Blog

“Investing in Mortgage Schemes can be a complex business. As one of the few remaining Private Lenders still in business, I have learnt a lot during my 20-plus years in the industry. The intent of these blogs is to pass on some of my knowledge and experience to you.”

Richard Woodhead
Managing Director

What is “subordination”?

Olivia and Jess, from our Investor Services team, have recently received a few requests from investors to explain ‘subordination’, a term mentioned in our...

New loans are coming

GPS continues to regain traction in our loan pipeline, but it is a frustratingly slow process. We have about $35 million of accepted loan...

An Issue On Everyone’s Mind

An issue within our industry which has been a recent focus of my attention is defective building work and combustible cladding. Fortunately, GPS has...

Salozza Developments Pty Ltd

The majority of loans on the GPS books at the moment are townhouse projects. However, there are still some unit projects we are excited...

When the funding dries up

I continue to see too many instances where funding for a project seizes mid construction. It is not the first time I’ve seen this....

Builder cashflows are suffering

Following several conversations with builders GPS has commenced a program to strengthen our relationship with builders on GPS funded projects. It turns out that...

Creekwood Villas Pty Ltd (Stage 2)

Another multi-stage project from a quality repeat borrower! Invest in the second stage of this townhouse project at Lot 1702 Ellis Way, Meridan Plains...

Union Share Pty Ltd (Stage 2)

The first stage of the Union Share Pty Ltd project at 4A-8 Hansford Road, Coombabah is in the process of repaying, nearly three months...

Nothing wrong with being boring

I am always humbled by the support GPS is shown from our investors. Right down to readership levels of this newsletter. Each month I...

All sunshine and lollipops?

While Bill Shorten is becoming ‘he who shall not be named’ within the property industry, GPS has seen one positive legacy. The prospect of...

Earn 8.75% p.a. across all GPS loans

Usually in the monthly investor newsletter, we include a progress update for one of our loans available for investment. When investing in the GPS...

Now for something completely the same

The main consequence of the federal election for GPS is that we slowed down our loan pipeline. You don’t drive at full speed around...

Who’s Responsible?

As part of our responsibilities as a Australian Financial Services License (AFSL) holder, GPS is required to “maintain our organisational competence at all times”...

Post election GPS

There has been more than enough analysis of the federal election result. You don’t need even more from me. At GPS we slowed down...

How do we add value?

The Hayne Royal Commission demonstrated the damage that lawyers, who are equipped with the benefit of hindsight and retrospective morality, can do to businesses....

Another federal election…

Another federal election is looming and, as expected, there is uncertainty in the markets. There has been quite a bit of media hysteria surrounding...

Looking for shovel ready projects

Due to a number of loans repaying early, yes – built, sold and settled ahead of program, GPS has an appetite to fund residential development...

The market

I have been keeping a low profile as there has been too much uncertainty and negativity in the residential development market. The Hayne Royal...

Creekwood Villas

Our preference at GPS is to work with repeat borrowers and repeat teams. Repeat projects also go straight to the top of the pile....

Oxford Terrace, Taringa

Some investors may recognise the name Velocity Property Group (“Velocity”), a repeat borrower with GPS, who are back again with their latest development on...

Questions you need to ask when looking for development funding

Australia Day is upon us, signifying the property industry’s return from summer holidays. The major focus for developers this year will be on obtaining...

8.95% interest rates for 2019

As part of the GPS drive for quality over quantity, we have decided to focus on residential loans in the $3 million to $8...

In the pipeline

The loan pipeline at GPS is pretty much full until the end of January 2019. We are now looking for loans with expected settlement...

The year and year ahead

2018 has been one of the more interesting years in my career. I have pretty much watched the perfect storm from the safety of...

57 Station Road, Bethania

The project at 57 Station Road, Bethania has reached 31.14% complete, with earthworks complete and retaining walls, civil hydraulics and electrical lines, underslab drainage, ground slabs and...

Interesting times for development finance

Judging by some recent loan applications, the second tier banks have recently come under more scrutiny from APRA. It is a real concern when...

Still open for business

At the last GPS board meeting we reviewed the various factors affecting the development market and the overall uncertainly in the air. A decision...

