Navigating Property Development Finance: A Step-by-Step Guide
Your roadmap to smart financing with Invest & Co Finance
Property development offers exciting opportunities for investors and developers looking to build long-term wealth. But behind every successful project is a well-structured finance solution. At Invest & Co Finance, we understand that navigating property development finance can seem complex—especially for first-timers or those scaling up. With the right approach, you can secure the funding you need while minimising risk and maximising returns.
In this guide, we walk you through the step-by-step process of securing property development finance, highlighting key stages, challenges, and how a finance broker can streamline the journey.
Step 1: Clarify Your Development Plan
Before seeking finance, it’s crucial to define the project scope. Are you planning to build a duplex, a multi-unit complex, or undertake a land subdivision?
You’ll need:
- A feasibility study outlining total costs and expected returns
- Site plans and architectural drawings
- A proposed timeline
- Council approvals or planning permits (or evidence they’re in progress)
Tip: Lenders will assess the project’s viability—your documentation must show the potential for profit and a well-managed risk. Learn more about new home or established property financing.
Step 2: Determine Your Funding Requirements
Property development finance often combines multiple components:
- Land acquisition funding
- Construction finance (progress drawdown)
- Contingency buffer
- Interest reserves
A key mistake developers make is underestimating total funding requirements or relying on personal capital too heavily. A finance broker helps you model cash flow and determine the ideal funding mix for your project.
Step 3: Prepare Your Financial Position
Lenders want to see that you’re capable of delivering the project and managing repayments. This includes:
- Company structure and asset/liability statements
- Experience in previous developments (if applicable)
- Serviceability (can you meet interest and loan obligations?)
- Pre-sales contracts or rental projections (rent roll financing)
If you’re lacking in some areas (e.g., development experience), a broker can help mitigate lender concerns by presenting a strong proposal or matching you with more flexible lenders.
Step 4: Choose the Right Finance Option
There’s no one-size-fits-all solution in property development finance. Options include:
- Bank loans – Suited to experienced developers with strong financials
- Private lending – More flexible criteria, quicker approvals, higher interest
- Joint ventures – Partners provide funding in exchange for profit share
- Mezzanine finance – Used to ‘top up’ funding where equity is limited
At Invest & Co Finance, we work with over 40 lenders—including major banks, non-bank lenders, and private financiers—to find the right solution for your project’s size, structure, and timeline. See our lenders and customer feedback.
Step 5: Understand Lender Criteria
Lenders will look at the following:
- Loan-to-cost (LTC) and loan-to-value (LVR) ratios
- Project profitability (usually minimum 15–20% margin)
- Number of pre-sales (if required)
- Exit strategy (refinance, sale, or long-term hold)
We help you prepare a comprehensive loan submission that anticipates and addresses these factors upfront—saving time and improving approval chances. Explore more about commercial lending trends.
Step 6: Manage the Approval and Drawdown Process
Once finance is approved, the process doesn’t stop there. Drawdowns are typically staged in line with construction milestones, requiring:
- Builder’s contracts
- Quantity surveyor reports
- Valuations and progress certificates
Invest & Co Finance coordinates this process, liaising between lenders, builders, and other stakeholders to ensure funds are released promptly and the project stays on track.
Common Challenges (and How to Overcome Them)
- Funding delays: These can stall construction. We minimise this risk with thorough planning and ongoing communication.
- Under-capitalisation: Having too little equity can cause problems. We explore options like mezzanine funding or JV partnerships.
- Tight lender criteria: We work with a wide range of lenders to find flexible options, even for newer developers.
Start with Confidence
Securing property development finance can be complex—but with the right guidance, it becomes a powerful tool for achieving your investment goals. At Invest & Co Finance, we bring clarity to the process, offering tailored advice, a broad lender network, and full-service support from planning through to completion.
Whether you’re developing your first project or scaling up to something larger, we’re here to help you fund it right.
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