Many constructions sites have been impacted by Covid-19 the situation, with social distancing and lockdown nationwide. It has been very difficult to get back to settle down the business post lockdown and also difficult to manage and operate the construction site during or after lockdown.
The main question is How to manage finance for construction in real estate after lockdown? Arranging finance for the ongoing construction site would be the most challenging situation.
Albert Einstein had once said that “In the middle of difficulty, lies opportunity”. Most of the country is facing the difficulty of an enforced lockdown due to Covid-19. However, this also gives us the opportunity to determine ways to manage our finances better, which could be useful even after the end of this pandemic.
In this article, let's focus on the main part of problem Finance, without finance none of the businesses could run. Every construction site requires finance for purchasing raw material, wages of laborers, marketing, etc.
The following ways are the easiest to bring finance for the ongoing of the Construction site:
1. Finance from Investor
2. Getting a Bank Loan
3. Income from sales
1. Finance from Investor
An investor is a person who invests in your business to receive a certain amount of profit. The investor always looks for the best opportunities before investing, and generally, investor prefers less risk while investing.
Investor study all your Project perspective, returns, etc. He will only invest if he finds some profit aspects of your Project. He will always look for more returns than what he will invest. The amount of investment is used for further operations of the business or the continuation of the work. In case you looking for an investor for your business then you should prepare documents or Presentations that is necessary for Investor, documents should contain all the details of the ongoing Projects and how much percentage of the amount would be returned to the investor of what he has invested, or giving them a share from the profits.
Once you get the investor for your business, your major responsibility is to focus on the sales. Returns of the investor have to be given on time, whatever return amount or profile share has been discussed. In the current situation, you should assume the market, and accordingly, you should have a word with the investor about the returns from the Project. Anyhow you have to pay the returns to him according to the Term & Conditions.
Before finalizing anything review your Available options and Finalized whether equity or debt works best for you.
2. Getting a Bank Loan
When you as a Real estate developer and have insufficient Funds and doesn’t get an investor for the ongoing construction project, you may Apply for the Project Loan. Bank loans seriously can provide stability for continuation. The loan is provided by undergoing through all your construction business papers, in how much area the construction is been? Cost of property, whether you have a RERA approval for the construction project, etc. Papers of the project should be cleared for getting a getting business loan. The loan can be used according to the project whether it is residential or commercial and the loan is sanctioned under the project finance/loan department. The loan is valid until the project gets completed. The loan is only availed for the Real estate developer who has successfully completed the 3 years project continuously or as per Term & Conditions of Financial Institute.
Below Few Documents are required for the Bank loan.
a. Application form and photograph
b. Address and identity proof
c. ITR of the last 3 years
d. The P & L, balance sheet of last 3years
e. Existence of business proof
f. Last 12 months Bank statement
g. Processing fees
Documents of property
a. Property paper which is relevant
b. Builder Profile
c. Real estate project report
d. Project valuation report
Depend on the valuation of the project the loan is been sanctioned. The loan amount should be paid with the EMI whenever the EMI starts. Even you can prepay the loan amount with the penalties stipulated. It almost takes 45days for the disbursement of the loan when the documentation is completed.
Once you get the bank loan, your responsibility is to pay the EMI or the interest of the bank on time. For paying it EMI on time you have to focus on sales. If you have a certain amount of cash then only you can pay the EMI or the Interest of the bank loan.
3. Income from Sales
As the construction site is ongoing, to get the finance you should focus on the selling part, which will help you. The income which you will get from sales will be your profit, due to which you will not have a headache of Interest, EMI, returns of investors, etc. This income will be yours with which you can roll up the money in your ongoing project.
Make sales faster you have to focus on a few things:
1. Proper Marketing Strategy
2. Build Strong Sales team
3. Close Deal effectively
4. Payment Collection
For reaching potential buyers, every real estate developer has a high demand for marketing. Each and every real estate developer has to importantly look for the marketing of the project. Project marketing should contain details of the project with the price and what is offered for the people. If you see there are tons of buyer in the market which is looking forward to buying a new home according to the budget, project marketing will help you to reach to buyers. You have to choose the right way for marketing for promoting your project with online marketing, offline marketing, etc. Which will help you to reach your targeted audience?
1. Making strategy for marketing
While selling your property, marketing strategy plays a very important role. Your marketing strategy should be strong and also very effective. The platform on where you promote your project is also an important part of your marketing. In this case, the Online property portal is the best platform for promoting your project. Because the online property portal has a large number of audiences which you can reach easily.
2. Build a strong Sales team
For selling your project your team plays an important role. The marketing person will help you to reach a targeted audience and generate Potential Enquiry. A salesperson will help you with selling the project. Relationship executive will help you to solve the problem of the customers. Strong sales team members are the backbones of the company. Qualified team members with skills are very much needed for the business.
As your business grows you will need for Strong sales Team. Always remember the more sales person you have, the more business you can generate. So, don't make the mistake of thinking you can grow your business without growing your sales force.
3. Closing Deal Effectively
Marketing strategy and your strong team will help for Closing the deal. You can give pre-offer for your customers or else you can give on the spot offer for your customers. This kind of offer attracts more customers to your project. The closing deal is the biggest task for every salesperson, for which the salesperson should know how to tackle and give an offer to the customer according to their so that the deal gets close. Henceforth try understanding the customers, their needs, their wants, and then tackle accordingly.
4. Payment collection
Once you successfully close the deal, you will get a certain amount of money for rolling up the business. For a collection of the payment, you should keep all the records of the transaction (or Use CMS or Customized Software to maintain your records as you per your process) which can help you to collect the remaining amount from various customers. If customers apply for the loan then you should get in touch with the bank and collect the money from them. Having the payment into your account would help you take major like marketing, offers for customers, etc.
Henceforth, if you are looking for an investor or getting a loan from a bank, focusing on selling the property which is ongoing can help you to get finance continuously, and will also, this finance will help you for continuous rolling of cash into your project. Remember Proper Planning will help to get more income from sales.
