Hi everyone,
I have come accross a great deal in the inner suburbs of Melbourme.
Purchase price: $1.4 million
Corner Site comes with plans and permits for 3 townhouses.I will be structuring this deal to be subject to the REA effecting the signing of contracts and deposits received from the two smaller townhouses, off the plan, being sold for $1.2 million each, within two weeks of contract signing.
If this is achieved, (the buyers love the plans but are too afraid to build the whole development themselves) and the contract goes unconditional, I presume this deal must be seen favourably by the banks as a relatively safe deal.
My question is, with the 2 townhouses sold, how much higher can I stretch the LVR, to lower my cash down for the project.
I plan to go on either residential or commercial, depending on the the best deal I can achieve with the banks.If I have to, I will lay down 20% for house and build costs, put would prefer to put in far less if possible.
Can any brokers out there advise on what banks may be prepared to offer on this type of deal?
Thanking you all for your time,
mccoz
mccoz
With 2 out of 3 unconditional contracts you could probably go to 66% of gross realisation for the entire project especially if you can show cash or equity to cover interest repayments and contingency if needed.
Will pay a little more for the higher lvr but gives you opportunity to go again.
Richard Taylor | Australia's leading private lender
Chances are you will not get the deal through on a residential basis, as it is clearly a development loan. 3 properties is a bit hard to explain away.
The pre sales will certainly boost your ability to pick up a suitable finance facility.
You could go for a wide range of options, it all depends on what you intend to use your funds for if you don't put them into this project.
By this, I mean that you will pay a premium to get a higher LVR, but if this frees up cash to complete a simultaneous project then it is probably worth it.
I have a range of commercial funders that will fund everything right up to 100% of the land purchase and costs, providing the deal stacks up, and the orevall position of the borrower, experience, ability to complete etc etc.
70-75% of the completed value is no problem.
Another way to go is 90% of your hard costs.As I said, it all comes down to what you need to hold on to your money for, and if that is more profitable that the additional interest you might incurr.
Ok. Thanks Richard and Tim for your comments.
Great that I have options. What I now need to do is to firm up my business case and show the banks how solid this deal is, to improve these options.
Thanks again.
mccoz
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