Description
Q1:
Download the attached document and complete the questions included.
Q2:
What do banks look for?
For this discussion, refer to the property you have chosen for the ongoing project. What risks are attached to the property that would concern a lender?
Q3;
Sources of property finance
For this discussion, refer to the property you have chosen for the ongoing project. Which source of finance would you choose in support of that project?
Q4:
Analyse a development case study
In this discussion forum, consider the development case study provided. Discuss among your peers what the developers should include in their loan proposal when motivating for financing. Having done this consider what perceived risks are attached to the development from the lender’s perspective. Share your thoughts with your peers.
Q5:
Alternative sources of capital
In this unit, you have been introduced to the various methods of sourcing capital for your property project. Sean Godoy, your Head Tutor, explained both the traditional and non-traditional methods of securing financing. In the video, he discussed the process of obtaining finance from a bank as well as other non-traditional financing methods including, private funding, hard money loans, syndicate funding and crowd funding.
In addition to this, you were shown further methods of securing financing in this unit’s presentation. The presentation followed John as he explored the various financing options available to him including, instalment sales, rent-to-buy, participation bond schemes, joint ventures, refinancing, and the use of capital from family and friends.
For this discussion, consider these alternative financing options as well as their strengths and weaknesses. To prompt your discussion, consider the following:
A) What alternative financing option would you choose if you could not secure a loan from a bank? Explain why.
B) How secure is this method of financing? What risks are attached to this method from the borrower’s perspective?
C) What additional advantages does this method offer that traditional financing would not provide?
D) Highlight any major pros and cons that stand out to you regarding alternative finance, either for a specific type or in general.
Share your thoughts on this topic with your peers in your small group discussion.
Unformatted Attachment Preview
MODULE 6 UNIT 3
Ongoing project
© 2020 UCT/ GetSmarter
All Rights Reserved
Learning outcomes:
LO4: Deconstruct the concept of positive leverage, and what banks look for.
LO5: Evaluate finance and leverage considerations, prior to investing.
Name:
1. Instructions and guidelines (Read carefully)
Instructions
1.
Insert your name and surname in the space provided above, as well as in the file name.
Save the file as: First name Surname M6U3 Ongoing project – e.g. Lilly Smith M6U3
Ongoing project. NB! Please ensure that you use the name that appears in your student
profile on the Online Campus.
2.
Write all your answers in this document. There is an instruction that says, “Start writing
here” under each question. Please type your answer there.
3.
Submit your assignment in Microsoft Word only. No other file types will be accepted.
4.
Do not delete the plagiarism declaration or the assignment instructions and guidelines.
They must remain in your assignment when you submit.
PLEASE NOTE: Plagiarism cases will be investigated in line with the Terms and Conditions
for Students.
IMPORTANT NOTICE: Please ensure that you have checked your course calendar for the
due date for this assignment.
Guidelines
1.
There are 7 pages and 1 question in this assignment.
2.
Make sure that you have carefully read and fully understood the questions before
answering them. Answer the questions fully but concisely and as directly as possible.
Follow all specific instructions for individual questions (e. g. “list”, “in point form”).
3.
Answer all questions in your own words. Do not copy any text from the notes, readings
or other sources. The assignment must be your own work only.
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All Rights Reserved
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Page 2 of 7
Plagiarism declaration
1. I know that plagiarism is wrong. Plagiarism is to use another’s work and pretend that
it is one’s own.
2. This assignment is my own work.
3. I have not allowed, and will not allow, anyone to copy my work with the intention of
passing it off as their own work.
4. I acknowledge that copying someone else’s assignment (or part of it) is wrong and
declare that my assignments are my own work.
2. Mark allocation
The question is worth 15 marks. However, you will only receive a final percentage mark and
will not be given an individual mark. Use the rubric to see how marks will be allocated.
3. Contextual information
One of the most important methods of successfully negotiating a loan application is through
a successful bank loan proposal. This document is often the first impression a bank will have
of your project, and investors and developers should take care to research and plan their
proposal thoroughly before submitting it. In the previous enrichment activity, you were asked
to examine a development case study and consider what components should be included in a
strong bank loan proposal. While there are multiple versions and templates available which
outline various formats of a loan proposal, in general, all loan proposals should contain the
following elements:
•
Project summary: This element provides an overview of your project proposal. It
briefly describes your project, the industry, and why there is a gap in the market. In
addition, the project summary will outline the need for the loan, how it will be paid
and the amount of money that is required to make the proposal a success. A brief
indication of the profitability of the proposal should also be outlined, including
projected cash flow and expected rentals. This is an opportunity to summarise the
contents of the entire loan proposal and provide clear motivation for the approval of
the loan.
•
Management team: This element briefly examines the management team behind the
project. It will highlight the critical expertise present in the team which will ensure its
success (Note: in some instances an individual may fulfil multiple roles, especially on
smaller projects.)
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Tel: +27 21 447 7565 | Fax: +27 21 447 8344
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Page 3 of 7
•
Project description: This is an opportunity to flesh out the project, describing its
current position, its history, and the future strategy which will be implemented to
make the project a success.
•
Market analysis: This analysis will examine the current market climate, identifying the
need for your project as well as any competitors already in the industry. In addition
to this, it is an opportunity to identify the target market for your project and the
current economic climate.
•
Cash flow projections: This important component of the loan agreement is the
section in which you state the projected cash flow of the project. This will give the
lender an indication of the sustainability and profitability of the project.
