Development finance query/help

[Hobo]

Having done a few housing developments in the early 2000's, I've been presented with an opportunity which looks worthwhile progressing, and may lead to other developments.

My question is though in relation to financing, and who currently are the companies out there offering such, as my previous dealing were with Dunbar and Haydock, both of which seem to no longer offer this. I'd like to know the criteria for approval.

Roughly I'm looking at a land purchase of 350k (excluding stamp), build costs of 450k, and worth once complete over 1.5m. Including fees/contingency, I'm assuming a total cost of nearer 900-950k on a 1.5m development, so 60% borrowings if no monies were put in by myself whatsoever.

Who should I be speaking to ? What kind of rates should I be looking to secure (flat rate, entrance & exit fees, etc, etc).

Edited by Hobo on Sunday 26th April 11:24

[millen]

I've no direct experience but this sounds like the sort of project that might interest Relendex https://relendex.com/borrowing
I gather they're trying to move up to the next level of borrowers but haven't got there yet so seem limited to small developments for now.

Separately I sometimes lend directly to a successful Midlands developer. He mixes individual lenders with commercial lenders for starter home projects of 10-30 units at up to £2-4m GDV eg https://www.investandfund.com/pages/broker.aspx among others. I could ask him how decent they are to deal with but know that they insist on monthly reports from a large quantity surveyor. He's also tapped into Welsh Development Bank for larger projects.

My concern with this type of borrowing especially in the current climate is what happens if the lender (P2P or traditional) enters distress? Eg would they have the right to foreclose on loans even if the borrower hasn't breached any covenants? Due diligence essential!

[afterparty]

Be prepared for 3 - 4 % in arrangement and exit fees alone on top of brokers 0.5 - 1%, plus all sorts of other fees Lol.

But ballpark rate figures is minimum around 6% +.

Good Luck Sir.

[bigbaddom]

I thought rates were closer to 10% and that was pre Covid, would be interested to hear how you get on.

Dom

[Hobo]

Thanks for the responses. I went out to a few people and have 2 indicative offers, being around 7% per annum with 1.5% arrangement fee, but no exit fee, based on a 15 month facility. That was at 65% GDFV.

Didnt seem too bad if I'm honest.