A property which has been financed using a LTGDV (Loan to Gross Development Value) calculation is one where the amount of money lent is calculated against the predicted market value of the property once complete. This is often cited in terms of a ratio.
If the development is considered large, then the funding will usually be released in tranches ie at the start, after phase 1, after the completion of phase 2 and at the end of the whole development project. This is provided the development remains on schedule and is in keeping with the original development plans. All this is checked by an independent surveyor who will monitor the work on a continual basis.
Typical LTGDV for Development Finance
Loans for large scale property developments tend to be in the range of millions of pounds. Conversions and other builds can be anything from £500,000 to £1 million. In other words, LTGDV finance isn’t something you’d consider for a simple refurbishment project where you’d be looking to borrow anything from £40,000 to £60,000. In those circumstances you would be looking for a bridging loan, peer to peer or straight-forward buy to let funding – both of which would be calculated on a Loan to Value scale (LTV).
And, because the work on the property is large-scale, it means the loan amount could last anything from two to three years.
A typical loan would be around 70% of the LTGDV.
What Funding can you get as a Sourced Franchisee
At Sourced, you get access to our in-house funding facility, which can lend you up to 100% of the finance you need to go and develop your property project. This covers both the purchase and the works’ costs.
Why we are able to do that for our franchisees is because the Sourced Capital arm of our operation involves a Peer to Peer Lending platform. We use this to bring on investors into projects, by offering them the opportunity to invest in development projects like your own. In return, they receive typical returns of 10%-12% per annum.
Projects Already Funded by Sourced Capital
Last year, we funded a number of property development projects, totalling around £10 million. These included £647,000 for a commercial conversion in Hull, £1,103,000 for a residential development in Clacton on Sea and £367,500 for a residential New Build in the Capital.
Join Sourced to Get Funding
To find out more about the Sourced Network franchise opportunity, as well as how you can access the finance, download our prospectus today. In it you’ll find the whole franchise business model explained, together with what we offer and how you can get onboard too.
We may be funding your project next!
Author
Chris Kirkwood
