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Aaron_C
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@aaron_c
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Post Count: 65
March 14, 2012 - 1:51 pm
As the boys have stated – this IS a commercial loan. In which case your ‘income’ is not so important – the most important thing is can you afford the debt for the project. This may involve using other assets you have (but you have indicated you don’t have much else), or pre-selling the units in order to clear the debt upon completion. Please consult with a broker who can give you some good advice on where to go. Commercial funding for development is definitely more complicated than its residential counterpart so make sure you have all your documentation in order.
Just bear in mind though (as Richard has indicated) that banks do not like cash-strapped developers – because they know that there is a high chance of you going bust halfway through and leaving them with a half finished site, which is basically one of the worst securities a bank can have.
Aaron_C
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@aaron_c
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Post Count: 65
March 14, 2012 - 1:44 pm
That’s correct jazz, as long as the property you’ve bought is not a commercial property – then it gets a bit more complicated.
Aaron_C
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@aaron_c
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Post Count: 65
March 14, 2012 - 1:43 pm
Maria if you are having problems with affording your own place, that means that you are either limited by a) your income or b) your savings. For most people starting out the limiting factor is your savings. Therefore you have to buy a property that allows you to use maximum leverage, which may mean going up to a 95% LVR lend.
This is where the problem with 1 bedroom apartments in the CBD comes to a head – no one will lend you more than 80% of those property’s value – hence you will never be able to afford it anyway. Best to focus on areas outside the CBD where you can afford something with better leverage and get into the market.
Aaron_C
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@aaron_c
Join Date: 2012
Post Count: 65
March 14, 2012 - 1:40 pm
Maria,
They are being built for several reasons:
1) As a developer, selling the student accommodation to a hapless ‘investor’ yields the greatest return. Student apartments are typically about 23 sqm, and they can sell to some idiot for $10,000 a sqm. Since they are small, the developer can fit heaps of them in one development – hence maximising the use of the site.
2) People still buy them!!! People get sucked into the ‘rental guarantee’ that they fail to see the pitfalls of it. But I think less people are getting sucked in.
3) It is easier to get approval for student accommodation because there is a much more relaxed car-parking requirements. If you were to build normal one bedroom apartments you would need to provide 1 car park per bedroom – which adds lots of costs to the developer.
Those are the main reasons – as long as you don’t buy it, just let it be someone else’s problem
Aaron_C
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@aaron_c
Join Date: 2012
Post Count: 65
March 14, 2012 - 1:36 pm
Technically speaking the rental income from the property has to flow to the person who owns it.
However, what can happen is an arrangement is made between you and your friend, so that all the rental is paid from him to you. The agreement would have to be in writing (preferably) and detail why he is paying you the rental – perhaps it could be in return for you paying the mortgage repayments etc.