Finance For Property Development

22-May-2023

22-May-2023 14:36

in Development

by Sam Hodgson

Getting finance for property development can be a complex and challenging process.

It often demands expertise, knowledge, and a strategic approach.

So what's the best way to navigate this intricate landscape and obtain the funding you need?

We provide our industry insights to help improve your chances of securing the funding you need.

Whether you're an experienced developer or new to property development loans, our goal is to empower you to make informed decisions and maximise your opportunities in property development finance.

And if you still need help, our team of experts is dedicated to guiding you through the complexities of property development finance. Through us, you’ll have access to the necessary resources for succeeding in securing finance for your development project.

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And finally, if you want to fast-track a comparison of development loan quotes for your project, our comparison software pulls quotes from over 40 development finance lenders in minutes, and you can use it for free.

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Finance for Property Development - Where To Start

When seeking finance for property development, conducting thorough research and identifying the right lenders can be time-consuming and stressful.

Here are some key steps to get you there faster:

Begin by assessing the specific requirements of your property development project, including size, location, scope, and completion timeline. This will help narrow down lenders that are best suited to your needs.
In the realm of property development finance, there are various lending options available, such as traditional banks, private lenders, and specialised development finance lenders. Research and evaluate the pros and cons of each option to determine which ones align with your project's goals.
Different lenders may have specific expertise or criteria when it comes to financing development projects. Some lenders specialise in certain property types or have a preference for projects in specific regions. Take the time to understand their focus, track record, and lending criteria.
Seek Professional Advice: At Clifton Private Finance, our property development finance brokers have experience in choosing the right lender for finance in property development. We can provide valuable insights and advice throughout the process and recommend appropriate lenders based on the market and our established relationships.

You might consider opting for a specialist lender rather than a traditional bank, depending on the nature of your project property.

Specialised development finance lenders focus solely on financing property development projects.

They have extensive knowledge and understand the specific requirements and challenges faced by property developers.

But they're not always the most well-known or approachable.

And it can be difficult to compare rates due to long and drawn-out quote applications.

Our comparison tool cuts out the hassle and gives you quotes to choose from today.

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Leveraging a Strong Track Record

When it comes to obtaining finance for property development, showcasing a successful track record can significantly enhance your chances.

If you can showcase some completed projects that were delivered on time, within budget, and with favourable outcomes it demonstrates your ability to achieve similar results in the future.

And this means it's less risky for lenders to give you finance for your development project (at least in their eyes).

Here are a few tips on proving your worth:

Provide as much information as possible about past projects, including scale, complexity, profitability, and challenges overcome.
Highlight the success of a previous property project, and showcase your effective management of resources, timelines, and budgets, demonstrating your competence in property development.
Let the numbers do the talking by showing the profitability of previous projects and presenting key financial metrics, such as ROI.

If you don't have any property development experience, don't worry - there are options for you too.

You'll either need a specialist lender open to working with first-time developers, or you may need to consider joint venture funding - both are popular options.

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Your Property Development Plan

A well-prepared property development plan is also essential for securing finance and demonstrating your project's viability.

Here are some of the steps to follow to ensure you get the property development finance you're after:

Clearly articulate your project's goals, such as the type of property to be developed, the target market, and the desired outcomes.
Thoroughly analyse the market conditions, demand, and competition in the area where you plan to develop the property. Identify trends, potential risks, and opportunities to inform your strategy.
Break down the development process into key stages, including site acquisition, design and planning, construction, and marketing (if applicable). Provide a detailed timeline for each stage, considering potential challenges and contingencies.
Create a comprehensive financial projection that includes estimated costs, revenue streams, and anticipated returns on investment.
Lenders will require relevant documents such as architectural plans, permits, environmental impact assessments, and any other permits or certifications required by local authorities.

How to Mitigate Risk in Property Development Finance?

Property development finance is considered a fairly high-risk finance type.

Lenders will need to make several risk evaluations concerning the property development project. They will also evaluate you as a borrower. They’ll need to make sure you:

Are a credit-worthy borrower
Have previously demonstrated expertise and experience in property development projects (not essentially, but will help)
Have adequate contingency plans to address unexpected challenges
Have solid financial projections and realistic assumptions
Have an exit strategy: property development loans involve the property or property development site as a secured loan asset. Additional assets or capital from other sources can also serve as an exit strategy.
Are compliant with local regulations and permits
Ideally, have a proven ability to manage construction timelines and budgets

Lenders want to see risk management in a property project. Reassuring lenders from the outset will put you in a better standing to secure finance.

Gain an Edge with a Property Development Finance Broker

Seeking the expertise of a property finance broker can simplify the process of securing finance for your property development projects.

Utilising a broker will make implementing the expert tips and tricks easier. It will save you valuable time and effort when it comes to handling paperwork, dealing with lenders, and streamlining the application process.

Our brokers can help identify whether property development finance is suitable, and feasible, with regard to your property project. And if there may be alternative ways of financing available to you.

Need Help with Securing Finance for Property Development?

When choosing the right specialist lender for your property development project, we at Clifton Private Finance can provide valuable assistance.

With our expertise and knowledge of the development finance market, we can find lenders that meet your specific requirements.

Our personalised approach ensures that we find the right lender tailored to your circumstances. And our access to the whole market enables us to secure the most competitive rates for you.

Making significant financial decisions is always easier with the guidance of a specialist finance broker. Our experienced team will ensure that you receive finance at an affordable and favourable rate that suits your needs.

FAQs

How Long Will the Approval Process for Property Development Finance Take?

With the aid of a broker, the application process can be significantly sped up. It may depend on the scale and complexity of your property development project, however. When an application goes to a lender, they’ll need make a number of assurances before the application is successful. For example, if the project is large in scope, or there are additional complexities, the approval process may take more time.

What are the Interest Rates for Property Development Finance?

There are no averages for property development finance rates. It can vary widely based on a number of factors; every case will be different. With that said, you can use our comparison tool in order to get a better understanding of development finance rates and narrow down your selection.