106 Considine Street, Ellen Grove

The construction of 18 townhouses at Considine Street, Ellen Grove (SP Development A Pty Ltd) is now a third complete (33.98% as per our QS’s inspection...

Life after the banking royal commission

To mark ten years since the GFC, I re-watched the movie The Big Short. It highlighted to me how little has been learnt. We...

The bank said no?

As the credit crunch continues to take grip, I am seeing an increase in loan applications. Traditional bank borrowers are comprehending that the banks...

The GPS Invest Pooled Fund – 8.75% p.a. paid monthly

Usually in the monthly investor newsletter, we include a progress update for one of our loans available for investment. When investing in the GPS...

Who are you talking to?

We take customer service seriously at GPS. One thing we pride ourselves on is when an investor calls, they nearly always are immediately talking...

Credit Crunch Deepens for Construction Funding

An indicator I look at to determine where we are in the credit cycle is average loan term. When there is plenty of credit...

GPS Loan Pipeline

Considering the deepening of the credit crunch for construction lending, my current priority is for smaller loans in the $3 to $6 million bracket....

The New Loans on the Block

Right now the core focus at GPS is on loan pipeline, with a drive for high quality deals that we are sure will appeal to investors....

5 Affinity Place, Birtinya

The projects that GPS currently has on the Sunshine Coast seem to be outperforming projects in other areas when it comes to achieving presales....

He who has the gold makes the rules

Life for residential property developers is not easy in the current market. Build and marketing prices are increasing faster than sales prices. The pull...

Will the banks return?

There is still a segment in the development industry who believe that the banks will re-enter the Brisbane market in the near future. The...

We take pride in our projects

One of the great moments of satisfaction the GPS team experience is getting to see the final result at the completion of a project....

The “rise” of the non-bank lender

Recent media has been claiming that with the pullback by the banks from residential development lending the non-banks, such as GPS, will rise, fill...

How will the changes to GST affect you?

Residential development is about to undergo the most radical change since the introduction of GST. For all sale contracts entered after 1 July 2018,...

What to look for in a non-bank lender

A recent survey by Stamford Capital of banks, non-bank lenders and private financiers found that 40 percent of respondents expect the major banks to...

Notice changes to the GPS loan product?

As the property market continues to go through its usual cycles, you will notice the loan product that GPS offers changes to match. Currently...

51 Peerless Avenue, Mermaid Beach

The development at 51 Peerless Avenue (a.k.a 2583 Gold Coast Highway) will be constructed over nine levels, plus two levels of basement car parking...

May 2018 – Banking Commission highlights why people come to GPS

For over 20 years people have asked me, “why would a developer borrower from GPS if they can go to the bank?” After everything...

New Loan Update: 4A – 8 Hansford Road, Coombabah

This latest development to GPS, from borrower Union Share Pty Ltd, is stage one of a three stage development. GPS is funding the first...

Its all about the bottom line

The banks requiring 100% (or more) debt coverage from presales has seen an influx of traditional bank customers approaching GPS to fund their projects....

Not just the developers stuck waiting for finance approval

GPS is largely a “word of mouth” business. Funds come from our direct investor base and we rely on referrals for growth in funds under...

New Loan Update: Camalee (Stage 2)

GPS is a business based on referrals. The number of repeat and referred borrowers making up our loan pipeline is continually increasing compared to broker introduced deals....

It’s a lender’s market for 2018

2017 has been an interesting year for construction lending in Brisbane. Banks have continued to pull back. The nature of presales has changed. Developers...

26-30 Waratah Avenue, Carina

The construction of three three-bedroom and five four-bedroom townhouses at 26-30 Waratah Avenue, Carina is proceeding well. As of 21 February 2018, the project was 58.79%...

Now is the Time for 2018 Projects

Loan pipeline at GPS for projects to commence before the end of 2017 is quite full. We can, however, always take a few more...

Residual Stock Facilities

GPS has traditionally stuck to its niche market and focused on residential construction lending. Due to the property market entering the next phase, where...

