In the dynamic world of property development, the concept of Build to Rent (BTR) has emerged as a transformative force, reshaping the approach to residential projects. At its core, BTR is a strategy that caters exclusively to the rental market, diverging from the traditional focus on sales. This innovative financing model is not just about constructing buildings; it’s about fostering communities and redefining urban living.

Understanding Build to Rent Development Finance

Build to Rent Development Finance is a specialised loan designed for professional property developers and landlords with an eye on the burgeoning rental market. Unlike traditional property development loans, BTR finance is tailored to support the construction of properties intended solely for renting. This financial solution effectively bridges the gap between the upfront costs of development and the subsequent rental income.

How It Works

BTR Development Finance operates similarly to a traditional mortgage, where a sum is borrowed and repaid over time. However, it distinguishes itself in several ways:

• Funds are released in stages, corresponding with the development milestones.
• The loan is secured against the properties under development.
• Repayment is typically sourced from rental income or refinancing post-completion.

Who Benefits?

This type of finance is ideal for developers aiming to create multiple rental properties and landlords seeking a bridging solution to manage development costs before the rental income stream begins.

The Advantages of Build to Rent

The BTR model offers numerous benefits:

• Stable Income Stream: Long-term rents provide a consistent revenue source.
• Community Building: Developments often include communal spaces, enhancing tenant satisfaction and retention.
• Attractiveness to Investors: The predictable returns appeal to institutional lenders, such as pension funds.

Key Considerations

When considering BTR Development Finance, developers should weigh several factors:

• Market Demand: Ensuring a strong rental market is crucial for the project’s success.
• Quality of Development: High standards can command higher rents and attract long-term tenants.
• Financial Planning: Accurate cost projections and cash flow management are essential.
• Exit Strategies: It’s crucial to have a well-planned exit strategy, a long-term commercial mortgage can be put in place before the start of the build to repay the BTR finance upon completion of the build. Alternatively, development exit finance can be utilised when the project is nearing completion and whilst waiting on the long-term mortgage completing.

Conclusion

Build to Rent Development Finance is more than just a funding mechanism; it’s a catalyst for innovation in the property development sector. By aligning financial strategies with the needs of modern renters, developers can not only profit but also contribute to the evolution of urban housing.

Before you Begin the Application Process:

Consult with an Expert Broker: At Evolve Finance we understand how build to rent development finance works and can guide you through the intricacies of the process, helping you explore all available options.

Edward Vaughan, senior director at LexisNexis Risk Solutions, looks at the potential costs of buying or building a risk orchestration platform. 

The benefits of orchestration

Risk orchestration is gaining incredible traction in regulated sectors. The technology can help firms optimise multiple sources of data and screening and monitoring tools that are used to detect and prevent financial crime. Unlike some traditional risk management strategies, risk orchestration can synchronise disparate processes, resulting in unified outputs and risk scores.

It’s a welcome antidote to the duplication of effort, conflicts, and delays that can easily and regularly occur during financial crime screening. Customers can be authenticated and validated quickly with reduced levels of friction that otherwise negatively impact user experience.

As more firms strive to realise these benefits, there’s now a noticeable trend amongst firms to build risk orchestration platforms in-house. The belief is that it’s the cost-effective route, but our recent analysis suggests otherwise.

Expensive self-build

We looked at the typical self-build orchestration costs for a mid-tier UK bank onboarding around 100,000 customers and processing an average of two million transactions per year. 

For a bank of this size, build costs would be around £3.1 million in the first year, with about a third spent on a team of developers to build and test software. Creating an API that can bring together multiple different data sources and systems can be complex and time-consuming. The remaining budget will go on annual licence costs and data fees, covering Identity and Verification (IDV), document verification, transaction monitoring, application fraud and AML screening. 

In years two and three, self-build calculations include annual license renewal costs and data fees, as well as the not-insignificant costs of maintaining and developing a platform to grow and adapt with a business. 

So, even conservative estimates will put costs for year two and beyond at over £1.3 million per annum for a self-built platform. That’s an approximate investment of almost £6 million in the first three years. 

