Raising money for a project in Hampshire

[colinbythesea]

Hi All,

First post from a new developer, I have a question about raising money. More looking for recommendations really.

I have one flat we are renovating and will be on the market soon. Although things are still selling well where we are I am prepared for a long sale process. However, we have built up very good relationships with local agents and have had the first view of a new project. It belongs to another developer who has too much on and just wants to move it on. It is 2 flats above a shop, the flats need light refurbishment and the shop could be converted into 2 more flats with planning permission. Our offer is accepted on the basis that planning is in place for the conversion of the shop, we will probably get this sorted. Price is £250,000, developed value is pessimistically about £400,000 with a £60,000 development budget.

Our problem exists that any cash we have is in the current flat refurbishment and even a re-mortgage wouldn't bring out enough as a reasonable deposit. I understand borrowing is available for a percentage of the developed value so we could borrow 100% of the purchase price but I cannot find anybody in Hampshire who does it. I have spoken to people around the country but I like to have a face to talk to. Does anybody know of a broker that could help in Hampshire, or even west, West Sussex or east Dorset. Or is developer finance so specialised it is normal to deal with somebody who you never see.

This is all a bit beyond the scope of our current broker who is orientated more to residential and buy to lets.

Thanks
Colin

[MarkD]

Hi Colin,

you are right, property development loans are quite specialised especially when it comes to high levels of gearing. The lenders out there are not on every high street and it's not surprising your IFA doesn't know where to take the deal as most of them will put your requirements into a software package and offerings will pop up, which is why a number of my introducers are IFA's!. The difference between mortgages and property development loans is simple, when it it comes to mortgages a 1/4 point difference in interest isn't going to break the bank. Development loans come in all shapes & sizes and selecting the wrong finance option can put alot of your profits into the hands of the lender and not your back pocket!

I'm not based in Hampshire so maybe you don't want to deal with me as I won't be able to justify a trip down there for a small deal but my website goes over some of the finance options out there to give you an idea. I'd be happy to screen your deal for you and tell you if it works or not... just contact me via the web site if you are interested...