Forum Replies Created
Hi a little unrelated to the intial post but nonetheless relevant to topic heading…
I have been advised that to get a loan with no financial backing except a stable and high income I can form a discretionary trust structure, have myself as a beneficiary and one other person as a beneficiary (i.e. parents) who have a fixed security (personal home equity). If all the beneficiaries become guarantors, the trust may be able to obtain a loan given that servicability is satisfied with my income and security is satisfied using the security.
Please advise if any finance gurus here?
Oh I should have made it more clear, the current owners have purchased a new house and want to vacate the property and they are afraid that if they lease it to someone else, the property may be damaged and consequently until settlement will be liable to fix any damage (due to a very long settlement). In fact the current owners have suggested this, for me to take responsibility of any damaged caused by new lesee and in return extinguish the current owners from responsiblity.
I am thinking of writing up a simple contract where this fact is clear, that my intention is to sub-lease it out to another person.
Thanks mate,
Hi, it would be ideal to prepare one master version for myself, and ultimatly be able to leverage of that for tailoring to meet loan and business partner purposes.
Would you have some type of template which you could email me?
thanks,
brendogs wrote:I totally understand what your saying there Terryw but I should have directed my question to AALLII. Thanks for your response, I have done my research and I do believe that structure to be the best for this particular project as it is for yours. Which accountant did you get to set this up for you? I don't have much faith in my accountant for anything other than tax returns to be honest.I'm actually an accountant myself so I did the setup myself. Company setup is fairly straight forward using the ASIC form, and you can get a fairly generic trust deed setup using cleardocs, by googling.
Its best you do see an accountant if you are not familiar with these things and you can find them using this forum by reading other posts. Sorry I dont have any good ones who are experts in this field.
Although I am not advising you Brendogs, the structure I am using for my project wihch is similar in your work is where I have established a company to be a trustee of a discretionary family trust that will operate the entire project. I am doing this project with family members as such it is safer then to do it with strangers.
Benefits are that we are protected from legal liability to extend of directors duties are concerned and trustee duties, and we have the flexibility of distributing the profits to other family members to ultimatly reduce our taxation.
I agree with Terryw, you should seek professional advise, however prior to doing so, do your own research so you understand your options as noone is really responsible for yourself then you.
Qlds007 wrote:At 5 Units it is more than likely to be considered as a Commercial lend as you have suggested with a maximum lvr of circa 70%.Lenders will only lend against current value (assuming you are purchasing an existing block of unit) or a combination of cost / end value if you are buying land and constructing.
Either way your own Statement of Position will be important and limit assets will go against you.
Even assuming you have limited personal debt / no mortgage etc $65K PA x 2 is not much to service such a debt.
Any loan where interest is to be capitalised will need to have the interest factored into the lvr i.e if interest accounts for say 5% of the project over 6 months the lvr will be reduced by 5%.
Cheers
Yours in Finance
QLD007, just out of curiosity, what is generally considered to be in a generally good financial position? How much cash/assets does the bank want to see before feeling safe about lending.
Also, I'm hoping to have altleast 3 or 4 of the properties sold prior to building. If this is done and contracts signed but settlement takes place after build, how advantageous is this from a lenders perspective?
No, to be honest, I'm not concerned about the interest and whether it is capitalised. I actually prefer that as it will ensure I have more funds available incase something came up during the build process requiring funds which the bank will not lend against. The profitability of the project is quite high as such interest capitalisation vs payment each month and differing rates are not a significant deal breaker for me.
My most important factors as you said are getting the loan and having enough money to fund certain things which come up not entirely expected.
From what I have been told, banks only fund things which they can place security over, that is i.e. if there is a large rock on the land which is requried to be removed, they generally wont fund this, as such I am required to fund the process of removing it. Is this correct? or LVR funding will generally involve i.e. end project = 2m, therefore I have available 75% = 1,500,000 to fund entire project, even if the build costs only 900k and land was 500k (1.4million), meaning I will have 100k available for unexpected stuff.
Hope that makes some sense :p
The property (block of land with a house on it) is being purchased initially as a residential property between the two of us and will be begining the development either a month later or 2. The land was say 500k, and say we develop at a cost of 900k, and final output = say $2m, does this mean we have an LVR of (500+900/2000) 70% or (900/2000) 45%?
Although we do not have a strong balance sheet, we have a business plan, a detailed cash flow budget spanning into 24 months, budget balance sheet and income statement with various factors in place and uncertainty and risks in place. Despite all these and the fact that majority of the significant costs have been verified via quotes, is this sufficient or highly advantagous to the bank?
Anybody know of any good development brokers in the Melbourne area?
Thanks,
Also another matter, do banks generally accept finance structures where payment for total interest is due either 6months later or at the end of the project upon realising the sale of all properties?
oscar wrote:jazz77 wrote:If you dont have a builders licence you will have to go owner builder.
You cant do multi unit work as an owner builder anymore.Yes you can. For example, buy a block with your brother/sister etc. You can owner build 2 dwellings on the block where each individual has one each.
