Top Ten Tips for development success

Top Ten Tips for development success

Specialist development finance provider Regentsmead gives us its top ten tips for trying to secure finance for your blossoming project.

Specialist development finance provider Regentsmead gives us its top ten tips for trying to secure finance for your blossoming project...

Tip 1: Fill in the missing links

Brokers may be missing out on a whole host of possible development deals, simply because they don’t have the proper links in place.

Every property developer, whether they be new to the industry or already well established, will need to speak to a solicitor, an accountant, a surveyor or an architect. It is these professionals who may well be the first to know when the developer needs short-term funds.

Have a brainstorm of the local professionals you know, from solicitors to architects and make sure they all understand how you can help their clients. If necessary mail shot the local relevant professionals as this could well lead to brokers forging important new contacts. It is vital for brokers to create an extensive local business network to maximise the chances of getting in quality leads.

Once these contact links are in place, you are more likely to be able to identify potential business opportunities.

Tip 2: Put an advert in the locals

Let’s face it ... even in this cyber mad world, most people lick to have a flick through their local newspaper and most check out the ad pages to see what’s on offer. This is even more applicable for the would-be developer, who loves to check out the property and furnishings ad.

By putting an ad in your local newsletter you’re sure to attract some attention from the right type of people: those who need some extra funds for their project.

Putting out an advert is cheap and easy to do, it’s also a self-marketing medium that very few brokers ever think to use.

Tip 3: Speak to and canvass local builders on any developments within close proximity

There are many developers out there who are reluctantly using their own funds for a scheme because they are unaware that other funding options are available. Either that or they may have land they can not develop because they are unaware they can actually borrow funds to develop them.

If you speak to local builders, they will soon let you know where this is happening. Talk to them on sites they are developing, You may then be able to explain to the developer that there are lenders out there who are willing to assist. They will no doubt be more than happy to pursue a funding option that means they don’t have to invest from their own pocket.

Get a list of local builders and developers and mail shot them to see if they need funding.

You may well have substantial amounts of business on your doorstep that you are unaware of!

Tip 4: Speak to local land agents

If there’s one thing we know about agents, it’s that they are always looking to increase their income. With a lack of funds for development in the market there will be many frustrated agents who have potential buyers of sites but can not get the transaction through due to lack of funding.

This may be a fantastic opportunity for you to strike up new relationships with agents in your area, you need to go to see them and explain you have an arrangement with a principal lender and that you might be the answer to their problems. They can offer sites for sale with a pre-agreed funding package in place which will make all the difference in terms of their ability to sell a site. The agent will be delighted as not only will he earn a fee from selling the land but he can earn a fee for introducing the finance as well.

You will find your local land agents far more receptive to this type of situation than they would have been 3-4 years ago when funding was readily available and they would not have given any thought to how the finance was structured.

Approach your local agents and let them know which types of cases you may be able to help with and you might find this could be an excellent additional income stream for you.

Tip 5: Speak to Your local banks

The High Street is generally shut to the small/medium developers at present. However banks want to be seen to be lending and do not like to say they are not. Most smaller cases cannot be funded by them because they do not meet the bank’s rigid criteria.

Banks want to be able to give positive solutions to their customers rather than just turning them down, there are therefore excellent opportunities in this market to get referrals from banks which in the past you would never have got. Find out your local business centres and make appointments to see them. Explain you have unique access to development funding and rather than them just turning down their customers if they refer them to you will not only be able to provide the funding for them but you can pay the bank a fee as well. Also it will enhance their reputation with their clients as they are providing a positive solution rather than just saying no!

Every negative has a positive, the fact that the banks are not generally lending to the SME market is a negative point but it leads to new opportunities for brokers to tap into new areas of business. Good luck and do not take no for an answer!

Tip 6: Look at joining a local business club

There are numerous local groups of business associates which meet weekly/monthly. You should be able to find out about these from local business people you are in touch with. Start with professional contacts such as solicitors and surveyors as they are very likely to belong to existing groups. You may also find these groups advertised in local papers or in specialist magazines.

The meetings will usually follow a set format and there will often be a referrals part of the meeting where members are encouraged to refer business to other members of the group. Going to a meeting will also hopefully lead to you finding out about other groups which the members belong to, go to as many of these as you have time for as they are an inexpensive way of networking which is one of the fundamental keys to your success.

Look into going along to a couple of the meetings and getting to know the local businessmen as this is a great opportunity to network and explain how you can help clients.

Tip 7: Once you have identified a prospective client, make sure you have the basic details of the project:

a. What is the site/property purchase?
b. What are the construction costs?
c. What is the borrower looking to borrow based on purchase/construction.
d. What is there planning for?
e. What is the exit strategy?
f. How much working capital is available?
g. What experience does the borrower have?

All you need is these basic details, there is no point spending hours on packaging if the basic details do not meet the current lending criteria in the market. Get the basic details across to an active lender and ask for an in principle approval before you start to investigate further details and spend time.

Ideally find a lender who will take the deal over from you at this point to limit the time you have to spend and very importantly try to ensure the lender collects your fee for you at offer stage so you do not have to chase for your fee or wait to receive it until funds are drawn down.

Tip 8: Create a network of sub-brokers:

Now that you have an established relationship with an active lender you can use this to get business from other brokers who may not have this personal relationship you have.

You want to become a master broker which means you will have many brokers (or sub-brokers) feeding deals into you which you can then filter and put to the lender. Canvas the local IFA's or commercial brokers and advise them of the relationship you have with an active lender.

By becoming a master broker you will be earning fees from placing your own business plus business from other brokers who will utilise your relationship and set up to earn fees for themselves.

Having a nework of sub-brokers can be an excellent way of generating regular and recurring income.

Tip 9: Presenting the information:

Once you have identified your borrower and target lender your job is to ensure the deal gets approved as quickly as possible, this way you will ensure you get paid as quickly as possible!

Do not spend hours packaging a deal and providing information that you might think is relevant but the lender might not want or need. Find out exactly what your lender wants and then provide the information accordingly. Providing unnecessary, incomplete or worst incorrect information will undoubtedly lead to delays or even fundable cases being refused.

Some lenders do require complete packaging but as an example at Regentsmead we just need the very basic outline of a proposed case and we then take the whole matter over making life as simple as possible for the introducer.

Do your homework on the lender and their requirements to ensure you provide what is required and in the correct format in order that you can then expect a quick response and a quick processing time. Listen to your lender as they will in effect be paying your fee and ensure that their requirements are met, providing of course they are reasonable and the do actually want to be lending!

Tip 10: Keep in contact with your clients

Now that you have presented a case to a lender and had it accepted you need to keep in contact with both the client and the lender to see how the case is progressing and equally importantly to see what future business may arise.

Particularly the client in say six to nine months after the project has started will be looking for new opportunities and you want to be in contact with him as this happens. Create and maintain a simple database which you should link to your calendar to ensure you are following clients up at the right time.

You have cultivated an important relationship with both the lender and your client and you should maintain regular contact to ensure your relationships are enhanced as much as possible.

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