Profit Share Model
100% funding profit share model in which we would work with the developer in a Joint Venture partnership. It is ideal for developers who have a site they want to purchase and but don’t have the development cash to do so.
100% Funding – although we only ask the client to pay for the legal undertaking and the valuation fees which is then refunded on completion.
Overall Gross Development Value £2 – £15 million.
It must be New-Build or Permitted Development Rights conversions. We look at multi-units sites, primarily residential but if there is a small commercial element, that’s fine.
Planning permission must be in place
Timeframe 6-24 months
Profits 60/40 – 60 goes to the developer
We look for higher number of units with lower cost per unit – We say max £700k value per unit for Home Counties i.e. London and surrey, surrounding the M25
£400k outside of the Home Counties i.e. Dorset, Hampshire and further down – we could go up to 500K but it depends on the project.
Smaller houses/easy to shift units are preferable in the sort of developments we look at. We do not tend to look at large lumps.
25% Margin on the overall value – client would only need to put money in if margins are tight or we can increase the profit i.e. 50% to you and 50% to us – all depends on when we work out the calculations from our end
Interest is charged 12-13%pa on the finance once it is drawn down (Example: 12% per year it will more or less be 1% a month once in drawn down)
We ask for an unsecured capped personal guarantee (home) and that’s capped at £500k
We work within England and Wales
We have an employer’s agent/monitoring surveyor, Edward Cooper Young who monitor all of our projects and they will authorise all of the drawdowns, visiting the site on a monthly basis to monitor the progress, producing monthly updates to us
Cash flows and Development appraisals would be great when needed to send over more information
The first step is to send us the development appraisal and cash flow for the project along with the planning decision notice and any other useful information you have including sales brochures, cv etc.
Once we have looked at the numbers, we can advise fairly quickly if it will work. If so, we then require completion of our application form which you will then need to return to us. We can then begin to draw up our formal Heads of terms for you.
Valuations will need to be carried out on the site prior to purchase along with our full legal due diligence carried out by our solicitors and the construction due diligence carried out by our employers agent. We formally instruct valuations, monitoring and legal’s on receipt of the signed Heads of Terms.
We usually advise around £10,000 – £15,000 for valuation and legal costs depending on the size of the project. These costs will need to be paid upfront by the client and are then refunded once we purchase the site on completion of all legal and construction documentation.