100% funding without some form of default back-up is just not feasible in today’s market.
Accept this and move forward with skill.
The fact that these funds are hardly ever called upon leaves a developer in a stronger position. After all, they can now walk away with not only 100% full funding for their new project, but also, their own capital remains safe and secure – most often in their own bank.
One obvious place to avoid nowadays is high street banks – global or otherwise.
Unless you have connections at the top, you need to be talking with the right people in the private and investment sector bank operations and for most, this will never be possible for reasons I’ll not expand upon here.
Every developer should be ready to provide as much ‘current’ documentation from a truly independent source as possible and, where necessary, be prepared to meet the banks due diligence costs.
When choosing a consultant / broker to find the most appropriate funder for your project, always ask for a clear statement in advance of preparatory work covering fees, costs and who pays them and when, etc. If you think it’s unreasonable, it probably is and, in which case, withdraw from further discussion.
Funding is important to the very survival of developers, so take the time to prepare your documentation when asked. Usually, a consultant / broker will provide an Executive Summary to be completed by the applicant. Remember this very simple document is meant to remain simple to ensure clarity and ease of understanding for an underwriter - or anyone else reviewing its contents.
Forget about flowery sales language.
Concentrate upon hard facts and figures but with less emphasis on profit margins. Though important, previous success and an indication of established assets feature higher on the list of deciding factors than what your company’s ROI might be.
Of course, if the developer can raise say, US $5M or more, it is time to look in a different direction and make money off-site, in advance, quickly and safely by taking advantage of methods only available to those with larger funds.
Sadly, it is neither permitted nor wise to discuss these issues in print. We don’t want a plethora of internet scammers attempting to cheat their way to victory on the back of this or any other article covering funding. There are already far too many impoverished souls exploiting developers made vulnerable through market circumstance.
Meantime, the type of funding to which I refer carries absolutely no upfront fees.
Lawyers and Financial Advisers are entirely welcome and all contracts are signed within the HQ of the ‘AAA’ financial institutions involved. Moreover, all transfer of funds takes place directly - bank-to-bank - in either direction and at all times throughout the transaction.
Time to ‘digress-to-progress’...
Another route for perhaps those who muttered ‘No’ is to accept a Joint Venture partner.
Unquestionably they’ll want as much of the profit as can be negotiated. Though many developers begin by flatly rejecting this option, after wasted months, many accept the notion that, without this kind of support, their project is destined the way of all flesh.
I would strongly urge anyone in this situation to give ‘serious’ thought to their proposals. Even if they do take the bulk of the profits on this occasion, it will most likely leave each developer better placed to gain the seed funds they lacked for their current project for the next time round.
In today’s market, investor's telephones are hot with calls from numerous sources all praising this or that project. To go it alone is rarely an intelligent option when negotiating with a seasoned J.V partner.
Once again, leave it to someone who’s negotiated terms for these types of projects before. A good consultant / broker is used to working with different bands of investor group.
And finally; if you are also experiencing difficulty in raising preferential mortgage funding for your home buyers, well, once again, for those with sufficient capital in support, a simple and highly rewarding method exists to provide a magnificent mortgage solution for your clientele.