Sample 1 - Blog #property development capitalSample 1 - Blog #property development capitalhttps://lololol.zohosites.com/thoughts/tag/property-development-capitalThu, 01 Aug 2024 21:51:34 -0700http://zoho.com/sites/<![CDATA[Alternative lenders enable the British housebuilding industry to flourish.]]>https://lololol.zohosites.com/thoughts/post/Alternative-lenders-enable-the-British-housebuilding-industry-to-flourish.

British housebuilders are turning to alternative lenders because they need funding.

There’s no denying that the UK’s housebuilding industry has become increasingly reliant on alternative lenders to fund its projects. Over the last two years, the amount of money supplied by the sector’s alternative lenders has grown by £3.7bn. This equates to 14% of all money lent for housebuilding in the UK during this period.

54% of SMEs stated that obtaining finance is the main reason for their home building project not being completed. Alternative finance is beginning to resolve this problem by offering small businesses access to the money they need in order to complete these projects.

The alternative finance provider industry is continuing to mature and develop in the UK. The traditional banking sector has faced criticism for its failure to serve SMEs in the property sector; there are upwards of 2 million small businesses in the UK, and up to 70% do not have access to finance.


Small businesses often face problems getting financing. They can’t get loans like big companies, and banks aren’t able to approve their small loan requests quickly. This is why alternative finance sources are so attractive to small businesses—they offer quick funding without all of the red -tape that comes with bank loans.


While it has made improvements, the Government may make several more changes to better support small building businesses.


The Housing Growth Partnership and other such schemes’ act as a dedicated initiatives that in some cases invest alongside smaller builders in new developments, providing money to support their businesses, helping get workers onto sites, and increasing housing supply.

These partnerships also establish a network of builders, including experienced developers, who will act as mentors and advisers to those looking to expand and grow their businesses.


Supporting small builders

In the last 25 years, the number of firms building between 1 and 100 units a year has fallen from over 12,000 to fewer than 3,000.

That’s why the government has placed housebuilding at the heart of its long-term economic plan, to get homes communities want to be built and create jobs in construction and related industries.


Click here to learn more about financing your business or to receive help and advice from us.

]]>Fri, 06 May 2022 22:30:02 -0800<![CDATA[The Power of Influence, Association & Imagination]]>https://lololol.zohosites.com/thoughts/post/The-Power-of-Influence-Association-Imagination

We've all heard the sayings:

"It's not what happens to you, but how you react to it that matters."  (Epictetus)

"“It is your attitude, not your aptitude, that determines your altitude.” (Zig Ziglar)

Watch Jay-Z explaining how his sixth grade teacher changed his life. 

We aim to deliver much needed capital for SME’s and Property Developers.

]]>Tue, 29 Dec 2020 09:01:44 -0800<![CDATA[A Dozen Things to Consider If Seeking Joint Venture Capital for Residential Development ]]>https://lololol.zohosites.com/thoughts/post/A-Dozen-Things-to-Consider-If-Seeking-Joint-Venture-Capital-for-Residential-Development
They say a Team is only as strong as its weakest link and as you can imagine, investments in real estate can range from the relatively inexpensive to the extravagant, depending on location and the specific asset whether Residential, Commercial or Mixed Use as well as ground up or conversion and not forgetting whether any existing income or not. 


Either way, even when looking at a modest or starting investment, there is always the risk of unexpected issues and chances are more than likely this will be the case. Planning, Execution & Contingency are crucial - better to spend more time planning than rushing into a project. 
Part of those crucial steps in the investment process is raising capital both senior debt, mezzanine and for the purpose of this article, Joint Venture Equity which will be our focus. Potential capital providers range from private individuals, private equity firms, asset managers, family offices, pension & investment funds and even housing association to name a few.                                

Whilst all these named stakeholders are looking for solid returns, there are a number of things they will be considering before stepping down this path, including who makes certain decisions, whether the site is ready to build on, or what kinds of potential downsides there could be ranging from experience, market - economic, political, social etc. 

Below we explore some of the crucial factors that real estate developers should keep in mind when raising funds for an investment and why those considerations are so vital to their long-term success. 

We aim to deliver much needed capital for SME’s and Property Developers.

1. Transparency & Expectations... 

Transparency as well as setting clear expectations for all parties is crucial at the start and ultimately builds trust for should be a long term WIN, WIN, WIN business partnership. Typically the developer is the general partner with the equity capital provider being the limited partner and may or may not have any say in the finishes chosen for a rehab / development scheme. Can they stop by the property and give direction? Generally, they provide funds for an agreed-upon rate of return plus profit share proceeds. As can be expected if you are dealing with the more seasoned private equity, asset management or family offices, do expect dictation of level of involvement, reporting etc. 

