Trying to secure investment for your property investment plans can be one of the hardest tasks property developers have to face. It can also be one of the easiest. Some property developers secure investments in their very first meetings, whereas others can spend months trying to convince investors to buy into their idea. Whether or not a property developer places their faith, and their money, in your ideas depends on a variety of factors and circumstances; read on to find out what they are.
Experience
This one’s relatively simple. A property investor is much more likely to part with their cash if you’ve got a huge portfolio of successful projects and renovations to hand. Seeing proof of your efforts in the past will give your investors a priceless sense of security, and instil them with faith that whatever they give you will find it’s way back to them, with profit.
In contrast, you may find it very difficult to secure investment in your property development plans if this is your first project. Property development is a complicated and risky business, and many investors will find the prospect of parting with their cash to a newcomer too low on the risk/reward scale.
Timescales
Another big factor which can make or break your pitch to investors is the timescale of your project. Some investors are looking for quick wins, and simply won’t like the idea of investing their funds if they aren’t likely to see a return for a prolonged number of years.
You can mitigate this by choosing contractors you know are going to get the job done quickly and choosing properties which won’t take as long to renovate, slashing the timescale of your project and increasing your attractiveness to investors. After you’ve completed a few successful developments and rewarded your investors for their funds, they may feel much more secure in lending you money for long-term developments.
Location
Who’s going to want to lend you money to develop property in an unpopular area? You’re much more likely to secure investment if you’re developing property in the south of France or Barcelona as opposed to a tiny, rainy village in the middle of nowhere.
Location can have a massive impact on the timescale of your development and, consequently, the chance of you securing investment. As such, picking an attractive location for your developments is essential in selling your ideas to investors, especially if you’re not the most experienced developer on the market.
If you’re looking to stay on top of the latest business news and find out how other property developers are doing, check out our entrepreneurship daily page.