HI
I am hoping someone can give me some information about funding a small development process.
I have so far done a subdivision but have never built before and would like to buy a block and build 3 or 4 townhouses or row houses on it.
Can anyone tell me how getting this kind of finance differs?
Also how much would you need. I have calculated the whole cost or the process (buying bloc, subdivision, build and hold costs) at $650,000 and expect to complete in 1 year (hopefully sell off plan prior to that.
I have 130k in a line of credit which I recently with a 204k stand alone mortgage to do another deal settling next month.
I also have PPOR (last valued 320K) most probably about $350K owe 220K and holiday rental unit (last valued $300K) could come out at anything from 280K up owe 135K.Thanks in advance for any help.
Cheers
Hi Misty
Development finance is a specialist area and whilst a lot of lenders offer it it requires putting the application together in such a manner to make it attractive enough for the lender.
Usually, lenders will go to 65% / 75% of end valuation subject to this not exceeding 80% / 90% of cost price.
There are course always exceptions to this and that what makes the type of funding exciting.
Experience plays a big factor in convincing a lender as well as an exit stategy. Pre-sales certainly help in todays market place.
If you would like me to take a close look at the figures please feel free to email me.
Cheers Richard
Ph: (07) 3720 1888
[email protected]
http://www.yourstatefinance.comIP funding and US property finance
our specialityRichard Taylor | Australia's leading private lender
Hi Misty,
If you want a one year turnaround, make sure you buy something with permits. I’m probably telling you how to suck eggs here, but i have come accross people who have budgeted for one or two months for the approval stage before. This is a bad mistake.
As Richard mentioned, construction loans are quite interesting. When choosing a lender, make sure you look at the whole deal, not just the interest rate. Some like to lock you into a fixed number of drawdowns for example, which could cost you quite a bit of money, if it does not match with the payments to be made under your building contract.
Regards
Alistairhi misty
Not sure of the place you purchased your pencil from but its faulty so take it back.
The cost to do 4 townhouses working on a 8ok per site and thats not metro area with the price to hold for da and then construct and depending on the products, I would use styrocon you won’t be comming out of this little deal for less then 1 mil, I’m doing 2 duplex currently and thats 1.2 mil 3 hrs out of sydney. and thats on a da site.
ball park your looking at about 20k for plans and drawings and if you go for brick your town houses are going to blow out to 250k each.
yes building finance is a specialist area and I’m in it.
do all your figures first i’ll give you an example
merryland builder gets lend for 1.4mil bank of qld
pays for da 17 townhouses out of his pocket starts construct gets 1/3 of the way in and runs out of money job stops everyone chases him for money and he comes looking for a lender.
currently 5 lending institutions won’t lend him because they want it from the start and his figures don’t stack up.
Now I can be very creative with my pen and usually are but not half way down the track when the lenders already have the figures.
You must use a specialist building broker and set the deal up from the start they usually charge more and different ways then normal brokers and don’t get paid until the loan is approved.here to help
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