‘Think Like A Lender’ To Boost Your Chances Of Finding Finance
If you’re looking for property development finance, you could find that your chances of securing a loan are improved if you start thinking like a lender rather than a borrower.
This is the advice from Roxanna Mohammadian-Molina, from Blend Network, who recently wrote for Property Reporter that putting yourself in the shoes of the lender can improve the quality of the loan application you submit.
She explained that all lenders want the same outcome: to be repaid and to receive that repayment on time.
Start by thinking about the numbers from the perspective of a lender. Among the questions they want borrowers to answer are what is the gross development value (GDV) of the project? How much is the land costing to buy? How much will the build cost? How long do you need to borrow the funds for?
It’s also important to demonstrate your experience in property development. If this is an area that’s new to you then Ms Mohammadian-Molina suggested partnering with someone who has completed similar developments in the past to help show a lender that you will be able to deal with potential issues if they arise.
This also means you have to consider the risks to the project and be able to show your lender how you will mitigate them.
In the current climate, considering potential upsets in the property market is important. As we recently noted, although house prices are expected to be up over the course of 2020, there are some experts who are expecting to see them drop in 2021.
This is a potential risk to consider as, if such projections are correct, they could affect the value of the properties you build, and therefore your returns on that initial investment.