If you are considering a development project, you may be wondering how to start looking for the finance.

There are lenders who specialise in providing property development finance. When they are considering whether to make an offer and at what level, there are two main things they need to know: the risks, and the profit potential. So before approaching a lender or a broker, you would be well advised to do your own research, so that you already have the information available. It will be assumed you already have planning permission for your project – the lender probably won’t look at it if you haven’t!

First of all you need to calculate the total cost of the project – otherwise you can’t calculate the profit potential! This will include at a minimum: * Purchase price of the site, or of the property to be developed. * Costs of building or refurbishment. You will need to obtain initial estimates from any contractors you will be using. It may be wise to over-estimate these, given how common it is for project costs to go over budget. * Stamp duty – based on the purchase price. * Fees for professionals. This depends on what the project is, but at the minimum it is likely to include surveyor, valuer, solicitor and architect. The lender might commission their own survey as well, but this shouldn’t stop you from having your own done. * Deposit. Unless you can be sure of getting 100 per cent finance, which is unlikely unless you are very experienced, your will have to find a deposit of anything from 30 – 50 per cent. * Interest charges on all the finance, allowing for interest rate rises if these are on the cards. * Planning fees and search fees.

Once you have a clear idea of the costs, you can begin to calculate the profit potential. * Identify your target market. You need to research the area and identify the results from similar locations. Enlist the help of estate agents. * Professional valuations. Your lender will require a realistic assessment from a professional valuer, both of the current value of the site and of the potential value of the development. This will help the lender asssess the viability of your project.

The surveyor and valuer will also identify whether there are any potential snags to the project – e.g. flood potential, or the presence of gas mains etc. – and thus help the lender assess the level of risk. The other factor in assessing the level of risk is your degree of experience. If you are a total novice, you will be seen as a higher risk. But don’t let this deter you – everyone has to start some time.

The real estate agent’s mantra “location, location, location” rings true even when you’re building from scratch. From privacy to orientation, your lot is likely to influence which house plan you choose.

“Theoretically, it’s best to start by finding a lot because then you’ll have a clear idea of what square footage will and will not fit on the property,” says Robert Martin, Architecture Editor at Southern Living. “It’s a dangerous proposition to try to gooseneck a house into a lot that’s really not ideal for that plan.”

Building Envelopes Every piece of property contains a “building envelope,” or the buildable area that a home can occupy. Sometimes this is also referred to as a building’s footprint. When crunched for space, a property owner can seek a variance to exceed the building envelope, but the process is often lengthy and there’s no guarantee that permission will be granted. Therefore, it’s best to consider plans that work with the dimensions of a lot.

Cedar Creek’s rambling, single-story floor plan suits a broad, narrow lot. If your site is deeper than it is wide, good options include Franklin House and Ames River Cottage, a modern interpretation of a classic Charleston Single House.

Setbacks Local zoning boards and community organizations often require a house be set back a certain distance from the street. Before purchasing a corner lot, find out if front-yard setback regulations apply to the lot’s front and side-street boundaries. This could substantially reduce the area available for a home’s footprint. Easements as well as natural features, like rock outcroppings and mature trees, may also influence where the house can be located.

“Some communities promote close neighbors, and some communities promote more breathing space,” Martin says. “It’s not wise to use up every square foot of building space because you’ll have less of a yard.”

Orientation If the lot is located in a suburban neighborhood, consider the placement of windows – take care that they will not align exactly with neighbors’ views. Driveways should also be taken into account to make sure there’s plenty of room for parking and turning around.

Streets and topography may be the main determinates of a house’s orientation, but it’s also a good idea to consider sun exposures when possible. A homeowner might reorganize a floor plan to take advantage of morning and afternoon light. Martin says that covered porches that face a southern exposure can help block out heat and sunlight.