should be accompanied by supporting evidence such as:
(i) reference to multiple flats / bedsits in descriptions of the property in title deeds
(ii) confirmation of multiple use by previous owners’ solicitors in replies to requisitions on title
(iii) historic tenancy schedules
(iv) evidence of separate metering and any other documentation that proves the legitimacy of the declaration.
Often a declaration will confirm that the property was in multiple use prior to the introduction of the Act, but will not specify the exact number of units contained from 1963 to date. This means previous owners could have further subdivided the property, or amalgamated existing units. Depending on the nature of such works, they could firstly constitute unauthorised development for the purposes of the planning acts. Secondly, if works were carried out since June 1st 1992, it could fall within the scope of the building regulations, including the requirement for a fire safety certificate.
Prospective purchasers, and in particular, lenders, will take an extremely narrow view when it comes to any potential fire safety issues, which highlights the importance of detail when it comes to such declarations.
NPPR charge
NPPR (Non-Principal Private Residence) tax was in place from the years 2009 to 2013 for properties that were not resided in by the owner(s). Each unit within a Pre ’63 property is considered a residential property for the purposes of the charge and any purchaser will require a certificate of discharge for each unit.
Previous owners may have considered the entire property one residential unit for the purposes of the charge, when in fact the property holds multiple units. If this is the case, it can lead to significant costs in a resale situation. It is worth asking the seller or sales agent from the outset if NPPR has been paid in respect of all units contained within the property.
Is the property vacant?
Pre ‘63 properties often come to market in a tired condition, in need of some modernisation.
If the buyer is looking to undergo works on the property, it will likely need to be vacant. This can pose two problems:
(1) The income will drop or cease for a period;
(2) Problem tenants unwilling to vacate may frustrate the process.
Where these issues arise, they can, in certain circumstances, present obstacles to obtaining finance and so, a pragmatic approach from Lenders is required.
Conclusion
Pre ‘63 properties can be a great opportunity to buy and lightly refurbish so they satisfy current living standards and provide essential rental accommodation. But it is important to be aware of all of the potential challenges when embarking on a Pre ‘63 project.
The financing of these properties can be challenging for the reasons set out. Onate stands ready to back experienced operators in this area.
This article has been written in collaboration with Eoin Dennehy from Gordon Judge Solicitors.
If you have any further queries or to see how our lending process works, visit www.onate.com/bridging-loans
In The Media: Onate’s John Ring in IPAV’s Property Professional Magazine
Onate’s Senior Lending Manager John Ring is featured in the latest Property Professional Magazine from IPAV (The Institute of Professional Auctioneers and Valuers).
Read John’s article on page 24 here
In The Media: Onate CEO Dan Gandesha in the Kilkenny People
Our CEO, Dan Gandesha was featured in this week’s A Day In The Life.
Dan spoke to Siobhan Donohoe for her popular column in the Kilkenny People.
Read the article online here
Onate’s Tips for Choosing the Right Solicitor
One of the key aspects to ensuring property and lending transactions complete efficiently is making sure that you have engaged a solicitor that suits your needs.
There will be solicitors with experience in alternative lending and others without that familiarity. This can be the difference between a successful and unsuccessful transaction.
Here are some of our tips to consider when choosing a solicitor:
1. Choose a solicitor with the right expertise
Choose a solicitor that specialises in property lending and conveyancing. Ensure that they have completed similar types of transactions previously with alternative lenders, executed through a company structure (SPV). For example, if you have used a solicitor previously to draft your Will or for family law matters, they may not have the right expertise to represent you when it comes to property lending.
2. Look for recommendations
Leverage your contacts and establish who might be in a position to suggest a solicitor for your requirements. Recommendations from friends, family or colleagues can also help you to make an informed decision. People who know or have worked with good solicitors are often happy to refer them to others.
3. Ensure the solicitor has capacity
At Onate, we like to close deals swiftly. You want to be sure that your solicitor has capacity to carry out the work required and that your requirements are high on their priority list. If you have chosen a sole practitioner that works across various legal areas, they may not have the resources to get what you need done. This can impact speed and efficiency in executing documentation. Mid-size firms often have a larger workforce and a higher workload capacity.
We like to hold all-party calls to close deals in order to ensure a swift transaction. We recommend broaching this with your solicitor at the outset. If they are too busy to join an all-party call, they may not have the capacity to get a deal done quickly (less than two weeks).
4. Agree the fee from the outset
Ensure you know the full cost of the solicitor’s services from the beginning so you don’t get a surprise at the drawdown stage. That said, solicitors with the above experience and capacity are likely to be more expensive than general practitioner solicitors - this is an investment worth making.
5. Don’t delay
Speed is key when getting these transactions across the line. Having a solicitor in place and ready to engage with the lender and their legal representation as soon as possible means the process runs more efficiently. Legal delays can cause knock on delays to the whole transaction.
Once you have engaged your solicitor, ensure the property deeds and associated information pack are sent to Onate’s solicitor immediately. It means our solicitor can raise any questions early. Your solicitor (or accountant) will also need to set up an SPV (Special Purpose Vehicle) in a matter of days.
For more information about how our lending process works, visit https://www.onate.com/blog/our-lending-process-and-how-it-works