JV Development Finance: 100% of costs for a share of the profit
Joint-venture funding: an equity partner funds what your deposit would have, in exchange for a profit share. Who it suits, what partners look for, and what it really costs.
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How JV development finance works
The JV partner puts in the equity, senior debt does the rest, and you run the project. Profits split by agreement, with 50/50 the traditional starting point, adjusted for who brings what. You trade a slice of profit for doing the scheme with little or none of your own cash, which is why this product is usually searched for as 100% development finance.
Before you look for a partner, appraise the scheme honestly with the development calculator. A JV partner will run the same maths on day one, and a margin under 20% of GDV rarely survives the conversation.
"JV partners back people more than plots. A tidy track record and honest numbers raise more money than a spectacular site with vague costings."
What JV partners want
- Demonstrable delivery experience, usually at least one completed scheme of similar scale
- Full planning granted, numbers stress-tested. JV partners will not take planning risk
- A healthy margin: typically 25% or more on the scheme, and the fatter the better
- Scale: schemes from around £1m GDV, with £2m+ the sweet spot
- Skin in the game somewhere: fees rolled, overage, personal commitment
Both cut the cash you put in, and they suit different situations. Mezzanine is debt: you pay more on that slice but keep the profit, which suits a developer who can afford the deal and wants the cash working across two sites. JV is a partner who covers the equity but takes a share of the profit, which suits a developer who has the scheme and the experience but not the deposit. Rough rule: if you can afford the deal, mezzanine. If you can't, JV.
Your questions
What is 100% development finance?
The searched-for name for JV funding: senior debt plus a JV equity partner together cover all of the project costs, so you build the scheme with little or none of your own cash in, and the partner takes a share of the profit instead of interest alone.
Do I really put in nothing?
Structures vary. Some JVs are true 100%, most want you exposed somehow, through rolled fees, an overage or a personal commitment. We'll show you real term sheets side by side.
What is the criteria for joint venture funding?
Experience first: at least one completed scheme of comparable scale, and refurbishment experience alone usually doesn't qualify you for a ground-up build. Then full planning, a margin of 25% or more, and a scheme big enough to be worth the structure, usually £1m GDV upwards.
Who controls the project?
You build, the partner monitors. Decision rights live in the JV agreement, so read it with proper legal advice, and we'll flag the traps before it gets that far.
What profit split is normal in JV development finance?
The traditional starting point is 50/50, and deals often land with the developer keeping more, up to around 60/40 in your favour, tilted by who sources the deal and who carries more risk. The split is only half the story, because some funders also charge interest on drawn funds, so we compare term sheets on what you actually keep.
I have never built before, can I still get JV funding?
For a ground-up scheme, usually not on your own. The routes in: partner with an experienced contractor or co-developer whose track record counts, accept a smaller profit share, or build the track record first on smaller schemes using senior debt and mezzanine.
How long does a JV take to arrange?
Longer than debt. You're effectively being underwritten as a person as well as a scheme, so expect weeks rather than days, with legals on the JV agreement adding to it. The developers who move fastest are the ones who turn up with planning, a costed build and a clean track record already documented.
Got a deal like this on your desk?
Tell us the numbers and we'll tell you honestly what's achievable.
Prefer to put it in writing? Email support@bridgingfinancebroker.co.uk