Financing Made Simple

Property loans are cheaper than ever. But does this also apply to gastronomy real estate? If the equity ratio is right and a few other factors are in place, investors can obtain borrowed capital at very favorable rates – even though gastronomy properties are generally classified as "risky investments." We tell you what matters when dealing with banks, credit institutions and real estate financiers. You will also learn what conditions you need to create so that loans can be granted quickly and at favorable interest rates.

Tips for raising borrowed capital when buying property -

All documents must be available before the credit review. Corona has ensured that hotels, restaurants, cafés, etc. are offered at very low prices. Interest rates on borrowed capital are lower than ever. For potential buyers, this is the opportunity to now purchase a good property at a favorable price. – Both in terms of the purchase price and the financing of the gastronomy property. But be careful: this asset class is classified as risky. Therefore, it is important to work with banks and other lenders as constructively as possible. Because they must comply with high regulatory requirements when granting loans.

Tip: You have a gastronomy property in mind that you want to buy? Do a financial check before your first conversations. How much does the property cost? How much equity capital is available? What would be the equity ratio in relation to the borrowed capital ratio? In which investment classes of your assets could there be "hidden" equity that could also be counted? An experienced broker for gastronomy properties can help you with the review. He knows the special features, pitfalls and requirements of banks.

Anyone who can demonstrate a healthy equity ratio is more relaxed.

Gastronomy Property Financing with a Healthy Equity Ratio

As a guideline for minimum capital, approximately 35% equity ratio is assumed. Depending on whether the financing is carried out with the house bank or with a third-party bank, the required equity capital contribution can be lower or even rise to over 45%.

Tip: Does the available equity capital fall short of the recommended ratio? – You better look for a cheaper property. Alternatively, you can rent or lease the desired gastronomy property and purchase it at a later date – when you can hold more equity capital.

Once it is clear how much equity capital is available for financing the gastronomy property, all documents required for the credit review must be compiled. They provide the bank with information about the assets of the person or company seeking capital. In addition, the potential financing partner needs detailed information about the property.

The better the starting situation, the more likely the loan will be approved. These factors influence the financing conditions. There are some aspects that influence the banks' decision regarding equity ratio, interest rate and the yes or no decision on financing. These include:

These Factors Influence Financing Conditions

• History and reputation of the gastronomy property

• Recognition and popularity of the gastronomy property

• Positive business and occupancy figures in the past

• Convincing business plan with promising future forecast

• Possibilities for any change in use

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

Tip: Do you have solid industry knowledge? Experience is always rated positively by lenders. If you don't have expertise, let a competent gastronomy property broker prepare you for the conversation. He knows the typical questions and can help you present yourself as competently as possible. He also supports you in creating and optimizing your documents.

Unnecessary financing costs reduce returns. Returns in mind when financing property. Potential buyers always keep returns in mind within their investment strategy. Therefore, the financing costs for acquiring a property play an important role in connection with future profits. They can be reduced if you make the right decision when financing real estate. Currently, capital seekers can benefit from sustainably low interest rates as central banks have no interest rate hikes planned for the foreseeable future.

Returns in Mind When Financing Real Estate

Tip: Avoid high transaction costs when buying a gastronomy property. Ask your gastronomy property broker. He can tell you what matters in your specific case.

Faster Than the Competition

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

With your house bank, credit inquiries often go faster. House Bank vs. Third-Party Bank. If you approach your own house bank, you save yourself a lot of paperwork. Since the house bank already has most of the information needed for the credit review – your personal information – it only needs the other half: the property data.

House Bank vs. Third-Party Bank

With a third-party bank, the process takes longer as it must handle your case from scratch. However, it may also be interesting to arrange financing through the house bank of the current property owner. They know the history and ongoing operations of the hotel, restaurant, etc., and can therefore better predict your future.

From Financing to Transaction

The purchase of a property – whether under time pressure or not – is always a challenge. A strong partner is then worth its weight in gold. Gastronomy property brokers specialize in financing issues. They do valuable work and guide potential buyers from financing preparation to the transaction. They know the right contacts, their structures and requirements. No one can see into the future. If you therefore want to insure yourself against payment default, they can also help you find the right insurance partner.