The vast majority of all property transactions in New Zealand are for residential homes, but a small percentage of the transactions are for commercial properties, and because of the nature of the transactions the value of this business is very high. There are a few high net worth individuals who are very visible in this market, and some of them may enter into the biggest deals in high rise properties. The vast majority of the commercial transactions are at the lower end of the market and they will be to property investors who are comfortable owning commercial properties for rental.
The property investors can the individuals or groups or consortiums, and they generally will own a lot more than one commercial property. A very important component in the market is the financing, and specialist mortgage brokers are required to make this happen. The reason for this is that the value of the commercial property is linked very closely to the rents that can be charged for the property, to the clients they have signed up to lease the property and the long term viability of those clients as tenants.
This is a completely different model than for residential housing, where the value of the property is fairly easy to determine simply by the quality of the property and it’s specific location. For rental properties it is important that the rent is considered by the mortgage brokers in Wanganui when applying for a loan, but in general the most important aspects are the capability of the owner in making the mortgage repayments, and the market value of the property and it’s ease of sale if the owner is unable to make the payments.
Mortgage brokers in Wairarapa serving the commercial market must have enough business experience to be able to assess for themselves the quality of the tenants that occupy the building, or if it is a new commercial building then they must be able to assess the quality of the tenants that will likely occupy the building. For owners that have already signed their tenants to long term leases, then the job of getting finance is fairly straightforward for the mortgage brokers, and they are able to make their recommendation to the bank with a high degree of confidence that the risks well and truly meet the banks requirements.
Where tenants have not yet signed up, the broker needs to be able to assess the probability that good tenants will indeed sign up, and the broker will need to be able to assess the quality of tenants that are likely given the location and style of the new commercial property. They will often need to personally assess for themselves the quality of likely tenants, and they will need to be able to understand the tenants own business models in order to understand the risk presented to the building’s owner of the tenants not meeting lease payments.