How To Raise Money For A Residential Development

How To Raise Money For A Residential Development

From building one or two homes on a small plot, to a fully-fledged residential development, it’s important that you have the right finance in place, or your project can ground to a halt.

Acquiring land and derelict buildings for residential development is a key trend in the UK housing market. Demand for housing coupled with a lack of available land means that developers need to be creative with their plans in order to provide well-built housing that fits in with the local community.

If you are new to this type of development, or you are planning an unusual or large project, one of your first considerations is how to finance it. You could get a regular loan or mortgage, but these are often not available for development purposes and lenders may not be happy to loan as much money as you require. If you have been developing property previously, you may have money in the bank, but this is not usually enough to buy the land or property and then to develop it.

There are specialist finance agencies who are experts in providing finance for developments. These companies have experience in assessing the development potential of a site and in forecasting returns from it, which means they are happy to lend development capital. Some of the benefits of using this type of finance include:

• Flexibility – a specialist will be able to lend you the money for a term that suits you; from as little as a month to help with bridging loans, to the whole period of your development.

• Expertise – a good development finance company will understand your plans and ask about your expected returns and your timescale. Their attention to detail can help you to refine your plans.

• Bespoke finance – Talk to one of these specialist companies about your plans for the development. Your loan and any repayments can often be tailored to the scale and length of your project, rather than imposing harsh conditions and time periods.

It makes sense to use a specialist finance company if you’re planning any sort of development. Not only can you easily raise the money you need, but the loan can be tailored to your particular project and you can benefit from the company’s expertise and advice.

A Guide To Land Banking

A Guide To Land Banking

Land banking is a relatively new investment concept that allows smaller investors to own a piece of valuable land.

How does land banking work?

When large parcels of land are put up for sale, they are usually far too expensive for a single small investor. Land that’s in a good place for residential or business development is usually either bought by a land investment company or by a property developer. The owner then “banks” or holds onto the land until they are ready to sell it or develop it. During this time, they can parcel the land up into smaller, much more affordable section and sell these sections to private investors. Each investor holds the freehold to their land, and can sell at any time, although the best profits are usually realised when planning permission is granted for the site.

How much does it cost?

The cost of the land to small investors will depend upon the type of land, the potential for development and the size of the land. For as little as £5,000, investors can buy a good-sized piece of land in a prestigious location. You can, of course, choose to spend much more, and the land parcels are often graduated in size to accommodate a range of investors.

Is it complicated to buy?

Land is easier to buy than property. It is still a legal contract, though, so it’s worth getting it checked by your solicitor. The straightforward nature of the purchase means that it can often be completed within 28 days.

Can I sell it?

In most, if not all cases, when you buy the land, you also acquire the freehold. This means that you can sell the land on at any time. Most people hold on to their property for between 2-8 years, to realise profits from the development of the site, but you can sell whenever you want or need to.

Where do I start?

If you’re interested in land investment, then talk to a land agent. They will have a variety of sites on their books and have the experience and expertise to guide and advise you throughout the process.

Commercial Real Estate Brokerage – A Risky Yet Healthy Business

Commercial Real Estate Brokerage – A Risky Yet Healthy Business

Real estate is one of the last pillars of the free-enterprising entrepreneur who buys properties in hope that they will rise in value because of improvement in market conditions or renovations. To make it in this career you need to be savvy, hard working, willing to take risks and fortunate. It is important, then, to think carefully of how you can succeed in this market through better wits, a superior management approach or a unique niche strategy.

Whether you are updating your current facility, entering a build-to-suit location or looking to build a property, commercial real estate brokerage associates or simply called brokers can help you manage the construction process. From property rehabilitation to inspection, from zoning restrictions to building codes, associates guide you through all necessary steps to ensure your project is completed efficiently and within budget.

Commercial real estate brokerage offices use sales associates who market office buildings, hotels and many other types of commercial real estate for brokers. Commercial real estate brokerage sellers usually specialize in a particular property type such as apartments, retail, office, and hospitality, shopping centers and industrial plants.

In commercial real estate brokerage, a person is required to have a license in order to receive remuneration for services rendered as a real estate broker. Unlicensed activity is illegal, but buyers and sellers acting as principals in the sale or purchase of real estate are not required to be licensed.

