Finance and risk
This is a good moment to consider how you will deal with finance and the associated risk. You will need to consider:
- No bank is likely to offer 100% financing of either the site purchase or the development. Where will the remainder of the money come from? If members put up their spare capital, will you pay interest? How and at what rate? Or will you discount their house prices? By how much?
- Although you may have formed a limited liability company, banks will want to be sure they get their money back if there is a problem and will want personal guarantees, possibly from all directors. How do members of the group feel about this?
- The bank will also want security for its loan. This may mean that members have to contribute towards the assets. Again have you thought about the implications for this?