Property development is a popular option for many– regardless if it is businesses or homebuyers. The benefit of developing property is that it is possible to make a home or office precisely as you want it to be. Having said that, the question comes to the funding of the development of any property.
Getting Mortgages for Property Development
As long as you are upfront with your ideas, there are some lenders who will be willing to offer mortgages that will also cover the cost of the development. You will need to have a clear outline of what you are going to do and then have a real estate agent to look over the plans to see how much value that will add onto the property.
The mortgage is then paid back in the same way that any other type of mortgage is – through monthly repayments over a set amount of time. This will allow you to get everything done and will be able to keep the costs in your monthly budget.
Developing a Firm
If you have done property development before, you could look at selling the homes to finance your next project. However, this is only beneficial if you constantly come out with a profit. You could also look at renting out some of your properties to gain a regular income while you are developing your properties. If you build up a large portfolio, you will be able to sell on properties whenever you wish.
This only works if you do know enough about real estate and you do have a large enough portfolio to develop, sell and move on. You will always need to think about the profit that you are making and how you will live from day to day – you will also need to think about fluctuating house prices and whether a home is worth the money.
Apply for Funding
Some companies will offer specialist funding, which will cover the cost of developments on any property. This may be something to consider if you are not able to get your hands on a mortgage for the development. Take your time to work out a proposal as you will need to sell your plans and show how you will get the return. If lenders cannot see the return, they will not be willing to fund anything.
This type of funding may be beneficial but you will only be able to use the money on the plans that you have. Very few lenders will be willing to see you use the money on other areas or other properties – you could find that the funding is completely taken away from you if you try something like this.
Save Up for It
Your final option to fund your property development is to save up for it. This is a great option if you plan well in advance and know that you can get that type of money together. You will also see a great return of investment after all of the work has been done. You will not usually need to save up for the whole house and the development – you will probably still get your hands on a normal mortgage and just need the deposit and development costs.
The problem with saving up for it is that it does take time. You will need to plan ahead and also remember about any emergency work. You may find your dream home needs to be completely ripped up because of problems.
Commercial bridging loans can be arranged through commercial brokers who specialise in commercial property development finance.