Development funding for new small development company

Discussion in 'Development' started by Robert1989, Jan 23, 2018.

  1. Robert1989

    Robert1989 New Member

    I am interested in small developments (with a view to moving onto larger developments later in). I’m looking at new builds of 1-4 houses or apartments.
    I have my own cash funds to inject but want to find suitable development funding for the projects - any recommendations would be helpful.
    Note that I am a U.K. national born in England but reside outside of the U.K. I note this as it may affect some lenders criteria. Thank you
     
  2. nmb

    nmb Well-Known Member

    I think the idea of starting small and moving up the ladder is perfect - small steps. How much development funding are you looking for?
     
  3. diyhelp

    diyhelp Active Member

    Partnering up with a UK company/group might help to mitigate some of the issues that living outside of the UK may attract. If you did this via a UK based company might this help? Take professional advice but dont lose faith - many overseas investors plough money into the UK property market each year so it is a well furrowed path.
     
  4. nmb

    nmb Well-Known Member

    Is there any update on your development @Robert1989 ?
     
  5. diyhelp

    diyhelp Active Member

    Whereabouts do you live at the moment?

    Lots of expats buy and sell property in their former homelands - surely one or more of the UK big banks must have a presence wherever you currently live?
     
  6. nmb

    nmb Well-Known Member

    Hi @Laurence Mills

    What kind of interest rates do they charge for the development finance options you have come across?
     
  7. Laurence Mills

    Laurence Mills New Member

    The rates really depend on how experienced the developer is however I know that rates can start at around 6.5% per annum depending on how big the project is.

    - Development appraisal
    - Details of the professional team being used
    - Description of project (Drawings, floor plan, location maps)

    I know fast property finance have the ability to entertain most development projects from experience.
     
  8. Longterminvestor

    Longterminvestor Active Member

    Are you setting up a company to hold all of your property assets?
     
  9. Gareth Bain

    Gareth Bain Member Forum Partner

    Hi Robert,

    Finding funding is one thing, however, structuring a deal to maximise your profits is another. If you need debt or equity funding, I am happy to have a conversation.

    Why use your money when you can use others. Check out https://www.shojin.co.uk/development-funding/raise-capital
     
  10. diyhelp

    diyhelp Active Member

    Would it make sense to put this in an SPV, inject initial capital and borrow the rest? That would protect your personal assets, keep everything wrapped in an SPV, and maximise income using development funding/bridging loans.
     
  11. Karen R

    Karen R New Member

    Development funding is available for up to 100% of the costs and funding can also be achieved for up to 80% towards the site purchase so you can inject some or all of your own funds or you can keep those back to use for new projects and to ensure you have a contingency fund. You could approach lenders directly if you have the time to research who can help you and how to meet their criteria or it may be preferable, especially as you are new to this so have the added complication of being inexperienced, to find a reputable finance broker who can guide you and will know who to approach and the best way to propose your requirement. They will also have relationships with lenders so will be more likely to achieve better terms for you given your situation. Once you are established you may then decide to go direct to lenders or you may have by then built a really great working relationship with a broker whose role will be to ensure you achieving the best funding available to you as your experience and reputation grow.
     
  12. Longterminvestor

    Longterminvestor Active Member

    I totally agree with the idea of leaving the experts to sort the finance for your development while you use your skills to complete the project. If you can borrow responsibly, leaving yourself some headroom, it might be an idea to spread your capital across a small number of projects (using debt to complete finance for the projects). But only if the figures stack up - dont take too many risks!
     
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