Commercial real estate brokerage is a risky business. Brokers are paid in straight commission – cashing out only if they were able to close deals. Brokers negotiate leases for retail, healthcare, high-technology, and other industries that are seeking office and industrial spaces. They represent both landlords looking to market office and industrial space and tenants looking to relocate or expand. They help secure the rights to redevelop the space. They spend some of that time away from the office, touring clients’ conditions and trying to understand their corporate culture and what kind of office or industrial space they need to operate. Brokers’ pay usually depends on market conditions, not years of work experience, said Al Marco, a partner in Joseph Chris Associates, a national recruiting firm in Chicago that specializes in placing commercial real estate brokerage executives.

The risks of the commercial real estate brokerage are certainly offset by financial rewards. A leader in the commercial real estate brokerage industry, Coldwell Banker Commercial® was founded in 1906 after a devastating earthquake in San Francisco.

Some brokers of a commercial real estate brokerage focus on the sale, purchase, lease, and development of commercial-use land properties. Associates specializing in multi-family property transactions are well versed in the unique elements and trends that shape successful multi-family transactions.

The Risk Exposed In Land Development

The Risk Exposed In Land Development

Messy developer's dream 52/24/3 #cf17 #messy
Source: Flickr

Land development creates homes and places of business that allows us to survive and move forward.
It is critical in the growth and progress of our society. Without those who are willing to assume the many risks of land development and investment, we doul not be where we are today.

Developing raw land is an extremely profitable business because it has to do with commercial real estate which is very valuable in and of itself, but also because there is a certain amount of risk that comes along with land development. Not everyone is capable of looking at the facts, conjecturing about the future, and able to make a move to capitalize on a specific piece of property. There are simply too many variables that could go wrong- and will go wrong, if you do not know exactly what to look for. Experience is truly the only way to feel confident in such a huge investment. Even the best of land developers make mistakes and can lose out on a lot of money.

Risk is what makes land development so profitable. There are simply not a lot of people who would be able to handle that type of risk easily. So what type of risk would you be looking at as a land developer?

The first and probably most obvious risk is your skill level. Are you capable and have the necessary skills to develop and entire piece of property without much error? It takes a great amount of knowledge in math, science, finance, architecture and building to successfully develop a piece of property. The larger the property, the more difficult this can be. A land developer would not want to attempt something that they did not have the necessary skill set for.

Coinciding with this risk is the risk of finishing a project on time. If a project takes longer than it is originally proposed, you can believe that you will be faced with extra expenditures that will eat away from your profit. There might be rules, ordinances and deadlines that will cause further political and financial problems if a project is not finished on time. It takes excellent planning to see a project through completion on time. This is a huge risk that a land developer does everything in his or her power to make sure that the project is done well, and on time.

There is risk before the project even begins. This risk is finding a property that one could actually create profit from. Many times finding a property where there is guaranteed property is difficult to find. You never know, no matter how hard you try to look at surrounding land values and comparable sales, exactly the money you stand to make from any one project. There might be additional building costs or expensive problems that you may run into. To avoid this, purchase a property that is already below market value. Let’s say an owner is extremely eager to sell and he knows that the property, as-is is valued at about $5,000,000. However, the owner really needs the cash and decides to sell the property at $4,000,000. That is an instant $1,000,000 in equity. The land developer knows that no matter what, he or she will have $1,000,000 in equity that will turn to profit if the property is sold. This strategy provides cushion for the unexpected happenings that are related to land development.

The next, and usually most intimidating risk for some, is finding the funding to actually develop a project. Land development is not cheap and the amount of money that goes into it is not for the faint at heart. Finding someone who will loan that amount of money and being able to prove to that person that you can pay it back through the project, plus some can be very difficult. Whether it is an investor or a lender, finding this large amount of funding and actually using the money is a giant risk every developer must face.

There is also risk for all those involved during the project. Because the project is not making any money while in development, are you able to maintain a steady cash flow to survive while all of this is taking place? It is one thing to get the money upfront; however, it is another to maintain some sort of healthy cash flow for your team so that everyone can eat. This cash flow must be factored into the project before hand because many times the amount of time to profit can be one year, two years, or more, depending on the size of the project. Can your project sustain until the profit can be made and distributed?

Those who are capable of assuming this risk and makes plans to see a project from conception to completion are to admired. It is neither easy or simple to develop land and so many things can go wrong. It is in the nature of the inconsistent variables to face more problems than positive notions.

Too many investors and land developers, the greater the risk the more profit to be made from a project. But these people do it for more than just the profits. They are literally in charge of our progress and are creating our entire infrastructure. That is a very profitable and important position in which to be.