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  • Writer's pictureChristiane Wolf

Financing made easy

- Information and tips for raising outside capital when buying real estate -

Real estate loans are cheaper than ever. But does this also apply to gastro real estate? If the equity ratio is right and a few other factors are given, investors can borrow capital at very good conditions - even though gastro real estate is generally classified as "risky investments". We tell you what is important when dealing with banks, credit institutions and real estate financiers. You will also learn which conditions you need to create so that loans can be granted quickly and at low interest rates.

Gastronomie-Immobilien-Kredit Prüfung
All documents must be available before the credit check.

Corona has ensured that hotels, restaurants, cafes etc. are offered at very low prices. The interest on borrowed capital is lower than ever. For those interested in buying, this is the chance to buy a good property now at a bargain price. - Both in terms of the purchase price and the financing of the catering property. But be careful: this asset class is classified as risky. It is therefore important to work as constructively as possible with banks and other lenders. Because they have to comply with stringent regulatory requirements when granting loans.

Tip: Do you have a catering property in mind that you would like to buy? Do a financial check before the first talks. How much does the property cost? How much equity is available? How high would the equity ratio be in relation to the debt ratio? In which asset classes of your assets is there any “hidden” equity that could also be taken into account? An experienced hospitality real estate agent can help you with the exam. He knows the specifics, pitfalls and requirements of banks.

Those who can show a healthy equity ratio are more relaxed.

Gastronomy real estate financing with a healthy equity ratio

An equity ratio of around 35% is assumed as a guideline for the minimum level. Depending on whether the financing is to be carried out with the house bank or with a third-party bank, the required equity capital contribution can be lower or even increase by up to 45%.

Tip: Does the available equity fall below the recommended ratio? - Better look out for a cheaper property. Alternatively, you can also rent or lease the desired catering property and buy it at a later point in time - if you have more equity available.

After it is clear how much equity is available to finance the catering property, all the documents required for the credit check must be compiled. They provide the bank with information about the financial situation of the person or company seeking capital. In addition, the potential financing partner needs detailed information on the property.

The better the starting position, the more likely the loan will be granted.

These factors influence the financing terms

There are some aspects that influence the decision of the banks with regard to the equity ratio, the interest rate and the decision of yes or no to the financing. These include:

  • History and reputation of the catering property

  • Awareness and popularity of the catering property

  • Positive business and occupancy figures in the past

  • Convincing business plan with promising future prognosis

  • Possibilities for a possible change of use

  • General condition, substance, necessary renovations or other unavoidable investments

Tip: Do you have in-depth industry knowledge? Experience is always valued positively by lenders. If you do not have any specialist knowledge, let a competent real estate agent prepare you for the interview. He knows the typical questions and can help you present yourself as competently as possible. He also supports you in the creation and optimization of your documents.

Unnötige Finanzierungskosten schmälern die Rendite

Keeping an eye on returns in real estate financing

Prospective buyers always keep an eye on the return as part of their investment strategy. Therefore, the financing costs for the purchase of a property in connection with the future profits play a big role. They can be reduced if you make the right decision when it comes to real estate financing. At the moment, those looking for capital can benefit from long-term low interest rates, as the central banks are not planning to increase interest rates for the foreseeable future.

Tip: Avoid high transaction costs when buying a restaurant property. Ask your real estate agent for catering. He can tell you what is important in your specific case.

Faster than the competition

In the current situation, speed is also required. Because there are not often good opportunities. Therefore, interested parties should act quickly and safely. The choice of bank can be decisive.

Immobilien-Finanzierung für Gastronomen bei Bank
At the house bank, the loan request is often faster.

House bank vs. foreign bank

If you go to your own bank, you can save yourself a lot of paperwork. Since the house bank already has most of the information required for the credit check - your personal information - it only needs the other half: the property data.

With a third-party bank, the process takes longer because they have to deal with your case from the ground up. Under certain circumstances, however, it can also be interesting to carry out the financing with the house bank of the current property owner. This knows the history and ongoing operations of the hotel, restaurant, etc., and can therefore better predict your future.

From financing to transaction

Buying a property - whether under time pressure or not - is always a challenge. A strong partner is then worth gold. Real estate agents for gastronomy real estate specialize in financing issues. You do valuable work and support prospective buyers from preparing the financing to the transaction. You know the right contact person, their structures and requirements. Nobody can see into the future. If you therefore want to insure yourself against payment default, they will also help you to find the right insurance partner.


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