The Times Are a-Changin’

The APRA driven homogenisation of bank credit, which requires 100% plus debt coverage as a risk mitigant, has caused an influx of applications for...

Not the Time to Sit Back

Loan pipeline at GPS is the strongest I have seen it. I have never been able to sit back at the end of September...

Real Research

For a deal I am working on for a unit development in Wynnum, the valuer made a comment about the project potentially coming up...

12-18 Hicks Street, Mount Gravatt East 

Mount Gravatt East is a long established residential suburb with all the typical facilities such as public and private schools, universities, parks, medical facilities,...

Involved in a project where funding is uncertain?

In early 2016, GPS stopped lending while we got our heads around the apartment oversupply issue. We then refocused our lending to avoid types...

What counts as a sale?

Each GPS loan has a set of construction and sales milestones to assist GPS in monitoring the loan’s status. If the Borrower is not meeting the...

41 Solomon Avenue, Loganholme

Richard and Marnie visited the site at Loganholme on 20th July. As part of GPS’s education process, Richard walks all staff through how to complete a...

The return of the banks

So when are the banks expected to re-enter the residential construction and development market in Brisbane? My thought process on this topic is: APRA...

Open for new applications

Despite the media hype about oversupply in the Brisbane market, projects funded by GPS continue to sell their product. We have a number of...

Say goodbye to the cranes

Investors frequently ask me to comment on media articles, and so I thought I would get ahead of the game with the latest topic:...

27 Arafura Avenue, Loganholme

On the Wednesday 5th of July, Bruce and Jess headed out to inspect the progress at 27 Arafura Avenue, Loganholme (EMI Pty Ltd). They met one...

The real cost of finance

It never ceases to amaze me how some borrowers are fixated on interest rate, but are blind to the overall cost of finance. When...

Time for smaller projects

GPS has currently seen an influx of applications for 20-plus unit and townhouse developments. Pricing for such loans is currently at a premium, due...

Retirement? – No way

The question I am most frequently asked comes out more as a statement along the lines of “you are not thinking about retiring anytime...

11 Collins Street, Nundah

The project at 11 Collins Street, Nundah (Joseph K Corp Pty Ltd) is progressing well. To date the project has exceeded its construction milestones...

Setting a cap on lending

The apartment oversupply question in Brisbane continues to be a talking point. In reality it is more of the same. There cannot be too...

Considering GPS? The time is now.

In October 2016 I wrote an article (Our Niche Product) about how GPS operates in a niche market for the mutual benefit of investors...

Now officially….GPS Development Finance Pty Ltd

Those who read our newsletter may already know us as GPS Development Finance, but up until recently the name of our operating company was GPS Managed...

Sub-contractors bearing the brunt of builder collapses

There has recently been a spate of builder collapses, with more expected over the course of 2017. Builder failure risk has moved up the...

Bad News Sells

In this digital age of media where it is all about how many clicks you get, balanced commentary has become secondary to bad news...

When it all goes wrong

Brisbane is now in a sector of the property cycle which will test all involved in residential development. We have seen the failure of...

Looking beyond the spreadsheet

While most of the team at GPS are glued to the spreadsheets on their screens, I remain old school to work the GPS loan...

Oversupply: Fact vs Fiction

Oversupply of residential units in the Brisbane property market is currently a large concern for many Lenders and Borrowers. When looking at sites to...

Looking into the crystal ball

It is that time of year when, if you are brave enough, you make predictions for what 2017 has in store for us. Based...

The Day the Presales Died

This time last year GPS stopped lending while we reviewed the apartment oversupply issue. The view we formed was that: Availability of construction finance...

The next step for our Next Generation Program at GPS…

At GPS we focus on our Next Generation Program because we know how important it is to pass on skills, knowledge and expertise to...

Development finance in 2017

Ten points about the direction of lending by GPS in 2017. The potential for an oversupply of apartments in the inner Brisbane renewal area...

Watch, learn and show restraint

As the banks are unlikely to broadcast their plans, I continue to watch and learn from what they do, rather than listen to what...

The market is speaking and we have to listen

The nature of loan applications currently coming over my desk indicates that a credit crunch has begun in the residential construction lending market. It...

