Hi. I posed this as a 'finance" qu, but am still not getting answers I need to hear. Please, if you are a REGISTERED builder, can you tell me this:
IF you have bought land in your company's name, (you are Director), then you want to build SPEC homes on it to sell (not for your own PPOR), then what finance structure have you used to finance the construction works please??
I have been told (and here) that banks will view it as an OWNER BUILD project. Which would drastically reduce finance options.
Plus, you would then only be able to build ONE every THREE years! So, how does it work to finance the rest of the deal??
Any advice/ suggestions/ stories?
If you are not a registered builder, and you are building it yourself, then you are an owner builder (in victoria).
Tools
Banks have no problems in financing Builders under the Development Financing arm subject to the usual checks and balances.
I hate to disagree with Terry but most lenders I am aware of dont consider registered Builders as Owner Builders so the matter of numbers per annum is not a problem.
Richard Taylor | Australia's leading private lender
You are classified as an owner builder!!
Perhaps no one has told Metricon then.
Richard Taylor | Australia's leading private lender
The term 'Owner-builder' relates to a person under the old Builders Licensing Act NSW and under the current legislation – how banks treat you is a commercial proposition regulated by the lenders not a licensing issue under DFT.
Have you approached your bank? Find out from their commercial lenders not the enquiries counter.
we build approx 40 or so homes a year & display homes every 18- 24 months… generally we may buy the land outright & then either fund the build ourselves also…. or if we are highly committed, we have other assets to leverage off. generally our displays sell very quickly as we have a very good reputation… (we are relatively "high end" type builders). the owners receive a guaranteed 7% return for a minimum of 2 years with 4 x 6 month options… these are generally in new areas either opening up or in already successful developments so our committment is generally short lived. Profits of course if any come under company tax law, so the tax man doesn't miss you…. this of course can be off set by rental we pay & outgoings etc etc.
do you own a building company?? or trying to build a one off type home??Hi misty1, we've had the same problem but after a bit of checking its only in the banks eyes that you are an owner builder, you still do a contract, specs etc, take out warranty insurance for the project, so once you sell it -go again theres no 'owner builder' limit. Only warranty insurance limits. Good luck
CheersThanks for comments everyone. Can anyone suggest which lenders may offer a reg'd builder an loan under these conditions (Ie as an "owner builder"? )
Would also like to know if any builders can recommend any lenders that offer lo or no doc commercial loans for units/specs/commercial ?? Thanks.
Hi Misty,
I posted this on your finance post as well.
I'm a registered builder in Tassie and have had exactly the same problem. Nearly everyone classed me in with owner builders when I was trying to get finance to build specs.
The only bank we had any luck with was the NAB. That was back in 2004 and we still enjoy a great relationship with them, using them for all our developing.
Best of Luck,
Pete
Thanks Pete. Any other suggestion too?
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