When it comes to commercial development projects, one of the most important things to keep in mind is how you can unlock equity. Equity is the portion of the property that is owned outright by the developer and is not subject to any liens or debt.
In order to make sure that your project is successful, it’s crucial that you maximise the amount of equity that you have. Here are a few tips on how to do just that; from simple things like managing expectations, to how to get higher debt amounts for development projects.
- Get pre-approved for a construction loan before you even start looking for a property. This will give you a good idea of how much money you can borrow and will help you stay within your budget.
- Look for properties that are undervalued. This can be due to a number of factors, such as the current owner being in a hurry to sell or the property being in need of repairs. By finding these hidden gems, you’ll be able to purchase them at a lower price and increase the amount of equity that you have.
- Use other people’s money. Instead of using all of your own cash to finance the project, look into partnering with other investors or obtaining a loan from a bank or other financial institution. This will help reduce the amount of risk involved and will allow you to keep more equity in the project.
- Make sure you have a solid business plan. This may seem like common sense, but it’s important to remember that your project should be viewed as a business venture first and foremost. Having a detailed business plan will not only help you secure funding from investors, but it will also give you a roadmap to follow during the development process.
- Hire an experienced team of professionals. One of the best ways to increase your chances of success is to surround yourself with talented people who know what they’re doing. Hire an experienced real estate agent, project manager, and lawyer who can help you navigate the process and avoid any potential pitfalls.
- Have realistic expectations. It’s important to remember that Rome wasn’t built in a day – and neither will your commercial development project. Even if everything goes according to plan, it’s still going to take some time to get the project off the ground. Try to stay patient and keep your eye on the long-term goal.
Unlocking equity in your commercial development project is essential if you want to ensure its success. By following these tips, you’ll be well on your way to making sure you have the most equity possible!