How does joint venture development finance work?
The loan deal starts with a joint venture finance agreement between you and the lender. The agreement has all the terms and conditions. The most important of these conditions is how much percentage of profit you will provide to the lender after the project completion. This percentage is usually 40% to 50% of overall profit.
Your exit strategy to pay off funds obtained through joint venture property development finance will be mentioned in the documents. This is your repayment strategy to pay off the loan. It is vital to ensure the finance company about the timely payment. Some lenders charge interest along with profit, but this does not happen in every lender's case. It depends on the individual project and the financial condition of the borrower.
Joint Venture Finance Options
- Debt finance
- Internal finance
- Equity finance
- Hybrid finance
- External finance
If the lender is charging you interest, it is mostly rolled up to ensure that you do not pay the interest for the entire duration. Otherwise, the expense will be an unnecessary monthly burden. We can take care of that part as your joint venture finance broker, as we always work in the favour of our customers.
The loan company gives money according to different stages of the project. Every project is divided into different durations like 12 months, 24 months and 36 months. As soon as this duration is completed, the lender releases the money accordingly. When the project is completed, you will make your sale and will give the decided profit to your joint venture finance company. Once the payment is over, you are free of debt.
Benefits of Joint Venture Development finance
In many ways, joint venture finance proves itself to be a highly profitable business loan solution. As an unconventional choice, joint venture finance supports property developers and dealers in starting new projects and expanding of business. It has some other benefits as well, which you can read below:
Get huge funds conveniently - Through joint venture development finance, you can get a large loan amount for any big project. Not only this, but funds are also easily available to run more than one project. This facility gives a reliable option for the speedy progress of your real-estate businesses. This is why joint venture property development finance options are very popular across the UK. Are you planning to start a new project? Contact Thebusinessfunds, and we will shortlist the best joint venture financing investors for your next big deal.
100% funding is possible - Through this option, you can obtain funds equivalent to 100% cost of a project. This feature makes joint venture finance a unique option. For this reason, it is also known as the 100% joint venture financing. Without any deposit, you obtain money equal to the cost of one or more projects. No other loan option provides this flexibility. They don’t allow you to borrow more than 80% or 85% funds of the overall cost. Due to this reason, whenever you need a hefty amount, rely on joint venture finance for property development. Your next real estate opportunity is just a few clicks away.
Take benefit of experience and expertise - Joint venture financing connects you with real estate industry experts. When experienced professionals invest in your project, you get insights into property development, marketing, construction and sales. Collaborating with knowledgeable people gives you access to best practices in property development. Your networking improves, which helps ensure the success of a project. With better industry insights, you can plan a progressive approach not only for your current project but also for your future projects. Every time you choose joint venture finance, you meet new people with a broader vision in the industry.
Boost your credibility - Due to JV financing, your company's name gets associated with established investors. This increases the credibility of your business in the eyes of banks, buyers and investors. Your achievements are easily visible. This, in turn, increases the chances of getting better investors in the future. Also, due to joint venture property development finance, you get a strong market presence and favourable terms. Obtaining additional funding for your future projects becomes simpler. As soon as you complete a project, you automatically start getting offers from the new investors for the next projects.
Speedy completion of project - In joint venture financing, money is released according to the different stages of the project. In such a situation, the property developer and investors both try to ensure that the project starts on time and is completed on time. Every initiative becomes a collective effort, due to which any project gets accomplished under the deadline. Not only the business owner but also the investors believe that there should be no delay. Joint venture finance brings everyone together as the profit and loss of all included in the work are linked together.