I agree there is always a loop hole
Mattnz thanks alot, thats very helpful. The problem is I’m not at the stage of discussions with builders as yet, but its great to have an understanding of the process before hand.
Thanks everyone
Thanks guys,
You are right, its important to have a buffer and I will likely include a buffer for risk in my calculations. however I'm intending to do a development with an overall total sqm's of over 860 which in turn means for every $100.00 it is likely to impact my margins by 86,000 (of-course net of GST).
Thats why I'm wanting to know what rates are likely to obtain before I begin negotiations etc so that I can have a better understanding of my buffer to negotiate.
Thanks Christian, while you are indemnified
on that advise, its a good starting point to understand that garages and balconies should attract lower costs.Thanks again
Would you know the very rough range for both garage and balcony? I understand they would vary however just a basic modern garage as you would see in many places around the country.
Thanks
Now does your calculations for $1500 m2 differentiate between garage and balcony. I.e. What would be the costs say for a 3 bdr, 2 bathroom double garage, attached double story townhouse be for the following size:
T'house = 135.15m2
Garage = 36.56m2
Balcony = 15.59m2
TOTAL = 187.30m2Thanks,
Also what do you think about the design size, i.e .is the balcony too big in proportion to the THouse (12% of the Thouse).From the above posts it is seen to be approx 1500 pm2, however does that price include for the entire hosue including garage, i.e. 187.30 x 1500?
thanks,I thought a builders licence was only required for the heavy work, whereas things such as painting, landscaping, tiling etc was not required by a licenced builder specifically, please advise if my assumption was incorrect.
thanks,
How much can be negotiated for economies of scale, i.e. building 5/6 units on a block rather then just 2 or 3?
What percentage could one negotiate for this sort of thing?
My father is a painter and obviously we can have the painting done ourselves, and the other areas such as landscape and plumbing and electrical we could organise for subcontractor to do directly by contracting it these things. Just wondering approximaltly how much discount can one obtain by having these things done one-self.
Also if you engage a builder to do these the entire project, they essentially act as the property development manager? There would be no requirement to obtain a development manager to oversee things. What do you guys think about that. thanksThanks Chrstian,
does that price of approx 1500 inc GST include from start to end, i.e. carpets, all kitchen, painting, landscape, curtains, air cond/heating etc?
It also seems so expensive when you consider a 21.5 square unit (200sqm) to cost approx 300k to build. I would have thought it would be low 200k.
What are some ways you know one could potentially save money, i.e. sub-contract painting, landscaping etc so you dont have the builder to be the middle man.
Any help would be much appreciated.
thanks,mace wrote:Hi All,I have spent the past 2 hours trawling through the Forums to see if I can find an answer to my question:
"What is an 'accurate' and 'up-to-date' cost per square metre to construct a 200m2, 2-atorey 3 bedroom townhouse of a reasonably good finish in Melbourne"But to no avail.
The answers I have found so far range from around $900/m2 – $1,500/m2 inc GST
Which is obviously far too big a range.
E.g. Washington Brown cost calculator
http://www.washingtonbrown.com.au/building-cost-calculator/ estimates approx $1,400/m2 inc GSTBuildChoice cost calculator
http://www.buildchoice.com.au/construction_cost_calculator.htm estimates approx $1,350/m2 inc GSTAnd BMT cost calculator
http://www.bmtqs.com.au/ConstructionCostCalculator.aspx estimates approx $1,350/m2 inc GSTAs well as numerous posts from this forum suggesting between $900 and $1,300
I built my own 40square house around 5 years ago, but that was obviously quite a different project. This is my first townhouse development, and I am trying to perform a feasibility on a 2 townhouse development in Melbourne, and trying to establish some accurate construction costs. I am looking for a reasonable finish on the project, and not trying to build "on the cheap"
Each townhouse is approximately 200m2, and if I take the figures above, that would indicate that construction costs could vary from: $180K – $300K inc GST. Which will obviously have a huge impact on the profit margin.
I need to narrow this estimate of costs down to a smaller range. I.e. If I could work on $1,000 – $1,200 Inc GST, or $1,200 – $1,300 Inc GST, then that would make me feel a lot more comfortable
Has anyone recently built townhouses in Melbourne, or knows enough to provide me with an accurate and up to date cost per square metre (Inc GST) to construct a 200m2, 2-atorey 3 bedroom townhouse of a reasonably good finish in Melbourne. Including Landscaping and driveways
Any thoughts, feedback or comments greatly appreciated.
P.S. I will probably be engaging in the services of a construction company to develop the townhouses, so the cost I am looking for at the moment is what it will cost me to have someone build them for me.
P.S.S. I assume I could save around 20% on a builders margin if managed the project myself – which is definitely an option.
Thanx heaps
TonyAre you sure these prices are including GST? That also makes a big difference if it isnt.
I'm interested in this information too if a builder or someone recently build in Melbourne can give us some feedback.Thanks,
What do you mean by everything? Do you include cost of the land aswell?
on that advise, its a good starting point to understand that garages and balconies should attract lower costs.
