Increasingly popular, property deals are coming up against the realities of the banking world. Admittedly, these projects often offer double-digit returns, but there are conditions to be met. Here we take a brief look at the specifics of this business and the financing solutions available.

The "property trader" business

This involves buying and selling property on a regular basis. The two most common profiles are very different. The first is that of a private individual who buys a flat or house, usually to live in. They renovate the property or carry out more extensive work, then sell it on for a significant capital gain. The second profile is that of a company that carries out projects on a more frequent or larger scale. In this case, it is a commercial activity with specific obligations and tax rules.

Obtaining finance !

In order to benefit from the leverage effect of credit, investors seek finance for larger-scale projects. Since returns are high, the larger the initial investment, the higher the return. It is quite natural to turn to the banks for this funding, but the institutions have certain requirements. In fact, having a very high theoretical net margin is not enough, as it has to be realised after completion. To avoid these pitfalls, banks want the project sponsor(s) to be credible and capable of seeing the project through to completion. Here are some of the most important criteria:

- A track record of 3 successful operations,

- The CV and experience of the promoter in the building sector,

- The financial soundness of the structure carrying the project,

- The quality of the partners involved.

If these conditions are not met, the banks, which generally have specialised departments for these operations, will not proceed.

When this happens, there may be alternative solutions for obtaining funds. Whether it's via real estate portage, crowdlending or other atypical solutions, each application must be analysed on a case-by-case basis to present it in the best possible way to the chosen financing partner.

To maximise the success of your search for the funds you are hoping for, it is essential to be accompanied by finance specialists. Whether you are an individual or a professional, the teams of advisers at Wealth A7 and France Crédit have access to these specific solutions and can analyse and meet your needs. Get in touch with us!

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