2. The Financials & Projected Returns... 

If experience is one critical factor, the reputation is next and just as important as your most valuable asset, and investing in real estate is a long term game with each project lasting anything from 15 months to 60 months or even longer. This means that you'll want to raise funds again and again hopefully and preferably with the same investors. Will those investors want to work with you again? The answer is  YES & IF you deliver on and execute according to budget, timeframe etc as promised. It is therefore important to be very cautious with your projections, planning for the worst and any and all unexpected events - the proverbial, under promise and over deliver. Ultimately impossible to foresee every eventuality with COVID 19 global health pandemic being an example however, RISK planning and CONTINGENCY are prudent ways to mitigate the unexpected. 


RETURNS 

  • Typical expectations is IRR in the twenties and or 1.5 - 2x Equity multiples subject to development circumstances. 
  • Fixed & preferred return on capital drawn 
  • Profit share ranging from 50/50 to weighting in favour of majority capital contributor of 70/30.

Simply put, if you are risking the least of hard cash, its reasonable not to expect profit share in your favour. Not forgetting the fact that you will have earned a development management fee before anyone else. 

3. The Right Perspective 

Simply put, "put yourself in the other persons shoes". When you are raising capital like in an business negotiation or exchange, you MUST look at things through the investors' eyes as well as yours for a WIN, WIN, WIN and more importantly be able to anticipate concerns and therefore address them satisfactorily. "Failing to plan is planning to fail!" and many real estate developers and business people alike fail to prepare for what should be most basic expectations like

  • How is my money secured? 
  • What is my guarantee should things go wrong? 
  • What market data can you provide to back your financials, back your property sales values? 
  • What independent cost consultants or quantity surveyors reports can you provide to back your build cost assumptions 
  • Do you have adequate Net-Worth to back your personal guarantee? 
  • Is the corporate guarantee you are offering, backed by adequate assets? 
  • Is the business even solvent? 

Capital is primarily concerned with half a dozen key factors

  • Demonstrable ample experience of executing similar projects successfully on-budget, on-time and anticipated returns. 
  • The Team thats going to deliver the project and their demonstrable credentials 
  • Prudent business plan backed by concrete data, market etc as well as risk and contingency assumptions 
  • Project timeframe - the longer the risker and the more difficult to determine risk factors 

Simply put what investors what to know is 

    • Whats the RISK and 
    • Whats the RETRUN offered and putting into the mix, is this project and developer worth investing in and with? 

4. Co-Investment Capital - Your Contribution 

Your monetary, quantifiable commitment to the project is not an option but a MUST when raising funds for real estate investments. If you can't put your own CASH into a project and are not even willing to provide appropriate personal guarantees (PG), it says one thing and one thing only - I want you to risk your capital but not mine. Its surprising how many "so called" developers as well as business people want to take third party capital on a handshake that they would not do themselves if the tables were turned. Be prepared to fully commit if you believe in your business plan as much as you say. After all, "Actions Speak Louder Than Words."

5. Professional External Team Players

Note. Raising money for real estate development investment should be from professional capital lenders (specialist development senior debt providers, private equity, family offices, asset managers and the like) who understand the market and the risks. Professionals will provide a service of giving real feedback on your investment and if successful in partnership will bring a lot more to the table than just capital - their experience and market expertise; network of industry contacts etc. 

Corporate & Commercial Law 
  • Your legal advisers to review and assist with all contractual law matters from joint venture agreements to contractors, acquisition and ultimately disposal and dissolution Sherrard Solicitors 

Cash Flow Finance, Invoice Finance, Development Debt, Mezzanine & Joint Venture Equity Capital 
 We understand that there’s no one size fits all policy when it comes to business finance. Your business model, sector, ambitions, and numerous other factors all play a role in deciding which finance option is the right one for you.  

Building and Construction Contractors 
Want a Turn-Key Building Contracting Solution? With a team of Planners, Architects, Structure Engineers and M&E Consultants that can design your dream house with a fixed price. Durisbuild take full responsibility to deliver your project from concept design to completion. 
For more information check out the Durisbuild-Durisol-construction-method 
]]>Thu, 07 May 2020 00:17:20 -0800<![CDATA[Why the Commercial Property Market is on the Radar for Savvy Investors]]>https://lololol.zohosites.com/thoughts/post/Why-the-Commercial-Property-Market-is-on-the-Radar-for-Savvy-Investors


Finding an investment that generates income can be a hard thing. For many investors, commercial property is an attractive prospect because it’s a route that offers strong returns, insurance against inflation and an income stream that is less vulnerable to overall market changes.

