Hi All
Just done this deal and for all you budding developer it would be good to read.
land $2,500,000
build $3,300,000 fixed price
gross $9,000.000
profit $3,200,000
All seems great
full lend at 11% private lender
still great
I’m happy another one across the line
about to offer 3 month delayed settlement.
My builder project manager checks the plans and site.
ops
stone foundation
fixed price is excluding stone or rock(always priced separately)(check when pricing)
cost for car park and concrete $1,500,000.
Back to my programmes.
Private lenders won’t lend on project.
In bin
Had project gone a head by the time we found out we would be in a $1,500,000 hole.
Even I check and check and then get some one to check before signing I was to sign today I found out about the hole 7.00 last night.here to help
Gross,
Could you tell me what the project is. What you would get for 3,3 Mil building cost (ie how many units/touhouses, aps ,shops ???). We are doing some costing ourselves at the moment, hence the question.Thanks very much.
GR,
I read it – but didn’t understand a word of it.
Could you perhaps write it in plain English so we may have the opportunity of learning.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
hi moony
current price for a 2br is 210,000 I don’t value commercial usually in the pricing that’s cream.
It becomes a little different when the commercial is a large component of the development.
I price per site and view each site,
Hence I only do in Sydney but I do complete lends land, build and all the cost in between.
rule of thumb at the moment 210(2br) 230(3br)
280 (townhouse)and 300 house build cost only.
This is only a thumb as I’m currently doing unit with sound,light, bells and whistles and they are 450 (2br) for the whistles per unit.
So it depends.
I work mine from the gross backwards
so gross $1,200,000 -35% = 780 – build 275 (505)-legals and cost interest 140 = 365 land
my working out with calculator
this is not an example this is a lend I just did.
land after legals came to 389,250.
loans going thru.
If you have most of the figure it work out the same.here to help
The old due diligence again. SO important.
Thanks for the story GR; a timely reminder, like you say, to budding developers. It requires more attention than many people think.
Bob
PS 11%? Youch! What was wrong with the bank?
Sorry GR just went back and looked again at your wording: “full lend”. I assume this means very high %TPC (Dazzling, if you’re reading that’s debt to total project cost, the development equivalent of LVR).
Bob
Hey Gross,
When you say full lend are you saying you are borrowing 100% cost for land and construction?If this is the case, are you providing something else as security against the borrowings, or is the final value of the completed project sufficient security for the lender?
kp
hi all
total lend is
land, build all cost except gst and legals
in the example I get lending for the 750,000 total.
lvr on these lends are 65%, they are stand alone single lends.
As for the banks I pitch first to bank, second to superfunds, and third to private finance.here to help
Is that a typo?
Do you mean lending of $7.5 mil and not $750k ?Based on the original post: gross is $9.0 mil, and lend is $7.5 mil, so isn;t this an lvr of 83% ??
kp, I think gr is referring to the example from his reply to moony:
so gross $1,200,000 -35% = 780 – build 275 (505)-legals and cost interest 140 = 365 land
my working out with calculator
this is not an example this is a lend I just did.
land after legals came to 389,250.
loans going thru.“780” would seem to refer to GRV less a developer’s return (expressed as a % of GRV) as per a reverse static feaso. So if he got the lend of $750k then yeah, that’s almost 100% TPC. Not too many banks or funds are going to lend that high, so maybe that would explain the private lender and the 11% rate. You’d probably have to put up the equivalent of a small village in real property security to get away with a loan like that though.
in the example I get lending for the 750,000 total.
lvr on these lends are 65%, they are stand alone single lends.I would suggest the loans are not 65% on TPC or gr would go to a bank and get an all-up rate of 8% or less. It could be 65% of on completed value, which on $1.2m would be (surprise) $780k. He can do this because the profit is so big. A lend on the basis of project cost wouldn’t cut it so instead you lend on the basis of completed value which is a fair way ahead of costs and a bigger lend.
Similarly, 65% on GRV $9m will be $5,850,000 – or enough to cover land of $2.5m and build of $3.3m.
Clear as mud? [blink]
Bob
hi kp
The 750k lend is on the 1.2 mil gross realisation.
The total lend on the gross 9 mil was total lend of 6 mil. each and every lend is different.
Theres ways of structuring it so the result is between a 65% and a 70% gross realisation depending on the deal.
These lends are not the normal lending and most banks will need alot of convincing to approve and is relatively specialised.here to help
Thanks Bob & Gross for clarifying…..
Reason for the query was that I am lookimg at something similar on a land subdivision…where total cost ( aquisition plus developemnt ) is in the area of 1.0 to 1.25 mil and gross realisation looks to be 2.24 mil thus lvr will be under 60%
Just going through the exercise of whether presales will be required before finance can be set..
kp
i’d love to be doing these sort of deals one day!!
how long did it take you all to get to this position, where your able to make these sort of deals ?
Hi kp
This is not a easy exercise and land subdivision is a different area again I don’t do then,one of my guys just does land sub division.
There was a post on land sub division last week and I got stuart to send him his last divison report and how it was worked out ( I think he was trying to find the value of his land, you’ll have to search)and email him for the report.
gross doesn’t work for land sub division hence I don’t do it.
oh and bob banks will do this type of lend I have done a 7 mil at 65% gross @ 8% rate.
But you have to be at the right time, for the right group and pitch it right ( I win some I lose some).
They are rare.
And for Property Passion look for a broker, there are a couple floating around this forum get accredited as a broker.
Work with a couple of bank managers and but a small gross lend to them.
They will then tell you how you should have presented it and work from there.
This type of lending is alot of work but I don’t charge normal $500.00 brokerage rates I am expensive to some.here to help
Yes gr I can think of one fund lender that will do 66.67% GRV at 11%. Queensland-based, maybe you know them?
Bob
hi Bob Dobelina
I’ve got to 70%grv and between 10 to 11.5% rate
I have a couple of people in qld that will do between 65 to 68%
Get ypur guys to email me if there in the market always interested in talking to lenders.here to help
hi Bob Dobelina
ask your lender if they get to 64 mil at above 66.5% gross.
looking at a finance deal at the moment.
syd
132 units 1/3 pre sold.
[email protected]here to help
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