Hi,
I am currently doing my first development project (under my company name) where I’ve acquired a block of land, got planning permit approved and I am in the process of organising the building permit. While the process is long and time consuming, I am exploring the option to run multiple projects simultaneously to maintain good cash flow and also mitigate the risk of property market fluctuation by having projects at various stages at one point of time.
My question is, how do I go about securing finance for such projects from land acquisition to development, subdivision and all the way to selling? Based on my salary, my bank will not lend me money for another project. There must be a way of funding this as a business. I would like to get in and get out, i.e. sell all built dwellings is required and the condition of pre-sale is not an issue as well.
Any help will be appreciated.
Regards,
AmitRunning multiple projects simultaneously is a great way to go bankrupt – which is why the lenders won’t be too keen to lend.
The % change of failure causing multiple developments to collapse like a house of cards is a risk which you should be considering.
Generally if you’re wanting to complete multi developments simultaneously, you’ll need to have a strong cash buffer and income to get to that level – can’t go 0 to hundred.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Hey Corey,
Thanks for the response and I appreciate you highlighting the pitfalls in doing multiple projects. To add more detail to my intention:
1. Looking at no more than 3 projects at a time
2. Each with 3 to 5 dwellings max
3. Strong Equity growth from couple of properties I have purchased
4. Strong income to support repayment
5. No intention to hold onto the developments I’ll be doing, I would rather inject the cash back into future projects.Does this still sound unreasonable or too risky proposition? What are the risks (other than the obvious ones like property market crashing or me losing my job) that I should be aware of?
Also, are there lenders who look at it solely as a project and lend money accordingly, rather than considering me as an individual with 2 home loans and set monthly income?
Hi Amit
Without pre-sales you will need to show serviceability for the entire peak debt plus your other liabilities.
A non coded no loan might be possible but certainly isn’t going to be cheap.
Welcome to the world of development funding.
Cheers
Yours in Finance
0-40 Properties in a decade. Ask me how.Richard Taylor | Australia's leading private lender
Thank you for your response Richard, that was very informative. I’ll visit your site to gather more information.
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