Most clients and enquiries are looking to borrow, at least, the build cost. All of it, 100% of it.
Being able to find promises of providing that are not too difficult to find. The problem that clients may find is that might not quite mean what they mean.
For most they think it means if they put in the plot, or perhaps building, they will be given the build cost, from the off, to get the work done. We think that is the best way to do it, so that is what we do. However, a lot of the time others will give the money in arrears.
This means that not only does the developer need to put in the build plot, which has a value ( and in all likelihood a significant one ), but they also need further funds to get the work moving. They wonder why they cannot use the value in the site to kick it all off.
Richmond will use that value and give an advanced payment, based on the current market value of the site. For us, the site is sufficient security for the loan, and in the vast majority of cases we do not ask for additional security.
As the build progresses there can be other issues around the value of the site and further stage payments. You might be able to carry the first stage but what happens if a further stage payment is withheld? We have experience in dealing with clients who were part way through the project, relying on that next stage payment to be told that they had to use their own capital again, before it is released.
Some lenders will send in a valuer prior to the draw downs so the continuing support of the project is down to that person’s opinion of the current value. So, if the site is not worth ‘X’ amount the next draw down can be delayed. At this point the developer then needs to use their own cash to continue the build or the project just grinds to a halt and brings with it the various problems and issues.
With us this is not an issue. We send out an Engineer to the site to check on progress, which has a couple of benefits. For one thing we are not concerned with the interim value of the site. We know that the real value of the site is once it is built out, we want to make sure you get there.
For those that are not builders themselves the engineer can confirm that their contractor is carrying out work in accordance with planning, building regulations and to the required standard. Problems can be uncovered before they become more serious and there is comfort in knowing the project is progressing properly.
As long as the work is being done correctly, we will continue to release the stage payments allowing you to get on with the work. There is no need to worry about valuations or whether you can make payments to your team on time.
We “allow you to concentrate fully on the build and getting it finished and sold as quickly as possible”.
To talk to us about your next project, pick up the phone and let’s get to work.