Property Development Finance Guide

CPC was founded by David Lovato in 2015 to de-risk our clients developments by getting projects funded in the non-bank lending marketplace.

Crowd Property Capital are development finance experts.

We help property developers – ranging from small-scale to larger professional developers – secure the finance they need to run profitable development projects.

CPC know that each client and development project are different. So we take the time to understand your unique situation before arranging a funding package designed to solve your specific problem.

What is development finance?

Development finance is the money that funds a property development project.

The finance might come entirely from one lender or it might be a package made up of contributions from several lenders.

That money combined with the developer’s own funds can then be used to purchase land, and assist with project costs including your consultant and construction costs for new builds or renovations.

Typical developer finance is arranged by CPC for properties such as:

Townhouse projects
Apartment projects
Land subdivisions
Commercial or Industrial projects

How does a development finance loan work?

A development finance loan is a loan involving a property … but it differs from a regular home loan in two big ways.

First, while home loans generally last for decades, property development loans are often short-term finance packages that have terms ranging from 6-24 months.

Second, while home loans are serviced i.e principal and interest repaid monthly, property development loans do not require any monthly repayments as the lender allows for the interest to be provisioned (capitalised) within the loan funding table.

However, property development funding and home loans do have one big thing in common – the amount of money a lender is willing to lend is based on a professional valuation of the existing land and proposed property. Because the lender needs to be confident that if the borrower defaults at any time during the loan term, it could recoup its money if it had to sell the property.

Why it’s vital to choose the right development finance lender

Just as each borrower and project are unique, so is each lender. Different lenders prefer to work with different types of borrowers and finance different types of projects. They also assess loan applications using different criteria.

That’s another reason why it’s a good idea to get help from an experienced development finance broker – because they can match you with lenders that want to work with a borrower just like you and finance a project just like yours.

As a result, CPC partner with a diverse panel of lenders, which includes:

Banks
Non-bank lenders
High-net-worth individuals
Family offices
Managed funds

Banks can often be quite rigid with their lending criteria, which is why CPC often favours more flexible alternative finance sources.

What are bridging loans?

A bridging loan for property development is a short-term finance solution that allows you to start work on a new property development project before selling an existing property.

Once you’ve sold the existing property, you use the sale proceeds to repay the bridging loan.

Bridging loans tend to be interest-only and to have higher interest rates than regular property development loans. But they’re also more flexible in that:

They’re easier to get and generally only short term
The loan period can be tailored to your unique circumstances
The loan period can potentially be extended if needed (subject to certain conditions)

What types of development finance loans are available?

There are three types of property development funding:

Debt – this is the standard type of loan, whereby you repay the entire loan plus interest (either fixed or variable)
Equity – with this type of loan, you also have to surrender a stake in your development project and your lender becomes a shareholder entitled to project profits. They share in any upside or downside based on their agreed shareholding percentage.
Preferred equity – this is similar to an equity loan, but the principal repayment and returns to the lender are defined and agreed upon upfront. You also have to give your lender partner certain equity privileges that you don’t enjoy, such as being paid profits first (if the project succeeds) and recouping debts first (if the project fails)

Need help financing your development project?

As you’ve probably gathered, securing a development finance loan is more complicated and time-consuming than securing a regular home loan.

That’s why it’s a good idea to get help from an experienced development finance broker.

To discuss your commercial development finance options, book a free strategy session with David Lovato.

Phone: 0434 932 634
Email: [email protected]

Get Finance

“CPC is a professional outfit, Dave displays all the top characteristics of a quality finance broker. Highly effective communication and prompt provision of requested information greatly assists in the loan assessment process benefiting both the client and the lender. His end to end knowledge of the loan application and settlement process is invaluable when navigating through sometimes complex and time sensitive scenarios”

Greg Turner - Trilogy Funds ManagementLender Testimonial

“CPC’s grounding in development management sets them apart from other finance brokers in the construction lending space. Initial assessment of project risks and deep understanding of their developer clients needs allows Solido to quickly assess his deals. Dave stays involved in the projects after initial settlement which is invaluable in assisting both developer and lender on the way through and at loan exit.”

Beau Quarry - Solido Capital Lender Testimonial

“David is highly responsive, always professional, kind and patient. We were impressed with the detail and updates provided by David throughout the lending process. David has shown a high degree of understanding in the structuring and brainstorming of an optimal funding solution, finding a suitable solution for both the capital provider, and the client”

Lender TestimonialSouth Yarra VIC

Frequently asked questions

What are the aims of development finance?

The aims of development finance are to give a property developer the funds they need to build a project and to get the highest and best use out of the land.

The developer may do that by constructing multiple homes, or multiple office buildings, or a mixed-use project that incorporates both residential and commercial construction.

How are development projects financed?

Development projects are financed by lenders who grant mortgages or property development loans.

These lenders can be banks, non-bank lenders, high-net-worth individuals, family offices, self-managed superannuation funds, managed investment funds or corporations.

Finance packages are often secured by finance brokers like CPC.

What is development finance Australia?

Development finance in Australia is the money that funds a development project.

Australia also has specialist finance brokers that have the experience and expertise to help developers get finance, like Crowd Property Capital.

What is needed for development finance?

To apply for development finance, a developer needs to provide documentation about their financial status and experience, and details about the development, like cost projections and expected profits.

How easy is it to get development finance?

Getting a property development loan can be easy if you have a good track record of past developments and speak to the right finance broker.

A finance broker that deals with private lenders may be able to help you get finance when banks turn you down.

Legal & Compliance

Crowd Property Capital Pty Ltd (CPC)

A registered company under the Corporations Act 2001, ACN 600 539 544

An accredited member of the Finance Brokers Association of Australia (FBAA) Member No M-352808

A licensed Corporation under the Property, Stock and Business Act 2002, Corporation License No. 10065109.

A member of the Real Estate Institute of NSW (REINSW)

David Lovato (Sole Director) holds a Certificate IV in Finance and Mortgage Broking and Property Services (Real Estate Agents License No 201 604 57 )