- Original Poster
- #1
I'm a reasonably experienced property developer, however all my previous projects have been entirely self financed, i.e. no borrowing needed.
I've had an offer accepted on a residential building which needs a lot of work anywhere from £100k-200k, depending on the spec and scope of improvement. On the border between light and heavy refurb.
I can secure the cost of the house purchase in cash, however to undertake the renovation work will require funding, and I am completely new (and therefore very cautious) about this big step.
So far I have spoken to companies about bridging loans and development finance. Both seem very expensive.
My main worry is what the exit strategy (and therefore how to service these loans) upon completion of the building work, while the finished property is sitting on the market and waiting to sell.
Of course, best case scenario is that a cash buyer is found during the latter stages of renovation, however the much more likely scenario in my experience (and with a property of this value in this area) is that it could take anywhere from 4 months to a year to sell. At which point I have zero cash flow and a massive loan to service.
Are there other developers who have been in this situation, and what would you recommend?
I've had an offer accepted on a residential building which needs a lot of work anywhere from £100k-200k, depending on the spec and scope of improvement. On the border between light and heavy refurb.
I can secure the cost of the house purchase in cash, however to undertake the renovation work will require funding, and I am completely new (and therefore very cautious) about this big step.
So far I have spoken to companies about bridging loans and development finance. Both seem very expensive.
My main worry is what the exit strategy (and therefore how to service these loans) upon completion of the building work, while the finished property is sitting on the market and waiting to sell.
Of course, best case scenario is that a cash buyer is found during the latter stages of renovation, however the much more likely scenario in my experience (and with a property of this value in this area) is that it could take anywhere from 4 months to a year to sell. At which point I have zero cash flow and a massive loan to service.
Are there other developers who have been in this situation, and what would you recommend?
