Developers can use development finance for almost any construction project, whether the project is a modest renovation or a major development finance broker. Different project types impact on how the property development funding is set up. Here are some of the most typical:.
New Build Developments
New build projects mean building a property from scratch (this could be one residential property or a bigger development of housing). New builds tend to need more funding and more detailed costs planning as lenders will want to understand timeframes, experience and the expected GDV.
Property Conversions
Conversions refer to altering an existing property's use, for example converting a commercial building to residential units. These types of schemes can be very attractive, providing excellent value-add potential but you should expect high levels of scrutiny from lenders regarding planning permission and conversion works.
Heavy Refurbishments
Large refurbishment works may also involve deeper internal reorganisation, structural alteration or even extension, but they will often be cheaper to carry out than a new-build. However, such work requires additional cost control and programming consideration.
Mixed-Use Developments
A mixed-use scheme involves having a mix of property types within one project, for example flats or apartments above commercial spaces. Mixed-use schemes may be more challenging to finance due to the multiple income streams and multiple valuations.
Commercial Developments
Commercial developments are usually offices, warehouses, retail units and industrial buildings. These types of developments are often valued on both current worth and also potential income depending on what the exit strategy is.
Different project types carry varying degrees of risk and complexity and have differing funding structures. As a broker, familiarising yourself with these differences will enable you to structure the right deal from the beginning for your client.
No comments:
Post a Comment