A married couple both post graduates in construction disciplines set out in 2013 to create a residential property development business aiming to build high quality homes. They formed a new SPV ( Special Purpose Vehicle ).
Frustrated by over a year of negotiations with two High Street Banks without success, they approached Genie Lending for help.
A parcel of land had been acquired for £20,000 using their savings and planning consent obtained for a pair of 3 bedroomed semi detached houses as the company’s maiden project. With a track record behind the couple of small scale purchases and refurbishments, they had expected the banks to assist with the build costs of £150,000 even though they were first time developers. They were wrong. A main well established contractor had been appointed and modest margins and conservative profits were forecast. The company engaged with its banks for the project finance, but this highly qualified, determined, financially prudent couple could not get a finance deal approved.
Genie Lending’s Business Finance Manager, a specialist in development funding, was able to quickly grasp the key issues within the deal, namely the lack of experience, the location in Scotland and the modest profit expectation and quickly identify a specialist development lender who, within a week, was on site meeting the clients and within 4 days had issued a formal finance offer for the £150,000 needed and incorporated 9 months of interest charges to be rolled up, this being repaid when the finished houses have been sold at a GDV of £250,000.
The interest rate may not have matched the High Street Banks, but stage payments supported by QS reports and interest roll up means that managed robustly and in conjunction with the specialist development finance lender, the clients can still turn an adequate level of profit for investment in the next project.
The ground will be broken early in 2015 and the company aims to have the development completed before the end of the summer.