- 27th September 2021
- Posted by: DMM
- Category: Equity Investment
Equity investment for property development can mean the difference between being able to do a project or having to pass on a great opportunity.
Have you found an exciting property development with great profit potential, but you lack the cash to put into the deal? Well, we could have a solution for you with a funding structure that combines senior debt, together with equity investment.
Key Features of Equity Investment for Property Development
- Equity Investment Loans of £200,000 to £1,000,000
- Up to 30% of land acquisition price
- Property development experience not necessary
- Suitable for new build or conversions
- House and flat developments
How does Equity Investment for Property development Work?
We can help you source equity investment for your project of between £200,000 and £1 million, or up to a maximum of 30% of the land acquisition price. This level of equity does, of course, make obtaining a senior debt facility possible and at competitive rates.
“…the property developer need not have an extensive track record. This means that even first-time developers, or perhaps contractors doing their first project for themselves, can qualify for equity investment for property development.”
What Types of Property Development are Investors Looking For?
This is bested summed up as ‘mid-market’ residential properties, new build or conversion, houses or flats, or possibly mixed residential/commercial for example, flats with some retail units below. The whole of the UK is considered, and the property developer need not have an extensive track record.
This means that even first-time developers, or perhaps contractors doing their first project for themselves, can qualify for equity investment for property development.
What are the Costs?
An equity investor will typically charge interest on their facility at a rate of, typically, 5%p.a., a 2% arrangement fee and will share the project profit on a 50:50 basis.
What else is involved?
Your equity investor will secure their investment with a second charge on the subject land and it is worth noting that they will not be a party to the SPV or provide any PG’s.
Most senior lenders will want a developer to be able to support a facility with a PG of between 15 – 25% of the loan amount. Now, of course, this may not always be possible but there are a number of lenders that will not require a PG but, of course, their rates will not be the cheapest and the loan to value will likely have to be below say 65-67% LTGDV.
Developer Money Market is an independent specialist in property development funding and can help you structure equity investment for property development together with senior debt. Contact us on [email protected] or call 0207 096 2003 for an informal discussion!