A Property118 reader has shared this story with us – he’s a Property Developer and was struggling to find the right Development finance.
Our reader first contacted us in the Spring of 2012. He was very frustrated at that time as he had an incredible opportunity to acquire a former riverside warehouse and convert it into modern flats. However, his bank was not interested in funding the project and neither were any other banks he approached unless he could put 50% of the money up himself.
John even had a client lined up to buy it from him on completion, a landlord who wanted to buy the units to add to his portfolio.
The Development finance deal in a nutshell was:-
Purchase price £350,000
Development cost £550,000
Agreed sale price £1,410,000
Gross Profit £510,000
John had £180,000 to invest into the project.
We introduced John to our preferred NACFB broker and the deal was completed on the following terms. The same lender is still offering similar terms today.
Initial advance: 50% of purchase price £175,000 (Max 65% is available)
Development finance: 100% of the build costs £550,000
The interest rate charged was 0.83% per month on funds drawn.
No exit fee was charged by the lender
The moral of the story is, don’t give up if you have a project that makes a great business case.
To discuss any commercial deal with our preferred commercial finance broker please use the relevant links below, call us on 01603 489118 or email firstname.lastname@example.org
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About Neil Patterson
Neil's career began in banking in 1990. He has also managed a building society branch and worked in business development. He became an Associate Partner of The Money Centre in 2003 and subsequently took on the role of Head of Operations which included training, quality control, project management and compliance. Neil has been a Partner of Property118.com since day one, responsible for operational management which includes, amongst many other things, updating the buy to let mortgage sourcing calculator and quote engine.