Ultimately, as in every business, cash flow is key. By holding a strong cash position and using the option of a loan investors can retain flexibility while still being exposed to the potential upside.
The attraction of lucrative returns over a 12-24 month period, given the buoyancy of the property market, is difficult to ignore. Over the past 10 years, the cost of borrowing has decreased and this is reflected in the development finance and heavy refurbishment sector.
Minimising the upfront skin in the game from the investor makes developments an attractive option to most with the correct risk appetite. But investors need to remember that the weather can change quickly in any asset class. The only way to know when it will, is by being aware and watching the sky.
Matthew Yassin is a partner, specialist finance, for Coreco
