Definition of Property Development
Property development (also known as real estate development) is the business of developing land or buildings into a higher use value.
It’s a multi-faceted business which can encompass any of the following:
- Buying land and building property on it;
- Renovating, extending or improving property;
- Converting property from one use type to another.
Who are Property Developers?
Property developers are the entrepreneurs who carry out the business of real estate development. To put it simply, the goal for every property developer is to add value to the land or property.
When a developer can add value to land or property, they are then able to make a profit.
Many property developers require significant loans from either banks or non-bank lending institutions (like Assured Management) to finance their property development projects.
Property Development Loans Explained
Property development loans or property development finance - is a type of loan that can help you to fund the construction of more than one property on a single title.
Most banks and non-bank lenders will split property development into two parts which are residential and commercial. Both of these have very different approval processes, fees, charges, interest rates and risk assessments.
Residential Property Development Loans
Most banks and non-bank lenders consider residential property developments to be smaller scale developments consisting of up to 4 separate units.
This type of mortgage is usually considered to be less risky so only the standard fees and charges will usually apply.
The application process and eligibility criteria for a residential property development loan are generally more straightforward than for a commercial property loan.
Commercial Property Development Loans
If the proposed property development contains more than 4-5 residential units, it is highly likely to be lcategorised as a commercial property development.
This type of development could be anything from a skyscraper to a series of commercial properties. These types of mortgage applications can be more complex, and usually come with a higher interest rate which helps to lower the risk for the bank or non-bank lender.
It’s essential to consider why you want to develop a block of land before you go ahead and apply for a property development loan, whether residential or commercial.
Find out more about how property development loans work here.
About Assured Managment
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.
Contact us today for advice on how we can assist with your development finance needs.