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You actually have 3 options:
1.Getting finance for buying the land-
Usually we can get a "bridge loan" for up to 12 months.
2.Paying on the land from your own sources and getting finance only for the project.
We can achieve in this case, a very good conditions.
3.Refinancing- Paying on the land from your own sources, and in the project financing step, to include the costs for the land (retroactive)
Who is giving these financing solutions?
The popular method for real estate financing in Romania is via Banks.
The Local banks sector has developed a lot, and still in development phase. In Romania we have now tens of banks, most of them are new and coming from western countries – Germany, UK etc.
Another option is with joint ventures or funds. This is a great way to lower your risk, and usually the funds are interested in bugger projects (up to 10 million € ).
At any way you choose, it is a must to know very well all the people involved – whether it is the bank branch manager or the decision maker in the funding company.
In Romania, more then in other countries, the "connections" are very important and can save you a lot of time and money (by getting better offers). Using, having contact persons in this process is crucial.
Unlike the myth, bribe (or "Shpaga" in Romanian) is not necessary in this phase. Everyone is here to do business, and we can assure you, based on our long experience, its not needed at all !
...So, if you lawyer or your assistants indicate this point…try to find another resource of assistance.
What's the time frame for the loan process?
We recommend to start at least 40 days in advanced. The problems starts when you are interested in purchasing a land and you know for sure that the seller will not wait so much time… (The good lands in Bucharest are sold in days).
If this is the situation, we recommend option 2 or 3 as mentioned above, or to sign a pre- agreement with depositing the advance payment based on your own resource.
At anyway, all the banks will refuse to obligate for any result or schedule, especially if you are not familiarized with them or you don’t have the right contacts.
What kind of finance –loans I can achieve?
Financing only the land can be around 50% loan. Having the rights contacts, we can achieve more.
Financing a land and the project can achieve- 70-80% loan.
Buying exist assets can stand also around 70-80%.
We recommend starting the process with 2-3 banks simultaneously in order to prevent loss of time if one bank provides a negative answer.
How to choose the bank?
We usually choose the bank based on some factors:
1.The personal level- how well we know the managers to approve our requests
2.Previous indication about each bank policies and project references (every bank has its own favorites).
3.The time frame takes to the bank to provide a Non obligative offer (for some banks it can take 1 months..)
4.What kind of documents the bank asks and ,can we achieve it- some banks may ask for things you can not have.
AND NOW… after choosing the hard choices, its time to start!
In the next article we will review the "paper work" needed for your loan.
We hope you enjoyed reading our articles about financing real estate projects in Romania.
If you are interested in more information you are welcomed to contact us.
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