Case Study · Singapore

Real estate loan helps CEO acquire shophouse

12 October 2018

Real estate loan helps CEO acquire shophouse

Real estate loan helps CEO acquire shophouse Problem The CEO of a fund management company, John, was always on the lookout for lucrative real estate investments. One day, he heard about a fire sale in the heart of the city and decided to check it out. As soon as he laid eyes on the shophouse, he knew it was the perfect addition to his portfolio. The only problem was that he had to act fast.

John approached his usual bank for a loan, but due to the current market conditions, they were unable to provide the necessary funds in time. John was faced with the prospect of losing out on the opportunity of a lifetime.

That’s when he remembered hearing about Rikvin Capital, a company that specialized in short-term loans for real estate investments. John approached Rikvin Capital and explained his situation. In less than a week, Rikvin Capital was able to provide a $3,000,000 real estate loan, allowing John to capitalise on the opportunity and purchase the shophouse below market value.

John was elated, the shophouse was now his and he was able to complete the purchase quickly. He couldn’t wait to start generating rental income from the property and further expand his portfolio.

Problem

  • The CEO of a fund management company had the opportunity to purchase a shophouse from a fire sale.
  • The individual needed financing in order to complete the purchase quickly.

Solution

  • In less than a week, Rikvin Capital was able to provide a $3,000,000 real estate loan.
  • The individual was able to capitalise on the opportunity and purchased the shophouse below market value.
  • Location: City Hall, Singapore
  • Market Value: S$ 5,000,000
  • Loan Amount: S$ 3,000,000
  • Loan-to-Value: 60%
  • Duration of Loan: 12 Months
  • Payment Schedule: Monthly Interest Payments
  • Asset Type: Shophouse Unit
  • Completion Time: 10 Days

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FAQ

I found a shophouse fire sale. Can you fund the completion fast?

Yes. Fire-sale opportunities require speed. The City Hall case here lent $3 million against a $5 million shophouse in 10 days, letting the CEO complete a below-market acquisition that his usual bank could not match in time. Shophouse fire sales are one of our most common urgent deals.

How does a below-market purchase affect what I can borrow?

We size the loan against the lower of purchase price or independent valuation, so a below-market purchase often improves the underwriting on a real-value basis. The City Hall buyer borrowed 60% of price; against the fuller market value, the effective loan-to-value was lower and safer.

How is the loan exited after a shophouse fire-sale purchase?

The most common exits are: refinance into a long-term bank mortgage once you have title and the income picture stabilises, or onward sale of the property at a higher market price. The City Hall borrower had a 12-month term, giving room for either route.