Where would we be without our short term lenders in what must the most difficult market place ever for development finance. The high street lenders have all but given up even mentioning the word as it seems to bring back some very horrible memories of abandoned building sites and unsold units, with massive write offs.
For those looking for commercial finance on commercial property
No sympathy from this quarter as it was sheer greed on behalf of the banks that drove them to throw the rule book and common sense out of the board room window as they looked for growth and dare I say it the big fat bonus.
The gap in the market has been filled partially by the specialist lenders who are charging some eye watering rates, but this does have the positive effect of focusing the mind and making sure that we get our sums right. The build time and the costs have to be screwed down to a minimum and an exit route has to be defined as the short term guys expect the loan to be taken out on completion of the site following the topping out ceremony.
If you are relying on sales to do the take out it will not always receive a warm welcome, renting out the units on ASTs provides a good income stream and some of the high street lenders will lend on this type of development as long as they are happy with the amount of the units and the demand for rental in the area.
If you are using short term finance make sure that you do your sums and watch for the exit penalty based on the GDV it can make a big hole in the profit margin.