Property development finance

Property development finance is not discussed much as a lot of developers like to keep this to themselves. There are several different property development finance packages that can be used. The most popular way is of course property development finance which usually is ran buy a group of private lenders offering finance for a good return on there money usually 15-20% and if you fail they will take your development site and keep all the profits so it is quite a risky business, At the moment as there is a global financial crisis and people loosing there jobs everywhere. This type of finance may have worked well during the commodity boom now however with everything slowing down this would not be a wise choice.

Other types of property development finance are projected profit loans used by smaller developers for things like a house and land package this type of finance is usually much easier to get if you can prove to your bank that your project will actually sell and make a 20% profit, as they will lend the money on the end result similar to a business loan you can get this type of finance just a little over the current mortgage rate which is great as interest rates are extremely low at the moment.

Development finance through a bank used to be quite easy to get, but now with the economic downturn they are much harder to come buy and a lot of banks want to see 50% presales before even taking your application seriously for development finance.