2017 has been an interesting year for construction lending in Brisbane. Banks have continued to pull back. The nature of presales has changed. Developers have become less certain where the funding for their next project is coming from.
It is a lender’s market and I do not see this changing in 2018.
Despite the market, GPS has made the decision not to expand. Expand too much and you have to adopt a corporate culture, which will prejudice your service levels. At GPS we treat borrowers as clients. Try getting that from a bank or financial institution.
The majority of our work, both investors and borrowers, comes from direct referrals. After 25 years in this business we have a really strong direct referrals base. Repeat business is important to us.
I have built GPS to be a niche lender, offering personalised service. We cannot, and will not, compete with banks and financial institutions.
In 2018 GPS will be looking for greater diversity in our loan portfolio. We still will only be lending for residential construction projects (no land subdivisions) and we will be limiting our exposure to apartments in areas which we believe are potentially oversupplied. Townhouse developments continue to perform and we have a reasonable appetite for those projects.
Our focus is on loans in the $3 million to $10 million range. There is still competition for sub $3 million loans. We have a particular appetite for loans in the $3 to $5 million range as they assist with our portfolio diversity and flatten our funding cash flow. Accordingly, we are still competitive in our pricing for such loans, with interest rates at sub 10% and no presale requirements.
In the $6 million-plus loan size, it is very much a lender’s market with little room for borrowers to negotiate lower fees or interest rates. It is common ground, when talking with my competitors, that we can pick and choose for those loans.
As 2018 will mark 25 years of my running GPS, I will be rewarding Debbie (my long suffering wife) and myself with an extended holiday in January and February. While I am away, Marnie (my daughter) will be handling new loan enquires. Please give her a call on 1800 999 109 or email her on firstname.lastname@example.org with all enquires for new loan facilities.
GPS would not have been able to make it to the 25 year mark without a lot of support from our long serving and loyal borrower and investor base. It is truly appreciated, thank you.
Have a safe and happy break. We look forward to working with you in 2018.