JV Property Development Finance Increasing

Finding 100% joint venture funding, or JV property development finance as it is also known, has seen a resurgence in recent months as lenders have increased their appetite.  For developers that can show experience but are lacking cash to put into a deal, this finance can be a means to grab a land opportunity.

There can be many reasons why a developer may not have equity to put into a deal, for example their cash may be in another project(s), but this is not necessarily a barrier to taking on another development site.

What is JV Property Development Finance?

  • The lender will provide up to 100% of the acquisition, build and professional costs
  • The developer does not, therefore, have to put in any cash
  • Personal guarantees not taken
  • A formal valuation may not be required
  • Assets will be held in a Special Purpose Vehicle (SPV)
  • Profit is split between the lender and developer

This is good news for experienced property developers that may be finding the right opportunities but are being held back by a lack of liquidity.

What are the Criteria for 100% Development Funding?

  • Facilities between £500k to £4 million are the most common but funding up to £20 million is possible
  • The developer will have a track record of having completed similar developments
  • Developers that are also the contractor preferred
  • Project terms up to 18 months, but longer may be possible
  • Profit on GDV, before finance costs, should be at least 27%
  • Outline or full planning consent in place
  • Project types will typically be new build or conversion residential or mixed

Downsides to 100% Funding

Where a lender is putting in all of the equity into a deal then their risk will be high and, therefore, they will want a high return.  This will include rolled up interest rates that may start from 1.25% per month and a share of the profit.  The latter will vary but usually on a 50:50 basis.

Developer Money Market is a specialist in JV property development finance and provide bespoke funding solutions to your requirements.

If you have a property development opportunity but need 100% JV property development finance then contact us today on 0207 096 2003 for an informal discussion.  You can also search online instantly for JV property development finance here via our unique loan search platform.

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