Being involved in the property sector means you’ve likely considered developing property.
Property development and being classed as a property developer is something many of us aspire to, it is usually attributed to wealthy individuals who have lots of cash to invest.
Many of our clients ask us about property development and how best to finance opportunities that they’ve come across. In this newsletter, we explore development finance and how you might utilise this resource to start your property development journey.
Financing your property development
Property development can consist of 1 small project or a multi-site development. In most cases, you’ll require a loan to finance the purchase and the development of the property.
Example: You attend an auction with the premise of buying a property in your local area, if purchased at the right price the property can be renovated and turned around creating a good profit. You are successful with your bid and have your 10% deposit which you pay to the auctioneer along with providing your solicitor’s details and signing a legally binding contract which ties you into paying the balance within the next 28 days. We contact the bridging loan company who values the asset and agree to advance typically 70% of the purchase price leaving you to find the balance which is done so within the agreed time frame.
The bridging finance is a short term solution, you’ll need to refurbish/redevelop the property quickly so that you can repay the bridging loan without incurring additional fees. This can be done by either selling the property or refinancing the property to a standard mortgage.
If you’d like to discuss how we can support your property development journey, call our senior broker, Danny O’Keeffe on 0208 364 3444 or click the schedule a call button below to book a time slot.