If you have decided to embark on a property project, and you’ve completed the hard task of finding a suitable property to renovate, there is one more step before you can get started, finding investment.
Some people are able to finance their property development from their own pockets, but many people aren’t in that position. If you are the latter person, then you have two options. You can either borrow money or find private property investors in the UK and give them a share of the profit once completed.
Giving away a share of the profit in the form of equity means you won’t need to worry about the burden of paying interest on capital. Also, because you are sharing in the risk and the reward, the amount you pay the private property investors at the end will be directly linked to the success of the project. However, relying on investment does mean you need to hunt the UK for an investor, or investors, who share your enthusiasm for the development. It can also mean the private property investors will demand a large share of the profit from you, as they know how much you are relying on their cash to fund the job.
Borrowing money, on the other hand, means you will be in debt and will have to commit to a repayment programme. The benefit of this is that this method may keep your project on track, as it allows you to budget for the cost of capital.
The extent of your project, whether it’s a light refurbishment or a total renovation project, will determine how much money you need, and what the best route of getting this money is. For the purpose of this article, we will assume that you opted to search for private property investors in the UK, so, where do you begin?
- Friends and family
Friends and family may be the first port of call, but it can be an awkward question, and risky when it comes to compromising friendships or relationships.
- Other private property investors
You’ll usually find other private property investors in the UK through a property network such as the agents who are working on your sale. These investors will be old hands at property development and should be keen to help, so long as you can offer them suitable plans and security.
- Angel investor networks
These are private property investors found online through angel networks. Usually, you will submit your requirements through the website and then browse profiles of people who are willing to invest.
- Crowdfunding platforms
This is a way to find private property investors in the UK via online peer to peer platforms. Some of these platforms are more established than others, so it is important to check the credentials before signing up. Once you have chosen a platform you will input your project details, and assuming you pass the platforms credit check your project will then be marketing to private property investors around the UK.