Unlocking the Benefits of Vendor-Assisted Purchases

What is a Vendor Assisted Purchase, and how can you, as a Property Developer, gain profits from the Financing method?

Firstly, to benefit from Vendor Assisted Purchases, a Home Builder will need to find a lender that is interested in the final value rather than the purchase price, and a vendor willing to participate in a legal contract when developing a site.

Vendor Assisted Purchases and Joint Ventures

Firstly, if collaborating with the vendor, a Property Developer can pull off a property renovation with no or little capital, yes, really! One route is deferred completion, where the Property developer borrows against the equity in the vendor's property, and they only take their funds on completion. If there is enough equity, there are bridging lenders who can consider not only lending the funds to buy the property but also to renovate it. Alternatively, the developer could enter a joint venture with the vendor and split the profits from the deal, and either way, there is an opportunity for profit with no or minimal cash required.

Sale Under Value

Some bridging lenders will consider 100% or more of the purchase price as long as it is 75% or less of the property value, and even some buy-to-let lenders will consider 90% of the purchase price as long as it is no more than 75% of the value; This can usually be achieved if there a some kind of fire sale or under value purchase which a RICs approved surveyor will need to confirm teh current valuation at.

Could Vendor Assisted Purchase financing work for your next development site?

Want to know more about Vendor-Assisted Purchases and how this financing method can help you as a Property Developer or Investor? If so, book a meeting with Robert Dyson and/or contact IFP Development and Commercial on +44(0)7830 308 659.

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