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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.”
GPS provides a niche product. We invest in residential unit and townhouse construction loans within two hours of the Brisbane CBD. Our investors and...
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...
October 2019 – We would sooner not take your money, than not give it back
In our monthly newsletter we usually have a range of available investments. At this time, we have put a stop on all new investment....
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...
August 2019 – We will not prejudice quality for returns
GPS has been operating in a low interest environment for some time. Real estate developer margins are being squeezed from all directions and there...
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...
July 2019 – New Investment Opportunities Soon
Loan pipeline is regaining its momentum following our slowdown pending the federal election result. I expect that it will take us until the end...
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...
June 2019 – Post Election GPS
I often start my monthly commentary by referencing a frequently asked question. This month everyone has been asking the same question. “What does the...
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...
April 2019 – Digesting the Royal Commission
We have now had time to start to digest the findings of the Hayne Royal Commission. GPS could dismiss the findings as not affecting...
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....
March 2019 – Proven performers
There has been quite a bit of news so far in 2019 with lots of sensationalism in the media. It has been more mundane...
February 2019 – Lets get on with it
As we enter 2019 there is quite a bit of political and market uncertainty. A federal election, handing down of the report from the...
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...
December 2018 – Good year for GPS
This year GPS continued to stick to our knitting, with our focus being on prudential lending and looking after the best interests of our investors and borrowers. Our hands...
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...
November 2018 – Conservative in uncertain times
Olivia regularly reminds all of us at GPS that “the investors would like some more loans please”. The slow down in loan velocity has been part of a...
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...
October 2018 – We have a sacrificial bonfire
The royal commission is proceeding pretty much as expected. We have a sacrificial bonfire. The big end of town has sung kumbaya and seen...
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...
September 2018 – Quality not quantity
GPS is heading into a transitional period with a large number of loans repaying and the settlement of, hopefully, enough loans to maintain usage...
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....
August 2018 – No News is Good News
It has been a busy month for GPS. Loans are repaying, and new loans are being settled. We continue to work on ways to improve our service levels. The...
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...
July 2018 – Happy New Financial Year
I have now passed my 25th end of financial year at GPS. It has been an interesting and mostly enjoyable journey. One of 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...
June 2018 – GPS is 25 years old!
This month the GPS business is turning 25 years old! It all began in 1993 when I resigned as partner of a law firm...
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....
April 2018 – Proud sponsors of the Hamilton Bowls Club
An investor with GPS recently approached us asking if we would be interested in sponsoring the Hamilton Bowls Club. We agreed to a sponsorship deal that would assist...
March 2018 – Ahead of the game
The Next Generation program at GPS is gaining increased traction and success. I returned from my overseas adventure to be informed by staff that everything was under control. I was...
December 2017 – Put your investor’s interests ahead of your own
A decision has finally been made about a banking royal commission. It should keep the banks occupied for some time and, therefore, not competing...
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...
November 2017 – Our Best Ever Loan Book
We are all very busy at GPS. Quite a few loans are repaying. So much for all the doom and gloom in the media...
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...
October 2017 is the Time to Invest
I like to read financials at this time of year to gauge where others in my industry are positioned. The focus of the GPS...
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...
September 2017 – GPS is an atom on the flea on the tail of the dog
Changing market conditions are a fact of life. If the property market was predictable then GPS would not be in business, as many more...
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...
August 2017 – Invest with us
Judging by the level of positive feedback from my article last month about GPS not wanting to grow too quickly, it is clear that we remain in tune...
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...
July 2017 – To grow or not to grow
The focus of our strategic review for the 2018 financial year was ‘what should be the growth rate for GPS’? One side of the...
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...
June 2017 – Invest with GPS
It has been a long term goal of mine to be able to go out to investors and say “invest with us”. Not “invest...
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...
May 2017 – Data is king
At GPS a lot goes on behind the scenes to generate consistency of return to investors. We are constantly looking for ways to improve...
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...
April 2017 – GPS Loan Pipeline
Loan pipeline continues to track as predicted. The banks appear to have further pulled back. As an example, we have a loan coming through...
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...
March 2017 – Old dogs for the hard road
I expect there to be some failures in our industry during 2017. It will come down to a question of resourcing and asset classes...
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...
February 2017 – What’s on the cards for GPS in 2017?