Open to additional investment

In early 2016 GPS took a conservative approach and slowed down lending while we digested all the speculation of an apartment oversupply in Brisbane....
relationship

The importance of building a relationship with your lender

The current market for development financing has highlighted the need for developers to again establish solid working relationships with funders. Banks have pulled back...

The current struggle

The horror story continues for developers trying to achieve construction funding. As this is a rapidly changing dynamic, I have conducted some straw polls...

Winning no awards for photography

As part of GPS’ loan management procedures, Portfolio Managers, and other GPS staff, make regular site inspections. We like to have someone out at...

Soft Landing

There will be no silver bullet solution to any potential apartment oversupply issue. Here are five reasons I believe that, if the problem exists...
offshore funding

The myth of offshore funding

Promises of large tranches of cheap offshore monies for construction lending have always been about. I can recall back to the petrodollars. I have...
Credit rationing

Credit rationing

The latest indication of the growing credit rationing for residential construction development lending is that all four major banks have now put a moratorium...

The right formula

Due to the current state of other investment classes, I remain of the view that there will be a continuing investor market for residential...

Pick a lender and run with them

Construction lending is a highly specialised field and is currently hard to obtain. Due to ongoing capitalisation requirements, the banks have either withdrawn or...

Horror story

In April 2015 I issued a letter of offer for a project (Project A). I was informed that I was too expensive and they...

The three month rule

Too many developers focus on the interest rate rather than the overall cost of finance. Banks traditionally require presales before construction can commence. Presales...

A brief history of private lending

Private lending started as solicitor’s trust account lending. Due to solicitors making a dog’s breakfast of the industry we saw the Managed Investments Act...

The Loan Pipeline

In the past month I have seen a decline in the number of good quality loan applications across my desk, and a substantial increase...
Loan Pipeline

The GPS Loan Pipeline

2016 has already been very interesting for the GPS loan pipeline. It appears that the banks are now only serving their long established and...

Brisbane property market plods along

As always, the start of a new year brings with it predictions for the Australian property market. As can be shown by the graphs...
Thank you

Thank You

2014 has been an exceptionally good year for GPS. It would not have been possible without the ongoing support of our loyal Investor and...

Hybrid Bank Bonds and Banking Reform

Hybrid Bank Bonds The banks are currently in the process of increasing their ratios of capital. Rather than issuing more shares and driving down...
Advice

Investors turn to the web for advice

An interesting statistic which I have picked up (Andrew Inwood – The Australian – 24/06/2014) is that some 67.4 per cent of High Net...

Market Update

Flat Interest Rates Banks offering five year fixed interest home loans at sub 5% is a clear indication that they believe interest rates are...

Repeat Borrowers

At the top of my list in selecting projects to be funded by GPS are “repeat teams.” This goes further than Borrowers and includes...

Financial Advice and Banking Reform

We are currently seeing push back from the large financial institutions over the future of financial advice (FoFA) and the new capital requirements for...
GPS turns 20

GPS turns 20 in 2014

Welcome to 2014, the year GPS turns 20. Rather than a year to party the team at GPS are looking forward to a more...

How Well Do You Know Your Fund Manager?

How Well Do You Know Your Fund Manager? Anyone can lend money but very few can consistently get it all back. The GFC has...

Risk Vs Return – What Is The Niche?

I do not think that I am delving into the financial advice arena by noting the old adage of “the higher the return the...
GPS Business Plan

The GPS Business Direction

The GPS Business Direction GFC was the catalyst for GPS to seriously rethink where it was and what it wanted to be. While GPS...

Mortgage Funds Are Not Property Funds

One of my soap box subjects and pet issues is when GPS is referred to as a property fund. Unfortunately, mortgage funds have had...

Is Your Mortgage Scheme & Operator Currently Licensed?

In order to operate a Mortgage scheme for Investors the operator needs to hold an Australian Financial Services Licence (AFSL). An AFSL can be...
The Turmoil Test

Mixed Cash & Mortgages Not Worth The Risk

The most common issue I have discussed with clients recently is the falling interest rate on the SBOSA (select business online saver account ie....