How to Borrow Money to Become a Property Developer

Written by robert lee
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How to Borrow Money to Become a Property Developer
Getting lenders to embrace your vision may be the first step in borrowing money for property development. (Road Grader Leveling a Car Park image by Chuck Alexander from

Your ability to borrow money to become a property developer may depend on your credit worthiness, your previous experience in the field and your connections. Property development can be highly speculative, with some projects becoming enormous successes and others failing miserably. Because of that, some banks are more comfortable lending to developers with a track record of success. However, it's possible to borrow money for property development even if you are just entering the field.

Skill level:

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    Accumulate some experience, if necessary, by entering into partnerships with other developers. Participating in even small real estate deals may provide access to bankers and others willing to lend money. Having your name attached to a successful project could prove invaluable as you seek money for your own project.

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    Broaden your connections even more by participating in community-based property development projects such as Habitat For Humanity, which builds houses for low-income people. Look for opportunities to forge relationships with more bankers, lenders and other developers.

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    Create a business plan for your project. Include detailed financial plans outlining how much money you will need and how it will be spent. Review the plan with experienced developers that you trust. Strengthen your team by adding one or two successful local developers to the project. Their participation and endorsement could provide a major boost as you begin meeting with bankers.

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    Make an appointment with a local banker specialising in real estate development. Introduce your team and make your pitch for financing. Be prepared to offer collateral including the property itself, a personal guarantee and your own real estate. Fill out the necessary paperwork and continue to communicate with the bank as it works through the decision-making process. If the bank turns down your application, find out why, make adjustments and present the project to another lender. Keep calling on lenders until you have a deal.

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