Finance Your Construction Project

Top 5 Ways to Finance Your Construction Project

This article will provide 5 top tips to fund or finance your construction project. With real estate and construction still providing a terrific way to diversify your financial investments and simply improve your current living or office space, it is important to have a clear understanding of the tips for beneficial finance. Here are 5 simple tips that you can use to access the best finance for construction.

1. Look for Partnerships

Finance Your Construction Project

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If it is a sizable construction project that you are undertaking, then you need to start by looking for the right investment and/or building partners. Whether you own the land or have purchased an old, dilapidated building that you are renovating, having a partner immediately lessens the risk.

If you are able to source professional partners, you will be a step ahead of your competition. Determine what you are looking for beyond just finance and then secure these skills in the form of a partnership for the entire development or construction project. This way you all have a stake in the success and are likely to work with this in mind.

2. Traditional Finance

Look to the banks as well as building/construction and development-specific lenders. These are considered the traditional forms of finance and funding for large-scale construction and development projects. Examine and compare the current interest rates and repayment periods as the defining selection criteria as well as the time to finalize the finance. In a fast-moving sector such as this, if you don’t have the finance ready in time then someone else will and there goes your opportunity.

3. Innovative Finance Solutions

Finance Your Construction Project

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Some of the most innovative private lenders will be able to provide the finance that you need in a fraction of the time as those aforementioned. Thus, dealing with any issues of tight response times and the ability to make faster purchases. Furthermore, if such finance is from local hard money lenders, they will know the local market much better and thus be in a position to understand as well as advise on your specific business proposition.

4. Save and Wait

Finance Your Construction Project

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Saving money may not be everyone’s cup of tea. However, if you can’t access the traditional finance or the alternative private money lenders mentioned above, then you will simply have to save your money and bide your time to find and afford the right land, or property at the right time. Look for the best possible interest rates and a savings vehicle that is suited to the end goal of the construction project intended. This may also lead to a unique way of building, as you build when you can as the money becomes available.

5. Start Smaller

Finance Your Construction Project

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The less finance you need the more likely you are to get it. Thus, it is advised to simply plan to do what you can afford at the moment and if this means one flat at a time then so be it. Start small and then use the completed property or construction as collateral to secure a further mortgage or loan.

General Tips for Any of the Above

Finance Your Construction Project

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Regardless of the type of finance that you use there are certain general provisos that you MUST follow: 

Read the Small Print

Yes, it’s clichéd and we all think that it’ll never happen to us but read ALL the fine print. You need to know what the finance is going to cost you in the long run and then work out if this is worth it or not. When are repayments expected to start and how much will these be? These are just a few of the questions you need answering and that must be contained in the fine print.

Don’t Rush

It’s possibly one of the trickiest aspects to get right when you are planning and implementing a construction project. There are time constraints and pressures that all projects undergo, but there is no need to rush. Unorganized haste will simply lead to errors and a project whose foundations may be shaky, it’s a risk not worth taking. Slow and steady must be the way to go.

Read Reviews and Recommendations

Before you sign on any dotted lines you need to be sure that this is the finance for your specific construction needs. Read reviews of other customers and clients and see what it is they have to say about the money that you have chosen to use.

These are the best-accepted ways to find the finance that you will need for a construction project and there is no time like the present to start, especially considering the fact that the housing and real estate market is on the up.