—
Development finance is not restricted exclusively to the largest-scale development projects. There are also plenty of funding options available for smaller property developments, covering everything from new builds to renovations and repurposing.
Examples of these include specialist development finance, commercial mortgages, bridging loans, sourcing funds from private investors, and countless other specialist products for property developers.
When it comes to getting the best possible deal, it is important to adopt a strategic approach; doing so could make finding the money you need for your next project much easier and facilitate a significant reduction in overall costs.
With this in mind, here are five ways to simplify the process of securing funding for a smaller property development project:
1. Work with an experienced commercial broker
The importance of experienced broker support cannot be overstated. It is vital to remember that many of the UK’s leading property development finance specialists offer their services exclusively via broker introductions. They do not offer their products or services directly to the customer, which means that the best deals on the market can often only be accessed with the support of a broker, such as UK Property Finance.
2. Consider as many financial products as possible
Your broker will also help you determine which of the available funding solutions is right for you; evaluating the available options means taking into account all borrowing costs, in conjunction with your current financial status, the outlook for your project, your track record in property development and so on. In addition, it is important to have a viable exit strategy in place – i.e. a provable roadmap for when and how you intend to repay the loan.
3. Build your brand and credibility
When presenting your project to a potential lender, they will expect to see evidence of a credible brand they can trust. They need to know that you are serious about the project you are planning, that you have the specialist knowledge needed to make it work, and that your financial projections are solid. If in doubt, it can be useful to hire a solicitor with a background in property developments to help you build and present an attractive proposal.
4. Consider private investor backing
There are various ways of going about this, but in all instances, the peer-to-peer approach is becoming more popular than ever before. Crowdfunding in particular provides huge potential for covering the costs of smaller projects, providing developers with the opportunity to cast their nets widely and involve multiple private investors. It may also be possible to attract the attention of high-net-worth individuals to back your project, if your proposal is attractive enough.
5. Be as transparent as possible
Honesty goes a long way when looking to obtain finance for a property development project; if there are still a few financial skeletons in your closet make sure your broker knows the details. Outstanding debts, history of bankruptcy, less-than-fabulous financial track record to date, poor credit are all the things that will need attention. It is therefore better to be honest, rather than running the risk of them souring the whole thing at a later date.
—