For these reasons- and many more – clever investors are looking long and hard at the commercial property market as the place to put their money.

Read on to find out why investors are so enamoured the commercial property market.



Less Risk, More Diversification


Spreading investments with commercial property is a great way to mitigate risk and build some diversification into your portfolio.

Free from attachments to the stock market, equities and bonds, commercial property is a great way to secure an investment that moves independently of outside forces. If the markets are volatile, your investment won’t fluctuate wildly. Commercial property prices are determined by valuation, which means short-term volatility isn’t an issue and you can acquire a safe, stable investment backbone for your portfolio.

Additionally, income from commercial property is less likely to see dramatic falls because legally binding leases are in place. Long-term agreements between commercial tenants and property owners are set in stone, so the income stream from them is constant. Again, it’s an example of how commercial properties are not so vulnerable to wider economic issues.

This low-level relationship between commercial investment properties and equities and the wider economic picture means commercial property is an excellent low-risk, diversifying option for your investments.



The How


There are many ways to invest in commercial property, from full ownership to indirect property funds.

  • Direct investment is the simplest – and most expensive – form of commercial property investment. It means buying all – or a share – of a commercial property outright. Many investors may lack the level of funds needed for this option, but it is a good way to secure an investment long-term. It also offers the benefit of a cash boon if property prices rocket upwards. 
  • Direct commercial property funds are a more accessible avenue for most investors. You invest via a collective investment scheme straight into a commercial property like a warehouse or office building, seeing a share of income in return or capital growth from increasing property values. This is usually done via an investment trust or similar instrument. 
  • Indirect property funds are, unlike the other options on this list, linked to the stock market. This doesn’t hold the same diversification security of the other routes discussed and more focuses on investment in the shares of a property company. Obviously, shares can move up or down in value and it’s an approach worth taking only if you have great confidence in the company you’re investing in.  


Ultimately, a direct commercial property fund may be the best avenue for the investor looking to enter the commercial property market. The risks are the lowest and it offers the security of income and potential growth in property prices.

Want more commercial property or business capital advice? Get in touch with us now. 

We aim to deliver much needed capital to start-ups and SMEs

Call Now +44 (0) 203 2909019

]]>Wed, 20 Jun 2018 20:02:00 -0800<![CDATA[Backing Property Developers Crucial for Solving Housing Crisis]]>https://lololol.zohosites.com/thoughts/post/Backing-Property-Developers-Crucial-for-Solving-Housing-Crisis

Funding Homes: Bridging the Gap Between the Supply and Demand of Property Development

The housing crisis is putting pressure on young families and while the issue was addressed in Philip Hammond’s budget, the government still isn’t going far enough. The industry needs to back and invest in forward thinking property developers to really tackle the crisis and ensure that aspiring homeowners have access to affordable options.

The government has set out plans to build 300,000 new homes a year but with past targets being missed, there’s uncertainty as to how well the new goals will be followed through. The shortage in housing is contributing to the highly competitive property market and spiralling values, pricing many Brits out of the market altogether. While noting there’s no single move that can correct the housing crisis, GIC Capital is taking steps to boost the market by offering a means to inject funds, allowing developers to carry out their plans through its 100% Development Capital service. 

We’re encouraged to see that housing is remaining on the government’s agenda but so far plans are having only a limited impact. There are property developers across the country that are eager to launch their developments to provide more options to those searching for their next home. We connect these developers to investors that want to take advantage of the growing values, supporting the economy and those involved in the projects. 

Acting as a facilitator, GIC Capital helps property and land development plans get off the ground by connecting developers with partnerships that can offer 100% of the funding needed. Through carefully selecting both experienced residential property developers and reliable investors, GIC Capital hopes to provide the capital needed to fund greater levels of affordable home building across the UK. 

The terms of the 100% Development Capital service can vary but typically developers will retain 60% of the profits generated, while investors share the remaining 40%. At a time when access to capital and interest rates are both tight, it offers a lucrative option for both parties thanks to the exceptional margins in the property sector. 

We’re keen to work with developers that are creative and passionate about what they do. Whether they have a vision to create a new multi-unit block of residential flats or are planning to tackle a conversion project, we’re always looking for ways that we can offer support. 


Are you a property developer in need of finance? Look no further! GIC Capital specializes in secured property development finance and can help you unlock capital quickly & efficiently. Contact us today to get started. #GICCapital #PropertyDevelopmentFinance #Bridging

#fundinghomes #propertydevelopment #supplyanddemand #realestate #investment #homeownership

We aim to deliver much needed capital to start-ups and SMEs

Call Now +44 (0) 203 2909019

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