PROPERTY DEVELOPMENT FINANCE

• 100% of Build Cost Funding
• 70% Land Purchase
• Available18 Month Term Options
• Desktop Valuations Offered

Property development as an investment when you plan on buying and either renting out a property or selling the property to generate income. Some people buy a property, fix it up and sell it, which is called flipping a house. Basically, property development strategies for increasing or generating income require you to determine if you have short-term or long-term goals as a property developer.

If your property development project consists of a short-term financial goal, you may be more interested in buying and renovating property for a quick sale and turnover. This type of property investment allows you to pocket any profit you make off the property. When you are interested in growing your income over some time, then you have a long-term financial goal and objective.

Any capital growth or return yields your development properties brings you is given to you through the commercial rent you charge for a home or business property. You set that rent based on your location and the work you’ve done to renovate or build a property out.

Property development finance is more complicated when you purchase a house or property for capital growth and investment yield. Property development finance for investment purposes means you need to have the funds advanced upfront and then be able to use them throughout any of the property’s build or renovations. The funds you receive for property development are usually advanced against the value of the property and location site you selected.

Many lenders are willing to give you 75% of any value the property has, but sometimes you have to find the rest of the money needed yourself. There are times that once you start building out or renovating a property, you’ll be able to receive further funds from a lender that releases funding at regular intervals that you can use on your property’s build-out. In the end, some lenders advance you and up to 100% of the build-out costs if you own the site.

The interest rate you’ll pay on your loan will be determined after the lender evaluates several different variables. Some of the variables include; but are not limited to:

Who is your developer, and what is their property build-out or renovation track record! Where is the location of the property, and is it a location that has growing value with its properties? How much funding is needed? What is the loan to value ratio? There is a GDV, and that needs to be determined before the loan’s interest rate.

Many lenders have a 1%-2% lender fee on the loans they approve for property development projects together with a broker fee.

Sometimes a lender has an exit fee that can be charged to you at about 1%-2% of the loan amount in full.
You will often have to pay for any valuation assessments or monitoring surveyed fees, and those fees vary time.

Many variables play into the costs and fees charged to you, so you should be aware of the fee and ask about it per property development project.