100% Development Finance
One of the common issues’ developers have are many opportunities to develop sites and not enough cash flow. 100% development finance or joint venture funding addresses this issue.
What is 100% development Finance?
100% development finance also known as joint venture development finance allows a developer to fund a scheme without putting in any of their own funds.
How does 100% development finance work?
A development finance lender or joint venture partner will work with the developer to provide 100% of the costs in return for a share of the profits or a return on their capital investment.
The developer will need to have found a site to build out, this can be already owned or a prospective purchase.
Key terms
- 100% loan to value development finance. Land, build costs and most professional fees are completely funded.
- Loan size from £500,000 and up to £25 Million
- Interest is rolled up and repaid on sale of the development
- Lenders fee 2%
- Exit fee TBA
- Max Loan to GDV 80%
Criteria
- Experienced developers
- Planning must be in place
- Usually reserved for multiple-units, certainly no single high value units
- Profit margin above 20%
- Personal Guarantees are a requirement (build cost overrun or % of costs)
100% development finance options
There are several 100% development finance options:
- Additional security – 100% development funding can be achieved by utilising additional security. The additional security can include existing buy to let properties. Lenders can also utilise existing developments that have not yet sold. This is achieved through the lender placing a charge over the additional security.
- JV equity partner – A JV partner will provide complete funding in return for a share of proceed from the sale of the development, Typically the JV funder will require a 40% to 50% share of profits.
- 100% development finance lender – A lender that is prepared to offer 100% of the purchase and build costs. The lender will charge an arrangement fee, an exit fee and a rate of interest on the capital borrowed.
The Process
- Application and supporting documents are presented to the lender. Lending is agreed in principle.
- An SPV ltd company is set up
- Valuations are instructed to appraise the development
- Solicitors are instructed
- Funds are released
What paperwork is required for 100% development finance?
- CV’s including previous development projects.
- Development appraisal including cash flow
- Full details of the planning decision notice.
- Assets and liability statement
Working with Fox Davidson for 100%/JV funding.
Lender relationships.
Fox Davidson work with development finance lenders, individuals and family offices all of which can provide 100% development funding.
We have built up relationships with these lenders and only approach those we know will want to lend to you and your particular development.
Lending Proposals:
We will work with you to complete the necessary documents and prepare a comprehensive lending proposal.
Every application we put forward for funding will consist of 4 components:
- CV detailing your development experience
- Development finance appraisal of the site (including build costs and timescales, purchase price and expected GDV)
- Your assets and liabilities
- Planning details for the site
To get started please call us on 01179 897950 or email enquiry@foxdavidson.co.uk alternatively please complete the enquiry form below.
