In the current economic environment, with developers seeking finance, it is little wonder people are worried about what lies ahead. For developers, the relentless commentary on the highest rates of inflation in decades paints a particularly concerning outlook.
In recent years, market buoyancy provided a strong tailwind for many projects that made profitable outcomes far more tenable than the present climate reasonably allows. However, with the prevailing macroeconomic backdrop, financial lenders are going to be much more discerning and conservative in their evaluation and approval of funding requests.
As a result, developers need to ensure they are taking every step possible to maximise their chances of success, by providing as much information as they can to lenders. This will be critical to help afford certainty that approvals can be secured in a timely manner so that rejections or even delays do not have a detrimental effect on investment returns.
While the various particulars of a development project always provide lending partners with pertinent information, funders will now be expressly focused on vital details such as site selection. The need to make astute judgments on project locations, coupled with intelligent decisions in regard to construction plans, along with clear objectives on servicing and exiting loan arrangements, are now more essential than ever.
In addition to establishing and substantiating how a project will be undertaken, funders will also be more focused on a developer’s ability to secure pre-sales. As these are not only crucial in confirming market acceptance of a project and mitigating against market movements but providing assurance to lenders for an exit on completion.
Experienced developers will also benefit from supplying a comprehensive history and evidence of previous successful projects. Demonstrating a strong record of cash flow management, as well as presenting advantageous information such as details on professional and highly accomplished supporting teams will be especially beneficial. With challenges around finding and hiring tradespeople, lending partners will be far more cognisant of specific details that may lead to delays or impact a developer’s capacity to deliver a profitable outcome.
Ultimately, private lenders will want to be fully informed on the merits of each individual project, making it critical to supply any information that will help support the credibility of both the application and the actual development project being undertaken.
With ongoing economic challenges resulting in so many factors affecting the potential outcome of securing funding for a project, the value for busy developers in obtaining specialist advice and assistance from a finance broker is only limited by the prospective profits on a successful deal.
A broker like UCapital is instrumental in helping effectively prepare and achieve the best possible funding outcomes for developers seeking finance, that in turn support the highest returns on investments.