01 Oct 2022

Moving to Kilkenny and opening a company in a pandemic - Dan Gandesha on life and Ireland's housing crisis

Day In The Life Kilkenny

Dan Gandesha, founder of Onate

Dan Gandesha combined making Kilkenny his home with setting up a new business!
Originally from the UK and founded of Property Partner, a hugely successful Fintech company. He moved to Kilkenny in 2018 with his family. It wasn’t long afterwards that he set up property lending company Onate - during the pandemic!
Dan and his wife Victoria, who is originally from Kilkenny, have two young children.
When I asked him about the secret to his success he told me that he is no Bill Gates, but is comfortable in taking risks and being curious.
That’s exactly what he did when he founded Onate, which provides fast and flexible finance bridging finance. It has already approved over €10 million of loans in the first two months of operation.
Dan’s background is in finance and deal-making across joint ventures, venture investing, commercial arrangements and mergers/acquisitions. Dan is a Chartered Accountant and Fellow of the Institute of Chartered Accountants in England and Wales (ICAEW).
Dan and his company are passionate about playing their part in increasing the supply of housing in Ireland.
So I decided it was time to meet him and find out some more...
Dan, you moved to Kilkenny from London three years ago. Why Kilkenny?
My wife is from Kilkenny and she disclosed her masterplan to move back home after we had a couple of kids on the scene!
It’s fantastic here and a wonderful place to raise kids - you can’t really ask for more than Kilkenny.
Obviously during Covid times everything is different but ordinarily with all the festivals, food and comedy, it’s just a great place to be.
My wife Vic comes from a close-knit Irish family, with the kids having lots of cousins on the scene.
We initially thought that we had to be in Dublin, because we were living in London and that would be the logical transition. We were outbid on a couple of properties in Dublin and realised we were going to be spending a lot of time on the M9 travelling to and from our family in Kilkenny. So we made the decision to move to Kilkenny and never really looked back.
Take us back to your first company - Property Partner. It sounds like a stock exchange for properties?
In terms of my background, I am a finance guy. I qualified as an accountant for KMPG and had a career in mergers and acquisitions, helping people buy companies.
Then I went to work for Sky TV. They asked me to help them invest in technology companies in San Francisco, where I had spent a lot of time.
That led to my idea for my last company, Property Partner, in the UK.
Essentially I was walking down Upper Richmond Road in Putney and there was a big house for sale. I imagined a stock ticker on the side of the house, like running lights with numbers, going up and going down!
I thought why can’t the property market work more like that, especially if a company wanted to own a piece of property - why can’t I buy just the piece, instead of the whole thing? The company can still earn an income during the period of ownership and sell on the stock exchange when it’s time to move on.
So I set up about building that type of company for the UK property market. While I ran it we bought 1,000 units of property in the UK with 10,000 investors actively buying into property. They were able to trade out in a couple of minutes on the stock exchange when they decided to sell, rather than taking months to enter and exit with nothing but hassle in between.
It was quick to enter, earn some money and sell when you wanted to. It was really democratising the asset class and given people access.
I moved from CEO to simply being a board member in 2018. That’s when my wife and I had a chat about what we wanted the next phase of our life to be.
The kids were one and three and we thought it would be really important be closer to family. So we moved to Ireland.
After settling in Kilkenny you decided to set up another property company - in the middle of a pandemic?
Yes, the common theme is property, but I moved into lending.
Onate empowers professional property entrepreneurs and investors by providing fast and flexible finance secured against residential investment property (‘Residential Bridging Loans’). Bridging finance is fast finance that can deliver funds quickly and handle complexity for professional property developers.
The loans are for up to two years in duration and €1 million in value, with a fast process enabled using modern technology solutions. Soon we will be loaning up to €2 million in bridging loans.
I set it up during the Covid-19 pandemic with backing from Will Neale and Christian Faes. Onate is the first Irish company focused solely on residential investment bridging loans.
Can you give us some real life examples of how it works?
Take for example a block of apartments that are currently vacant. A local investor has spotted them and believes they can turn them into social housing.
That’s a difficult product to get finance for at the outset because you don’t have a cast iron guarantee that you are going to land that social housing contract and you don’t have any income generated because there are currently no tenants in that building.
A lender like us in the alternative lending space can take a view on that and look at the track record of the investor and we can fund that acquisition. It’s short term finance that allows them to land that social housing contract and gives them time to sell the underlying asset if it’s that type of a deal or to move onto a cheaper lender.
So how expensive is bridging finance?
Our lending isn’t cheap; it’s about 1% per month, which is about the going rate for bridging in Ireland.

The property crisis now is not crashing prices, but more about getting enough homes.

Bridging has been around for some time now in Ireland but what is innovative about our product is the flexibility. The borrower can repay after 90 days with exit penalties, so they can genuinely use this product to help them from A to B quite effectively.
The other innovative factor is around our business model and our processes. We only do residential bridging finance in the €1 million space, soon to be €2 million, which means we can focus on smaller loans and that allows us to be very good at what we do.
Our mantra is that we give a very fast yes or no and follow through on our word at pace.
Given that there is a lot of complexity here, to give a same day answer if we will lend to them and get the cash into their hand within 10 days is pretty unique.
This type of bridging is very niche. How has it taken off in Ireland?
Since January 2021 we have approved 29 loans across 20 counties in Ireland, that’s €10.3 million of lending.
Essentially we see an opportunity here that is very niche. There’s no doubt that it isn’t a large market, but it is big enough for a niche company like Onate.
The Irish Government are talking about shared ownership or cash for equity to help with the current housing crisis. What do you make of the current crisis here?
If you compare the Irish residential market from 2008 to now, it’s in a very different place and credit to all the interventions that have happened.
The Central Bank intervened and limited the amounts one can borrow in terms of their loan to income and how much debt they can take against the property i.e. the loan to value. That has really moderated the prices, which is very positive.
Also if you look at how much mortgages are consumed in term of income, prior to the crash it was 26%, now its 15%. Earnings of people’s wages have continued to go up, faster than the property prices, but also interest rates have gone down to reduce that cost. The yield on property has pretty much doubled from pre-crash levels. While the supply of homes is a huge challenge, it also underpins prices, so the downside risk is not there as much as it was in 2007.
How do we fix this property crisis?
The property crisis now is not crashing prices, but more about getting enough homes.
The Irish Government, in my humble opinion, are doing a great job in terms of the social housing agenda.
At the grass roots level we see a lot of activity being driven by that. People are taking a risk on vacant buildings, improving them and landing the social housing contracts.
There is more to be done and you touched on it with the shared equity, which is there in the UK.
The problem is anything you do to drive demand side incentives, like shared equity or giving people bonuses on their savings, can drive demand, without driving supply, so it pushes up prices.
We need to do them both, there is no silver bullet but the Government needs to concentrate on both side – demand and supply.
Watch the full interview with Siobhan and Dan on Kilkenny People Newspaper YouTube Channel here

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