Risk Orchestration – the cost-effective approach

Given that specialist software developers are typically the most expensive part of a self-build approach, the alternative could be to work with an expert partner to integrate a plug-and-play risk orchestration platform via a no-code API.

A specialist partner can draw on industry-wide insight and experience to help develop a solution that evolves with an organisation’s growth and can adapt to changing financial crime threats. Such solutions are also scalable, meaning a small-to-midsize firm can procure an affordable, yet high-performing platform, without it weighing heavily on the balance sheet. Economies of scale across licence and data fee costs can also be realised. 

Specialist orchestration platforms provide an automated, end-to-end solution for customer onboarding and ongoing monitoring, incorporating anti-money laundering screening, transaction monitoring and case management. With support from multiple data source providers, firms are free to stick with the vendors they know and trust, or can swap them out for others, at the same time benefitting from simplified vendor management.

The easy set-up and integration of a risk orchestration platform like LexisNexis® RiskNarrative™ is complemented by an intuitive interface and the ability to drag and drop services and apps. It eliminates the need for costly IT-led operations and interventions, saving firms both time and money. 

Best of all, our analysis suggests all this is achievable at around a third of the cost of a self-built solution over the first three years, freeing up more than £3.5 million to invest back into a business.  

All financial services firms want to prevent more fraud. At the same time, most firms are also under pressure to reduce compliance costs. Risk orchestration is the perfect tool to achieve both these opposing goals – the only question remaining is whether to buy or build a platform.

Join a free webinar on Tuesday 28th November at 2 pm, when leading industry analysts and experts will explore the build versus buy dilemma and the many benefits of a risk orchestration platform. Click here to register now. 

One needs to understand the industry before jumping into its business. Many things that look easy on the outside will surprise you when you get to their implementation. You should have a few resources beforehand if you are to start a property development business.

Make Sure You Know the Industry

People say you need money to start a business. Most successful entrepreneurs disagree. They say you need to have skills like no other to start a business, and the investment will come to you. Make sure you are worthy of running a successful business before you worry about finances. Learn everything there is to know about the industry you plan to target. For that, you may have to do a job, work as an assistant, or join a study course. When it comes to property development, you need to understand every corner of it. Start the business only after you are certain that you have explored the entire industry.

Arrange Investment

Once you are confident that you can run the property development business, it’s time to prove it. Your skills will be tested and there will be money on the line. You either have to invest your own finances or get a loan. It’s best if you have your own investment because that way you don’t have to answer to anyone. On the other hand, it won’t be a problem even if you don’t have the finances. As I said, the

investment will come to you if you are skilled. Anyone would agree to invest with you when they know you are not going down. You can get development finance from Property Finance Partners for your business. It is a property finance company that provides real estate raising finance solutions in the UK.

Keep Contact with Suppliers

A professional network is your net worth. You need to have contact with every supplier related to your work. You should also understand every service and product that you will use and their current value in the market. As a property developer, you may need services of builders, electricians, painters, architect, carpenter, plumbers, decorators, and interior designers. Having a reliable relation with these professionals will give you confidence and allow you to meet deadlines with quality work.

Understand Your Target Market

You should have a full understanding of your target audience before investing in a business. You should know who will need your services, how they will approach you, and if there is any space for you in the market. It can be difficult to survive in a market with fierce competition. Likewise, you should also know the right time to penetrate the market and when to take a break. Having an audience persona in your mind will help you better target your potential customers.

Use Digital Marketing

Marketing is important to make an entrance in the industry. While many property developers may underestimate it, digital marketing has helped many new entrepreneurs build their business. Use every marketing tool to get an edge over your competitors. Once you understand your market, targeting potential customer becomes easier.

Digital marketing doesn’t need you to have an office, you only need a website and a few social media profiles. You will reach out to potential customers through these channels. It’s also a great way to enter the market because it lets everyone know that you exist and now offering your services. Portray your skills and unique selling point on the internet. See what your audience is expecting from your industry and provide them an easy solution for that.

