57% of Property Developers Say This is Their Biggest Obstacle…
I’ve been working with property developers for over 25 years now and during that time I’ve helped thousands of developers get the funding they needed for their projects.
I’ve worked with first-time developers and highly experienced developers.
I’ve helped developers raise finance to:
– Carry out extensions and refurbishments of residential flats and houses
– Carry out conversions – often converting commercial properties to residential
– New build projects where an existing property is being demolished
– New build projects where the developer was buying a site (with or without planning)
In working with so many developers over such a long period, I’ve discovered that there are some common issues and problems that many developers face.
For instance, finding the right property to develop is definitely one of them. All too often developers find sites or properties that look like a great opportunity, only to find when they do their numbers that the deal simply doesn’t work.
I know several developers who work on the “100/20/4/1 principle”. What do I mean?
It’s only a “rule of thumb” guide but gives a sense of what’s involved in finding the right property. The developers I’m talking about, will look at up to 100 properties, they’ll put offers in on perhaps 20 of them, the offer will be accepted in about 4 cases and they’ll end up proceeding on just 1 of the properties.
Finding the right property can be a bit like panning for gold! It’s a long process, involving a lot of hard work.
Another issue for developers is the planning process. If the deal they are doing needs planning permission or the planning permission needs to be revised, weeks or even months can go by.
I had a client recently, who despite the planning officer giving my clients proposals the “thumbs up”; when it went to committee it was turned down and my client had to go to appeal. Eventually, some 9 months later he got his planning permission, but during that time he had ‘opportunity’ costs which he had lost out on, as well as the actual cost of having the interest on the loan rolling-up for much longer than he had originally intended.
Another issue for developers is labour. Skilled craftsmen who are good at what they do and reliable are not that easy to find. And of course, with the looming uncertainty over Brexit, I suspect finding good contractors and sub-contractors may not get any easier, certainly for a while.
However, there is one issue that occupies developers more than other… and that’s funding.
In a recent survey of property developers, 57% of them said that access to finance was the biggest obstacle they faced.
Many developers, particularly first-time developers or those who’ve been turned down by the banks, are not quite sure what to do next or what other funding options exist that may help them with their proposals.
To stand any chance of getting development finance, developers need to know which lenders to approach to get the best deal and they also need to know how best to structure a funding application so that it stands the best possible chance of success.
Many is the time, a developer contacts me having been turned down for funding because the application wasn’t put together correctly.
So, if you’re a developer and you’d like to find out more about what your funding options are and how best to make an approach to a lender, why not start by giving us a call.
We can go through your plans and proposals with you and give you some options that might help.
Simply give us a call on 020 8949 2122 or email us at: firstname.lastname@example.org
We look forward to finding out how we can help you.