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How to get Property Development funding in place

How to get your project out of the ground

It’s well documented how challenging development funding has become with banks, in light of tightening of lending policy and I wanted to share my experiences on how you can still obtain funding where other developers can’t.


Considering obtaining investors in form of equity or set rate of return is a great way to inject needed funds to meet the lenders requirement.

Generally, banks lend up to a limited percentage of total development cost (TDC) or gross realisation value (GRV). Depending on the project specifically, it could be either. So, if the lender has reduced their maximum lending ratio by 5-10%, seeking cash from investors to cover the shortfall quickly can bridge the gap the banks created and ensure you can have your loan funded by a mainstream lender.

Importantly, this means the interest rate and lender fees are reasonable and won’t reduce your development return.

Private Funders

Many private funders, family offices and other forms of funding have entered the market in a big way. They have always been around but not as popular. Their funding terms and policies are generally more favourable. For example, minimal or no pre-sales, and they often offer higher TDC or GRV lending ratios, but with the added flexibility, their rates and fees will come at a much higher cost.

When you are seeking a solution to keep your business moving forward, they do offer a good solution and it allows developers to get their project off the ground quicker, coupled with much more flexible lending terms compared to banks.

Consider smaller developments and do more!

I know this sounds blatantly obvious, but some developers believe bigger is better, when it should all relate to the development return and minimising risk. When you consider investors or private funders, your margin will reduce and you won’t make as much profit, so an alternative to both of those options is to consider smaller developments, and possibly do more developments which would spread your risk across multiple development projects.

Bigger isn’t always better either, understanding your numbers, the pro’s and cons of all of your funding options, and how that relates to your profit is what I see makes or breaks developers. I’ve seen plenty come and go, minimising risks and not overexposing yourself is the single biggest issue developers have.

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