Property Development Financing Opportunities that You Can Look Into

Property Investment Development

Though the property market has the highest returns, investing in it requires a substantial capital input. This capital is typically beyond the reach of many would-be investors, more so those looking into residential property investment. However, lack of finance should not be a hindrance to your investment.

Just like, there are various property development funding options for Melbourne investors. The ideal choice from the ones available generally depends on your circumstances. Here are the funding options you might come across:

Bridging Finance

Bridging loans are short-term loans with a repayment period of 1-36 months. They take 5-7 days to process and are used for ground-up developments and property conversion and renovation. A bridging loan should have an exit strategy detailing how you intend to repay it. You can get up to 75% of your project’s costs or 60% of its GDV {gross development value} with bridging finance.

100% Development Finance

This option is available for seasoned property developers. It allows you to borrow the full amount of your project’s cost though this depends on your level of experience and years in the industry. 100% development finance is typically available from private specialist property development creditors who are accessible through a development finance broker.

Mezzanine Finance

This is like a second loan advanced when you have a primary one which covers a majority of your development’s costs. You can use mezzanine loans to reduce your capital amount in the development. The loans are advanced by specialist property development lenders and can increase your project’s loan to 90% of its development cost or 70% of it GDV.

Taking property development loans blindly is the biggest mistake you can do. Though all the above options are guaranteed to help you realize your dream of residential property investment, without expert advice, they can kill your dream. It is hence essential to get a property development company to assess your circumstances and advise you accordingly.