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What is property development finance?

If you’re seeking flipping or letting opportunities, property development finance could provide you with the freedom you need

Undertaking a large building or refurbishment job is no easy feat. It’s a mammoth task that is likely to excite and scare you in equal measure. Of course, any job of such scale requires a huge amount of planning, including several key decisions regarding your funding. Whether you choose to do the work yourself or have a big project on that means you get a company like Project 4 Roofing Conservatory Conversions in to help, the financial aspect needs to be very carefully assessed. It is quite crucial to keep this piece of information in mind!

Anyway, it’s imperative that you make the right decisions when it comes to your project, and this means choosing the right property development expert, similar to Lincoln Frost, who can help in the acquisition, disposition and delivery of commercial, industrial or residential properties. Such people can also guide you on the right path to gaining financial support. Moreover, people like him can advise you to opt for a property development loan in order to access the finance you need quickly.

However, in the event that you are not taking any external help regarding this, then it might be a good idea to do your research before committing to any means of funding. Along with taking a look at professional companies like Imperial Blue Finance and the services that they offer, this handy guide has everything that you need to know about property development finances.

So, let’s get started.

Property development finance

Property development finance is used to provide the finance for building projects and renovation works, particularly those on a large scale. For example, residential housing projects, office block construction and expansive regeneration initiatives can all benefit from this kind of finance.

A property development loan is one kind of bridging finance, which is a fast and flexible funding solution that can be applied to a variety of situations. Bridging loans are designed to ‘bridge’ the gap, offering financial stability during a period when funds are low. Once greater funds are accessed through the selling of a property or other means, the loan can be repaid.

Bridging loans are also used to take advantage of opportunities which require fast action, such as buying a plot at auction. Unlike traditional finance methods like mortgages, bridge loans can provide finance within a matter of days.

When is development finance necessary?

Anybody looking to undertake a significant property project should consider property development finance if they are in need of immediate funding. This kind of finance usually covers around 70-80% of the build cost, putting you in a much more realistic situation to get started with your project.

If you’re an existing landlord who already has a portfolio of properties under your belt, these can be taken as security in lieu of the developer having to finance the project with their own reserves.

Acquiring or developing land can be a fast-paced and often unreliable industry, which means that when an opportunity comes along you want to take advantage of it. Bridging finance gives you the opportunity to access funds quickly and take immediate action. This provides you with greater freedom of choice when it comes to selecting your land.

Different kinds of property development loans

There are different kinds of property development loan depending on your requirements. Property development is a broad term which can refer to many different things, such as:

Light redevelopment or refurbishment – aesthetic or non-major work on existing buildings which is relatively unobtrusive.

Heavy renovation – more extensive work within existing buildings, including major structural changes and heavy refurbishment.

Ground-up development – a ‘start from scratch’ project which involves everything from land purchase to completion, requiring major plans and a team of builders.

Bridging finance can also be tailored to specific situations, such as auction purchases.

How to plan and apply effectively

You’ll need to make sure you’ve researched your potential plot fully before committing to it, doing all the necessary checks and visiting the site in-person. Put a plan together of how you expect the project to go, and how you intend to oversee it, including the total build cost and a contingency plan.

It’s a good idea to contact bridging loan lenders directly so you can explain your specific circumstances and together you can come up with a plan that suits you personally.