Build a Reliable Team

Every businessperson needs a team that he can rely on. The team builds the foundation of a business. If your foundation is strong, you are likely to survive in the market. Property development business doesn’t necessarily need a team if the leader is skilled enough. You will need the expertise of an accounting professional with the knowledge of all legal matters to understand and control all expenses. A project manager can divide your responsibilities and ensure that all development on site is in order. Moreover, you may need someone who understands the field to be on the lookout for opportunities.

Deciding Your Property Sector

A property business developer should know every sector of his industry. He should further understand the requirements of each sector where he wishes to operate. Whichever sector you choose, you will need to follow its every news and update. By specializing in just one sector, you are more likely to dominate it. You will know what, when, and where to buy, sell or rent a property. You will be able to make more sales by telling customers exactly what they want to hear if you focus on just one type of audience.

Nearly 50% of 2017’s Initial Coin Offerings are currently failing, and one serious factor in this lack of success comes from the lack of trust in a business. Investing in ICOs is risky. Little regulation results in a vulnerability to fraud, and is putting off people from contributing - and rightly so, why would you want to just throw away money?

With that said, ICOs can prove an incredible investment opportunity, with huge potential for growth starting at the pre-sale; and if a potential contributor has trust in a project, there is absolutely no reason for them not to invest.

So how can you earn investors’ trust? This week Tomislav Matic, CEO of Crypto Future, provides Finance Monthly with his top five ways to incite trust in potential investors.

1. Be transparent

One key factor in convincing others of your legitimacy is through being as transparent as possible. Of course, not every detail can be given away, but letting potential contributors understand the inner workings of your company can go a long way to showing them all the work being put into your ICO.

Being transparent develops a unique relationship with investors. Show them you align with legal compliance - you could even go as far as showing off clips of on-site testing; whatever it takes to show the world that you are genuine in your efforts, working hard to make this project a success - it goes much further than you might think.

2. Go social

On average, people spend 116 minutes of their day on social media - just under two hours checking what other people are doing. Only a fool would miss out on this opportunity for both exposure, and a chance to involve future contributors.

Use Facebook, LinkedIn and Twitter - and other social media sites too - to give people regular updates on product details, blog posts, interviews, information; anything you can think of. Frequent updates through a channel that people will be checking regardless go a long way to making investors feel involved in the progression of the project, connected and valued - that extra insight only helps towards bridging that relationship.

3. Introduce your team

By now, contributors feel the platform is safe, they know the inner workings of your product, and they feel involved with the project; it’s time to show them the team behind it. It’s all well and good having a brilliant product, but if you’ve got someone running the ICO who isn’t capable of delivering it, how can an investor trust it?

Roll out the blogs, the interviews, the Q&As, and get their social media accounts active too. Does your CEO have an incredible track record of getting ICOs off the ground? Shout about it. And an inexperienced leadership team isn’t necessarily a bad thing either - you just need to show to contributors why they are in the position they hold.

4. Create an extensive whitepaper

Not everyone will go through the entire whitepaper from front to back, but having a detailed outline of everything to do with your project gives contributors access to any specific information they might need.

Having a strong, comprehensive whitepaper in place allows investors to complete their due diligence at their own leisure. It’s a recurring theme: access to information. The more access, the more allowance you give for trust to blossom.

5. Outlining a clearly defined roadmap

Actions speak louder than words, but if you’re showing future contributors exactly what you’re planning and how you’re going to implement that plan, and then following through on it, there is absolutely no reason for them to believe that you can’t continue in that vein.

Outlining your strategy is a brilliant way of proving that you follow up on promises, and if you can do it before the ICO even starts, even with the smallest steps, investors will be more inclined to put their faith in you once the sale has kicked off.

Building trust is by no means easy, but it is incredibly vital to aiding your ICO’s success. It can without doubt be the difference between an ICO that hits the ground running, and one that flops completely.

The process starts early, and requires a huge amount of time and effort - much like building trust face to face - but the rewards are tremendous.