•
Financial statements: You will also need to provide any relevant financial statements,
both business and personal. The bank will use this to analyse your creditworthiness
and credit history, identifying any irregularities.
•
Loan purpose: This key element of the loan proposal will outline how you intend to
use the capital if the loan is approved.
•
Loan amount: Clearly state the exact amount needed for the project to be realised.
•
Repayment plan: This is an opportunity to suggest the repayment terms you would
prefer based on your research and financial position.
Reminder:
Remember to read the Ongoing Project Guidelines document when completing sections
of your ongoing project. This document can be found in Unit 2 of the Orientation Module.
4. Question 1
Having read the previous section, you are now familiar with the key components of a strong
loan proposal. For the purposes of this submission, you are required to write only the first
component of a loan proposal – the project summary (see the contextual information above).
Assume that you have decided to proceed with the purchase of the property you have
identified for the ongoing project. Use the previous section as a guide and outline your loan
proposal, motivating why you should be granted a loan.
Include any relevant findings you have made from previous ongoing project submissions,
including the market value, the projected net operating costs, the annual yield, and any
market research you have conducted.
© 2020 UCT / GetSmarter
All Rights Reserved
Tel: +27 21 447 7565 | Fax: +27 21 447 8344
Website: www.getsmarter.com | Email: [email protected]
Page 4 of 7
Note:
If you have selected a property for business purposes, remember to focus on the property
investment aspects of your site while working on your ongoing project, and not the
business operations. For example, if you plan to start a guesthouse on the property, your
focus should not be on the guesthouse operations, but rather the investment side of your
property.
In order to fulfill the requirements of this ongoing project submission, you can assume
that the property you have selected will either be rented or sold.
Methods of conducting a market analysis will be covered in greater detail in Module 7. For
the purposes of this assignment, you do not need to conduct a full market analysis but
should have a high-level overview of market conditions.
Your submission should not exceed 600 words, excluding references.
Start writing here:
5. Rubric
The following rubric will be used to grade your submission:
Critical
engagement
with the
module’s
content is
evident. This is
used to inform
the writing of
the loan
proposal
summary
Answer
critically
Unsatisfactory
Limited
Accomplished
Exceptional
No submission,
or fails to
engage with the
content or
show any
insight into the
format of a loan
proposal
summary. The
student has not
used the
module content
and additional
research to
Minimal
engagement is
evidenced.
Some insight
into the topic is
provided but at
a superficial
level. The
module’s
content has not
been used to
inform the
student’s
proposal
Sufficient
critical
engagement
with the
module’s
content, as well
as insightful use
of additional
research is
evident. There
is evidence that
the content has
informed the
writing of the
Submission
excellently
makes use of
the content and
additional
research to
craft a
sophisticated
loan proposal
summary. The
choice of
property
project is
clearly
© 2020 UCT / GetSmarter
All Rights Reserved
Tel: +27 21 447 7565 | Fax: +27 21 447 8344
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Page 5 of 7
engages with
the learning
material
provided and
insightfully
makes use of
both this
content and
independent
research to
inform their
loan proposal
summary.
inform their
summary.
loan proposal
writing of a loan While there is
summary. (4)
proposal. (0)
evidence of
additional
research, it
bears little
relevance to
the
requirements of
a strong loan
proposal
summary. (2)
motivated and
supported by
additional
research and
the course
material. (6)
The student
has clearly
made use of
market
research and
the content
from previous
ongoing project
submissions to
motivate for a
loan
No submission,
or fails to offer
a reasonable
summary of the
property
project and its
expected
profitability.
Student makes
no mention of
previous
research
conducted
through the
ongoing
project, which
is not used to
motivate for
the loan. (0)
Answer
demonstrates a
thorough and
nuanced
understanding
of the market
and the
demand the
proposal will
meet. There is
evidence of
market
research and
the use of
content from
previous
ongoing project
submissions.
This
information is
used in a
sophisticated
manner to
motivate for
the loan. (6)
Answer
proposes wellreasoned
motivation for
the granting of
the loan
application.
Answer
demonstrates a
superficial
motivation for
the loan. There
is only minor
use of market
research and
the findings
from previous
ongoing project
submissions.
However, this
research has
been poorly
used to
motivate for
the loan. (2)
© 2020 UCT / GetSmarter
All Rights Reserved
Tel: +27 21 447 7565 | Fax: +27 21 447 8344
Website: www.getsmarter.com | Email: [email protected]
Page 6 of 7
Answer offers a
reasonable
motivation for
the loan. There
is evidence of
market
research and
the use of
findings from
previous
ongoing project
submissions.
However, this
has only been
applied
simplistically
and is not
clearly used to
motivate for
the loan. (4)
Quality of
writing
Answer is
structured
clearly and
logically, and
contains as
little spelling
and
grammatical
errors as
possible.
No submission,
or complete
lack of logical
structure.
Multiple
spelling errors
and
grammatical
mistakes. (0)
Answer has
some logical
structure, but
not enough to
justify a passing
grade. Quite a
few spelling
errors and
grammatical
mistakes. (1)
Total: 15 marks
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Tel: +27 21 447 7565 | Fax: +27 21 447 8344
Website: www.getsmarter.com | Email: [email protected]
Page 7 of 7
Answer is
structured well
in terms of logic
and clarity. Few
spelling errors
and
grammatical
mistakes. (2)
Answer is
structured
exceptionally
well in terms of
logic and
clarity. The
style is
persuasive and
convincing.
Free of spelling
errors and
grammatical
mistakes. (3)
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