Different Types Of Property Funding

Given the wide array of financing options available to property developers and the importance of the financing decision, it is important that developers are adequately informed when deciding on how to finance their development.

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Jimmie Follow

Uploaded on Jul 24, 2024 | 5 Views

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1. Different Types Of Property Development Funding Brought to you by Silver Oak Capital

2. Introduction When undertaking a property development, there are a number of important factors to consider. One of the most important factors is the source and type of funding. The source and type of project funding can have a crucial impact on the success of the development.

3. Development Finance Development finance is a funding option that has been tailored to suit the needs of property developers. Development finance provides funding to the developer to cover costs across the development stages. Funding is generally provided in different tranches to correspond with the cash flow requirements of the project.

4. Senior Debt Finance Senior debt finance is used frequently in property development finance projects. Generally, borrowers will be required to secure the facility against the property being developed. Senior loans give the lender a prioritized claim over the property being developed. As a result, if the borrower defaults on the loan, the lender will have first claim over the property.

5. Equity Finance As alluded to previously, equity is a commonly used form of finance in property development projects. Equity is not considered debt financing as equity allows investors to hold shares in the project. The result of this is that equity does not require interest payments, which can assist with cash flow pressures.

6. Crowdfunding Crowdfunding has recently been popularized as a financing mechanism for smaller scale property developments. Crowdfunding involves obtaining funding from a number of different lenders in smaller amounts. Generally, crowdfunding is done through an online platform where investors can view the details of a project and commit finances accordingly.

7. Bridging Loans Property Bridging loans are well-established options in the property development sphere, allowing developers quick access to capital. Unlike senior debt, bridging loans have shorter terms and higher interest rates and allow the borrower a greater degree of flexibility.

8. Contact Us 91 Wimpole St, Marylebone, London W1G 0EF, UK https://www.silveroakcapital.co.uk/prope rty-development-finance/ Conclusion GIVEN THE WIDE ARRAY OF FINANCING OPTIONS AVAILABLE TO PROPERTY DEVELOPERS AND THE IMPORTANCE OF THE FINANCING DECISION, IT IS IMPORTANT THAT DEVELOPERS ARE ADEQUATELY INFORMED WHEN DECIDING ON HOW TO FINANCE THEIR DEVELOPMENT.