How to control financial risks in real estate development?

Real estate investment is to invest funds in the basic economic activities of the real estate industry, such as comprehensive development, operation, management and service of real estate, in order to obtain uncertain returns in the future. In the process of this investment activity, there are both returns and risks.

1. Avoid risks.

Enterprises are required to avoid risky or risky businesses and choose risk-free and low-risk businesses when making business decisions, so as to achieve the purpose of avoiding operational and management risks.

2. Transfer risk.

It is the transfer of all or part of the risks that may occur or have occurred in the business. Generally speaking, the main method adopted is to transfer out the business projects that may be risky, or to cooperate or joint venture with other units for the projects with business risks, so as to achieve the purpose of diversifying or reducing risks. But there is also a cost to the transfer of risk, some of which are direct and some are indirect.

3. Reduce losses.

Once the business risk occurs, the enterprise should do everything possible to take various effective measures to reduce the losses caused by the risk. When mitigating business risks, the following methods are usually adopted: accurately reducing the cost and income ratio of business projects to reduce unnecessary expenses in the business process; shorten the business cycle or reduce the scale of the operation; By signing contracts, those profit-sensitive variables, such as interest, development and construction costs, construction periods, and pre-lease and pre-sale of houses, are fixed, so as to achieve the purpose of reducing or reducing risks.

1. What are the causes of real estate development and operation risks?

Any business management activity is risky. The so-called management risk refers to the situation in which the management is unable to achieve the expected goals due to the influence of various factors in the management activities, resulting in the loss or failure of the operation and management. The particularity of real estate operation and management determines that real estate operation and management have greater risks.

1. The immobility or fixity of the location of the real estate determines the irreconcilability of the real estate to the market supply and demand in terms of geography;

2. The long-term nature of real estate investment time determines the inflexibility of real estate operation to changes in market supply and demand;

3. The fixity of real estate investment and operation determines the difficulty of real estate investment and operation;

4. The dispersion of real estate market information determines the inadequacy of the real estate market and the difficulty of realization.

5. The risk of real estate operation and management has different manifestations and functions at different stages.

The specific effects are as follows: Dongye Ridge1. Excess profits lead to irrational growth of real estate credit.

2. Structural contradictions lead to uncertainty in the repayment of real estate development loans.

3. Investment buying induces a bubble, resulting in insufficient value of real estate credit collateral.

4. The capital spine is relatively simple, resulting in excessive concentration of real estate credit risk.

<>1. Risk of default.

Even if the mortgagee is a bank, there is a risk of default when the borrower applies for a real estate mortgage, and the default risk includes forced default and rational default. Forced default means that the borrower is forced to default due to some reasons of his own because of insufficient ability to pay, which indicates that the borrower has the willingness to repay but has no ability to repay. Rational default refers to the borrower's voluntary default, and equity theory holds that in a well-established capital market, the borrower can make a decision about whether to default or not only by comparing the size of the equity in his or her housing with the size of the mortgage debt.

2. Liquidity risk.

There are some risks associated with real estate mortgage loans, including liquidity risk, which refers to the risk that funds are difficult to realize in short-term deposits and long-term loans. Nowadays, the liquidity risk of real estate mortgage loans is reflected in the fact that China's housing loans are mainly covered by provident funds and savings deposits, and the savings deposits absorbed by banks are short-term deposits, generally only three or five years, while housing mortgages are long-term loans.

3. Economic cycle risk.

The risk of the economic cycle is relatively rare, which refers to the risk generated in the process of repeated fluctuations in the overall level of the national economy, and the real estate industry has a higher sensitivity to the economic cycle than other industries.

4. Interest rate risk.

Interest rate risk is understood by everyone, which refers to the risk brought by the change in the level of loan interest rate to the value of a bank's assets. Interest rate risk is determined by the capital structure of its business, short-term deposits and long-term loans, and any fluctuations in interest rates will bring losses to banks, whether they rise or fall. If the interest rate of the mortgage is also raised, it may increase the borrower's repayment pressure, the higher the borrowing amount, the longer the borrowing period, the greater the impact, thus increasing the risk of default.

Legal analysis: 1. The risk of insufficient solvency of the borrower.

Conducting credit checks on borrowers is an important part of the bank's review. For the lending bank, one of the issues that must be solved is to obtain sufficient credit information about the applicant without investing too much time and cost. Banks will use the income certificate issued by the borrower's employer as the basis for credit assessment, but the authenticity and timeliness of the credit assessment are difficult to determine, and the cost of verifying personal income is high.

The term of personal housing loans can be up to 30 years, and it is impossible to monitor the borrower's economic situation for a long time in such a long time span.

2. Guarantor's solvency risk.

If the guarantor (i.e. the developer) is a third party for the borrower to obtain the loan from the bank to perform the guarantee, if the borrower fails to repay the relevant debts on time within the term of the loan, the guarantor shall perform its joint and several liability before the borrower obtains the two certificates (state-owned land use certificate and house ownership certificate) or before the loan is terminated.

From the lender's point of view, the loan risk insurance refers to the possibility of various losses faced by the lender in the course of operating the loan business. Loan risk is usually for the lender. Review of business license, review of development qualification, and legal review of project materials.

Review of approval documents and construction land planning permits, and review of construction self-financing.

Legal basis: General Principles of Loans》 Article 25 Application for Payment: The borrower needs a loan.

The application shall be made directly to the host bank or the handling agency of other banks. The borrower shall fill in the Loan Application Form including the amount of the loan, the purpose of the loan, the ability to repay and the method of repayment, etc., and provide the following information: the basic information of the borrower and the guarantor; , the financial report of the previous year approved by the financial department or accounting (auditing) firm, and the financial report of the period before the loan application; 3. Correction of the original unreasonable occupation of the loan; 4. The list of collateral and pledges, the proof of the consent of the person with the right of disposition to the mortgage or pledge, and the relevant supporting documents of the guarantor to agree to the guarantee; 5. Project proposal and feasibility report; 6. Other relevant information that the lender deems necessary to provide.