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We bridge the gap.
Between investors & housebuilders.

Our investment service provides impressive capital growth and income-based options to our network of investors within the UK property market.

Every quarter we release new and exciting projects to our community of investors.

By signing up you will be able to view important documentation, access our due diligence reports, and take advantage of our market research so that you can feel confident in choosing your next potential investment.

DEVELOPMENT FINANCE
EXPLAINED

Invest in property. Without the hassle.

DEVFINANCE
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Why does a developer
need your funds?

This is probably one of the most common questions that we tend to get asked - "If this is so good, why does an established and credible developer need my money?"

It's actually quite simple - cash flow and scalability are just two key reasons - but below we will elaborate more for you.

DEVFUNDS

An Introduction to
Development Finance

Times have been challenging for small and medium-sized developers and housebuilders in general. In 1988, according to Property Week, there were 12,200 small and medium-sized housebuilders in the UK, but this had dropped to 5,700 by 2006 and sunk even further to just 2,400 by 2014. These statistics are somewhat concerning for the industry, especially at a time when the need to build more new homes for the  UK population has never been greater.

Many small and medium developers have been pushed out of the market by several factors, such as the ever-increasing cost of property and land; the dominance of the larger developers; the practice of land banking by the select elite and blue-chip housebuilders; and unavoidably, the difficulty of raising finance since regulation changes came into effect in 2008 in order to crack down on the banks.

Helping to raise finance is where Your Street and our investors come in. Raising finance not only plays an increasingly critical role in the development market, it also helps smaller and medium-sized developers build momentum and generate a pipeline of future projects.

Contrary to what you may think, raising finance from investors is rarely because a developer is short of funds. In most cases, our developers choose to fundraise even though they have the necessary cash available.

A way to balance the odds

Funds from private investors are used to fill the gap between the developer’s initial equity (their skin in the game) and the senior debt, which is typically provided by a bank - this is similar to a mortgage but on a much larger scale. In a common case, a developer will put up their own funds (equity) of around 10% of cost, the bank will lend around 60% of cost and private investors usually make up the difference.

By using funds from investors,
developers can increase cash flow in their business and scale up faster.

As you can see in the example below (based on a typical 18-month development cycle), by using funds from investors the developer has only been required to put in £400,000 of their own money, compared to the £1.6m they would have had to put in without it. Not only have they more than doubled the return on their investment (171% compared to 63%), they have freed up £1.2m to use on other projects.

This is what we mean by cash flow and scalability.

Internal Rate of Return (IRR)

With Investors
Funds (£'000)

Without Investors Funds (£'000)

Gross Development Value (NET) (GDV)

5,000

5,000

Gross Development Cost (Including Bank Loan) (GDC)

4,000

4,000

Development Profit

1,000

1,000

Profit on Cost

25%

25%

Profit on Sales

20%

20%

Bank Loan

2,400

2,400

Investors Funds

1,200

0

Total Bank Loan and Investors Funds

3,600

2,400

400

1,600

Equity (Developers Funds)

Interest to Investors and Exit Fee

315

0

Net Profit to Developer

685

1,000

Developers Return on Equity

171%

63%

Developers can stay in control

On occasion, developers will sell a stake in their company and bring on board equity partners to help fund their schemes. By doing so, this can bring about a host of issues not least of which is a lack of control for the developer. Typically, equity partners almost always require a say on how a development is run, which can cause stress, conflict and delay. In addition, equity investment can be expensive.

 

Many developers see raising funds from private investors as “cheap” (and stress-free) equity. In most circumstances, more than 80% of the profit will go to the developer, with the remainder going towards the cost of paying investors back.

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Thanks to our investment service, you have the opportunity to fill the funding gap on carefully selected and thoroughly researched property developments from well-established and reputable developers that can offer our investors anywhere from 4% up to 20.5% per annum.

We build on the bank’s risk assessment and due diligence and then we conduct further research and feasibility investigations for added protection. We then compile this information into a report for our investors in order for you to make an educated decision. You receive a dedicated consultant that will answer all of your questions, no matter how big or small, and then once you've invested you will receive a full customer support service throughout the lifecycle of your investment with us. 

What due diligence is conducted
by Your Street?

Investing means taking on a degree of risk to generate a return, and the property market is no different. However, it is the mitigation and control of this risk that is a key part of our due diligence process.

Before embarking upon a relationship with our development partners, we review a whole range of factors which includes assessing both its business model and project.

Our data-driven approach to property investment means our expert team of researchers examine everything from establishing the developers track record, ability to acquire funding from banks, relationship with local authorities, the security that is offered to investors, and most importantly the exit strategy that is in place.

We ensure the developer ticks a number of boxes prior to launching any of its projects to our investors and the 'Four Pillars' we look for in any suitable developer is that they are Reputable, Reliable, Responsible and Resilient.

On average, just 1 in 20 potential developers meet our strict criteria.

71 - 75 Shelton Street

Covent Garden

London

WC2H 9JQ

Customer Support: 0800 138 5400

Sales: 0203 004 9455

Email: hello@yourstreet.co

Monday to Friday: 09:00 - 20:00

Saturday: 10:00 - 17:00

Sunday: 10:00 - 16:00

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