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5 Ways To Fund Your Building Project

5 Ways to Fund Your Building Project

Funding is a primary challenge while embarking on a building project. Finance is the bedrock of the ideas and plans one may have in real estate, it is the driver of every transaction. Money with other factors answers the major questions of actions. Questions like, how, what, where, who and when all have their answers tied to fund.  The dream of building a structure remains a dream until it is being activated.

Finance drives logistics and mobilizes resources for the planning and execution of building project. Availability of funds is what distinguished wishers from action takers. It is the major capital needed for execution of building project. It stimulates the efficiency of other capitals like labor and land. It’s imperative to educate on the funnels through which building projects can be funded. There are ways by which projects can be funded and they are as listed below:

Personal funding: This is the most claimed source of funding building project. This type of funding requires the use of personal money; it’s the healthiest way to fund a project. With personal funds, there is no form of incurred debt or interest loan hence the project is executed without unprecedented upheaval from funding party as in the case of other forms of funding. Albeit, there are disadvantages to this form of funding building project. Project execution is prone to interruption from irregular funding which may increase the construction time of the building project. Personal funding is a sacrificial feat, this infer that this responsibility or commitment may affect other areas demanding funds. Unplanned scenarios perhaps inflation in price of materials may truncate or impede the progress of the project if funded personally. However, with 100% budgeted funds being available, personal funding is the best way to go especially for personal building projects.

Commercial bank loans: Banks offer loans specifically tailored for building projects. These loans have attached interests and payback period. Though, this may be a refuge for desperate project owners, it comes with logs of downsides. Unlike personal saving with no incurred payback fund, bank loans are guided in contract involving non-negotiable interest rate. It is however regular, in the sense that the required budgeted fund is applied for. This causes no unexpected interruption in the construction process.

Co-operative schemes: There are thrifts, cooperative schemes and microfinance banks that offer loans and bonds. Like commercial bank loans, interest and payback period attached to the loan taken. This is the perfect method for low income earners who cannot afford approaching commercial banks for loan. Co-operative scheme are a group of people united in savings commitments. The fund issued to loan applicants is the collective money from the group. Funds from this scheme usually have a lower interest rate compared to commercial banks. Though, the sum of fund is limited, there is also possibility of interruption from defaulting members.

Read also: What 30% of People that Don’t use Project Monitoring Firms are Missing

 

Ways to funding your building project

Mortgage funding: Mortgage banks are banks that primarily or exclusively offer loans to clients to purchase real estate, especially of private residence. The bank loans their own capital to clients and either collect payment with interest or sell their loan on the secondary market. Mortgage banks also have revenues from origination fees and similar fees attached to making loans. Projects are done without any hiatus due to readily available funds. A big model in this sector is Federal Mortgage Bank of Nigeria which presently offers a 6% interest with 25years repayment period for #5million.

Real estate funding plan: In this plan, a client can deposit a particular commitment fee for a completed building to be paid back at a particular time length. There are endless lists of real estate firms offering a pay later plan for clients.

Issue of fund is not an impediment to achieving your real estate dream. You can walk into Luvanex Builds for more free consultation on project management and monitoring.

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