The situation
The following is an anonymised composite reflecting a recurring pattern, not a specific settled deal. A property investor who has bought and renovated single dwellings decides to take on a first ground-up development, a small townhouse project on a site they already own, but has no prior track record delivering a project of this kind.
Why it's hard
Most construction lenders, and virtually all banks, want to see an established developer track record before committing to a construction facility, and a first-time developer without that history is assessed as a materially higher risk regardless of how sound the individual project's feasibility looks on paper.
How it can be structured
A construction facility from a private lender or specialist fund experienced with first-time developers is the standard path, generally requiring an experienced builder and project manager on the team to offset the developer's own lack of track record, and typically at a more conservative loan-to-cost ratio than an established developer would achieve; the exit is the sale of completed townhouses. Strong pre-sales materially improve the terms available to a first-time developer specifically, since they substitute market evidence for the track record the lender cannot otherwise rely on. Some lenders will also want a slightly higher equity contribution from a first-time developer, treating it as a way of aligning the developer's own incentives with the project's success given the absence of a proven history to draw confidence from instead.
Lenders will often ask for the builder's own financial standing and current workload alongside their licensing, since a builder juggling several large projects at once presents a different risk to the developer's own project timeline than one with capacity dedicated to this build specifically. Some private lenders structure a first-time developer's facility with more frequent progress reporting and site inspections than they would require of an established developer, using closer oversight to substitute for the track record that cannot otherwise be demonstrated. Where the first-time developer has professional experience adjacent to construction, whether as an architect, quantity surveyor, or in property funds management, presenting that background alongside the project team can meaningfully improve how the file is read, even without prior developer credits specifically. A clear, realistic contingency allowance in the cost budget, reviewed independently rather than simply adopted from the builder's own figures, is something lenders in this category check particularly closely given the added risk of a first-ever project running over budget.
What it typically costs
Pricing reflects the first-time developer risk being accommodated, generally above the terms an established developer would achieve for an equivalent project, quoted on enquiry once a lender has reviewed the feasibility, the builder's credentials and the developer's own financial position. Costs include standard construction finance fees alongside quantity surveyor and monitoring costs through the build.
Timeline
- Same day — scoping call confirming the site, project scope, team and pre-sale position.
- 5–10 business days — feasibility package assembly, including builder credentials and cost breakdown.
- 3–5 business days — lender matching to funds comfortable with first-time developers.
- 10–20 business days — credit approval and offer.
- 5–10 business days — documentation and first drawdown.
Questions we'd ask you
- What is your own property investment or renovation background, even without a construction track record?
- Who is the builder, and what is their track record delivering projects of this scale?
- What proportion of the townhouses, if any, are pre-sold or under genuine buyer interest?
- What equity are you contributing toward the total project cost?
- Do you have a project manager or consultant supporting you through the build?
Related
Construction finance · Land bank loans · Property developers · Pre-sales