Property Development Finance Tips

It is standard practice for property developers to borrow funds to maximise gearing and profitabiliy!

• When seeking 100% funding we will always ask for as much detail as possible so that we can consider all the pricing models in the market place. This will allow us to offer you what we consider will be the lowest cost option.
• Warranties, the main suppliers for new build are NHBC, Premier and Zurich. Architects Certificates may also be used but you should check they have sufficient insurance to cover the project. You should note that not all lenders will offer mortgages on properties guaranteed by an Architects Certificate.
• No Experience and high levels of gearing, typically the higher the level of borrowing the more your relevant experience counts. We can however fund up to 100% of property Purchase & Development Costs for new developers subject to meeting minimum profitability criteria.
• Market Research, checking the area around your project for comparable properties and values is essential to obtaining funding. Limited comparables may mean funding cannot be obtained or a larger deposit is required.
• Be realistic with your end sale valuations and development costs, being overly optimistic or pessimistic can mean your project may not get funded. You should cost and price at a level an independent valuer or Quantity Surveyor will agree with.
• Avoid spending on enhancements that don't add value to the property.
• Tight managing and scheduling of trades & suppliers is essential to avoid costly delays.
• Have a back up exit strategy, if sales are slow, will your properties have sufficient rental potential to allow for a "Buy To Let" mortgage of sufficient size to take out your current lender.
• If you have an offer to buy multiple properties by a single source, do not allow too much time to exchange contracts as weeks can become months, costing you money when you could have sold elsewhere.