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  • Property-a-holics

    JV/Funding

    Hi,

    Some advice/suggestions please.

    I have a colleague who is looking to purchase and build out in Dorset.

    They have owned a roofing company for over 20 years, and carry out work for many large organisations, including the council and housing charities. They have very good relationships with planning, architects, estate agents etc gained over the 20yrs working in the Bournemouth and Poole area.

    They are now looking for either a JV partner or bridging. Would a JV partner cover the purchase cost (plots or existing bungalow) and also fund the build/renovation costs, with a first charge,  if my colleague did the build themselves (they can cover most trades). Then split profits at the end.

    Is this a feasible proposal for a JV partner? or is it better to find bridging finance?

    Any suggestions gratefully received.

    Many Thanks

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    If you want the JV to cover the cost of the plot and the build/ renovation costs then your going to need a pretty high % profit on the site, because otherwise the JV will simply do another project on their own. Why would they commit to 50% of your profit unless it was more than 100% of their own. 

    However, if there is a high uplift on the site (i.e more than 30% on a one year project) then you're better looking at development finance at around 12-15%, but read the small print, thoroughly. 

    All this is assuming you can't finance this through remortgaging etc.

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    Hi, I thought that maybe investors with funds to use, but no time to carry out the development themselves, would be the potential investor?

    My colleague would bring experience to the deal, his contacts, as well as sourcing the projects.

    Would development finance work on the GDV? Could you bridge plot and build costs?

    Many Thanks


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