I am very proud of the next generation team we are developing at GPS. It appears that our investors share my view. This is...
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...
December 2016 – So, how was 2016?
After the slow start to 2016, when we limited lending so as to review and develop strategies for the perceived apartment oversupply concern, GPS...
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...
November 2016 – Watching and Learning
There is so much being sprouted in the media about undersupply, oversupply, prices rising, prices falling and affordability, that it can make a readers...
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...
October 2016 – Our Niche Product
One of the reasons GPS can provide investors with above market returns is due to our operating a niche product (service, skill and culture...
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....
September 2016 – Liquidity, liquidity, liquidity
There is not much to report at GPS at the moment. We are sticking to our knitting with more of the same type of...
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...
August 2016 – The flow of information
The flow of information across my desk continues to support my view that any oversupply of apartment issue will be limited to a few...
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...
July 2016 – The sky will not fall down
I do not have much to say this month. GPS and I have been through uncertain times in the past. It is now a...
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...
June 2016 – GPS Graduate Program
Just over three years ago GPS commenced development of its next generation of staff with our graduate program. Going down the graduate program path...
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
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...
May 2016 – Brisbane property market
Overall the Brisbane residential property market continues along my predicted path. Price growth continues in line with inflation. Median prices remain well below those...
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...
April 2016 – Navigating the market
The start of 2016 has been one of the more interesting periods in my 20 plus years as a private lender. The year started...
March 2016 – A continuing media topic…
Potential oversupply of units and a “market correction” of prices continues to be a media topic. Again there has been a “generalisation” of the...
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...
February 2016 – Improvements at GPS
Improvements at GPS in 2016 2016 is lining up to be another good year for GPS. Low interest rates and poor performance in other...
December 2015 – A Very Good Year for GPS
It is once again the time of the year for the traditional review, thank yous and predictions for the coming year. Overall it has...
November 2015 – Market Review
Market Review The residential construction lending market remains very buoyant for operators like GPS at the present time. Reassessment by the banks (or whatever other...
October 2015 – The Importance of a Good Quantity Surveyor
The Importance of a Good Quantity Surveyor They say that no news is good news, and that is exactly the type of news we...
August 2015 – Glut of property in the pipeline
Glut of property in the pipeline The current main topic in the property market continues to be whether Australia is heading for a glut...
July 2015 – Is there a property bubble?
Is there a property bubble? There has been considerable media about a potential property bubble in Australia. My view is that such media attention...
June 2015 – GPS Business Plan
GPS Business Plan In the next 6 months, GPS has budgeted to raise an additional $10,000,000 (or thereabouts) across the GPS Invest Select and...
May 2015 – GPS Update
GPS Update I am pleased to report that there is not much to report. The foundations have been laid and so it is heads down...
April 2015 – General News
General News In the past two years there has been quite a lot of development going on within the GPS business. The launch this...
March 2015 – General News
General News Thank you for the very positive feedback to our last newsletter. It is truly appreciated and inspirational. The only negative feedback I...
February 2015 – The Turmoil Test
RBA Rate Changes At its meeting on 3 February 2015, the Reserve Bank of Australia decided to lower the cash rate by 25...
January 2015 – Current Affairs
Target Distribution Rate for the GPS Invest Pooled Fund (“the Fund”) set to increase to 8.75% p.a. Growth of the Fund has been excellent...
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...
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...
June 2014 – GPS Update
Pooled Fund Opening Foreword for the PDS to be issued in July 2014 when we reopen the GPS Invest Pooled Fund for investment. Trying...
May 2014 – Loans Update
One of the strengths of GPS is that we are a niche Lender who operates in areas where there is reduced competition. In recent...
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 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...
December 2013 – The Lending Market in 2014
The Lending Market in 2014 My read of the market in 2014 is that the Big Four Banks will continue with their capitalisation program...
November 2013 – NEWS
NEWS When you can measure your career in an industry in decades (GPS has been operating in the Mortgage Industry for over 20 years),...
October 2013 – “Information Overload”
Newsletter During the course of 2013 I have been driving further improvement in the quality of service which is offered by GPS so that...
August 2013 – 20 years
GPS has now recorded over 20 years of successful Mortgage Management in Queensland. Rather than sitting back, we have implemented some significant developments so...
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...
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...
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....
