Hi all,
Very new to this forum but I was hoping to get any useful advice I could on obtaining private finance for a development project.
I have very few details at the moment as I am in the VERY EARLY stages of this, just basically doing a feasibility study on a business venture to buy land, build townhouses and sell. Im employed full time but do not have the savings available for deposits/loan servicing.
So what im looking at is the possibility of private financing to fund a deposit/debt servicing costs with a very healthy return for the investor when the project competes and the properties have been sold. It would require very little effort on behalf of the investor.
Im an accountant(CPA) and business studies teacher (career change
) so Im confident that the busiuness model has legs, but the funding of the debt servicing (and deposit) is what is prohibiting.Most mention of private financing I see is relating to speculative or 'innovative' business ventures, and I cannot seem to find anything near what Im looking for. I understand that this is considered somewhat high risk as there is no proven track record, but the basic principles are sound and my background is in business operation and finance.
So, to get to the point – Where could I find such investors? I really am at a loss as to where to find all this money that's apparently available for investment.
Thanks in advance………
Brother
Welcome to the forum and I hope you enjoy your time with us.
I assure you there is plenty of money out there for investment just all boils down to the level of risk v return.
Professsional developers are paying anywhere upto 20% for private funds to complete their projects and they do it for a living so you would need to offering something showing either an excellent return or with reduced risk to attract the right investor.
Then of course you come to funding the seed debt.
Depending on the size of the project most lenders are going to want a combination of experience, pre-sales and good asset base.
If you can combine all 3 then trust me there are plenty of investors out there.
I have literally dozens of investors on my books who we put into projects either we do ourselves or into other projects that show good returns and have experienced developers.
Dont need to tell you being a CPA but make sure you comply with the Managed Investment Act when you prepare your prospectus or Memo of Understanding and I am sure that if the project is right their will be investors there to back it.
Richard Taylor | Australia's leading private lender
Thanks for the info, and prompt too!
I'm seeing this as a stepping stone, a way of building a base to work more profitable projects from, so I’m looking at smaller returns for me and larger returns for the risky money contributed by others. Hopefully no one will rip me apart (as I said, I haven’t done any detailed costings and forecasts) but I think a return closer to 30% is possible
So it seems you have helped answer one of my questions – You say you have dozens of investors who invest in projects, so is that where I find private funding, from mortgage and finance brokers?
Also, I’m not familiar with the Managed Investment Act, but I'll look into it. My accounting background is in a commercial environment, not in business advisory/consulting so I usually understand these things quite simply, I just am at a loss about what to know and where to find it.
Yes both from mortgage broking, financial planning and 14 years of doing my own developments.
Richard Taylor | Australia's leading private lender
Great, this sounds a bit more promising.
So if I put together a solid business plan & then start to approach Finance/Mortgage brokers like yourself then I should be able to get a better idea if I'm in the ballpark?
) so Im confident that the busiuness model has legs, but the funding of the debt servicing (and deposit) is what is prohibiting.
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