How Do You Get Property Development Finance?

How Do You Get Property Development Finance?

Accessing Property Development Finance

Q: How to raise finance for property development?

You can apply for property development finance through a number of traditional lending schemes or by approaching private, non-bank lenders.

In some cases, you may require professional help from a Mortgage Adviser or Finance broker. 

Sources of Development Finance

There are various loans or mortgage sources you may be eligible for as an investor:

  • Joint Ventures.
  • Syndicates.
  • Private lenders.
  • Development leases.
  • Equity partnerships.

More information is available here

 


 

How the project is presented both verbally and in the loan application documentation plays a major role in whether the loan for property development finance is approved by the lender. Here is some advice to give you the best chance of securing a property development loan.

Do your due diligence

Good research is the foundation of a successful property development project. It's really important that you do your homework on the type of development you are attempting to finance.

An experienced and competent property developer will never rush in without getting all of the necessary information such as:

  • evaluating potential suburbs, neighbourhoods and sites;
  • doing a preliminary market study;
  • putting together a draft budget;
  • carrying out a preliminary financial analysis
  • preparing a timing analysis;
  • reviewing the current political climate and the council approval process;
  • discussing your potential development idea with a council planner.

Feasibility before finance

There are some developers out there who attempt to use loan approval to help secure planning permission (also known as building approval).

This is generally a risky strategy because permission can take a fairly long time to be granted which extends the length of the required loan term. If the building approval is then outright rejected, it will bring everything to a grinding halt.

Feasibility studies should be completed with building approvals obtained before attempting to secure finance.

Previous Property Development Experience Counts

Potential lenders also like to see if you've had previous development experience. If you can show that you have been involved in a similar project, you are much more likely to be accepted and have your finance approved.

If you are a first-time property developer needing finance, you may need to prove your knowledge and show that you've done your due diligence. You may also need to contribute your own funds to the project - if you're willing to put skin in the game, your project will be taken more seriously.

Bear in mind that each private property finance group and/or non-bank lender like Assured Management will have a different set of money lending criteria.

Create Realistic Development Timelines & Plan For Emergencies

Consider the resources available to you and your project. Be objective and realistic about the potential timelines and costings for your property development project.

It's expected that you fill out the paperwork carefully because underfunding/overfunding a development project can result in serious problems as the project progresses.

Be as accurate as possible with timelines and cost estimates whilst building in allowances for things that can come up during the project such as emergencies, disasters and extra expenses.

Wrap Up

Securing development finance for property projects can be complex and time-consuming. 

As stated earlier, you may require professional help from a Mortgage Adviser or Finance broker, especially if you are new to the industry.

 


 

About Assured Management

Assured Management (AML) is a flexible, non-bank lender with the ability and expertise to work directly with property developers to complete projects in a timely and profitable manner. 

We provide tailored construction finance solutions and property development loans for:

  • Housing estate developments
  • Unit blocks
  • Townhouse development
  • Land subdivisions development loans.
  • Commercial and industrial premises.
  • Construction loans.
  • Investment property finance.

Seek advice on your development finance needs.

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