DEVELOPMENT FINANCE EXAMPLES?
Development finance can be used to finance both the land purchase and also the build costs.
LAND PURCHASE AND BUILD WITH MINIMAL DEPOSIT.
A plot of land with planning permission to build four, three-bed detached houses. The land can be purchased for £750,000 and the cost to build all four houses will be £810,000.
The estimated value of each house is £555,000 meaning a Gross Development Value (GDV) of (4 x £555,000) £2,220,000.
Development finance can be used to raise up to 50% of the land cost = £375,000 and all of the build cost. The remaining amount coming from the developer.
A facility would be set up for £1,185,000 (net loan as interest is being retained). The initial release would be for £375,000 and used to help fund the purchase of the land.
The remaining £810,000 will be released in arrears stages as the build progresses.
LAND PURCHASE AND BUILD WITH ZERO DEPOSIT.
Mayflower can for the right client fund a project with no money in. Certain lenders and family offices we work with will partner with new developers who have building experience, fund the whole project and split the profit 50/50. It’s a great way for seasoned construction professionals with a good team to move into professional development.
Total loan to Gross Development Values typically need to be below 65%. .
Mayflower can help prepare a suitable proposal pack that has a record of success before approaching lenders
NO CASH AVAILABLE BUT LAND IS OWNED
A plot of land with planning permission to build four, three-bed detached houses.
The land is already owned by the developer and is worth £750,000 and the cost to build all four houses will be £810,000.
The estimated value of each house is £555,000 meaning a Gross Development Value (GDV) of (4 x £555,000) £2,220,000.
Development finance can be used to raise up to 100% of the build cost = £810,000.
A facility would be set up for £810,000 (net loan as interest is being retained). The initial release would be for up to £375,000 and used to help fund teh first phase of the project.
The remaining funds will be released in arrears stages as the build progresses.