Richard hit the nail on the head. Whatever you do don't let them pay down the IP loan even if it means giving them cash security.

Thanks for the comments Will. The developments we have financed are already pre-sold, that hasn't been a problem. I'm pretty concerned about the settlement risk on these projects though as the sales prices, while currently supported by the market, are very high. Hopefuly the activity you mention helps keep prices high for a little while. Don't…[Read more]

Hi Will,

How is the market in Port Headland at the moment? I have a few clients developing land up there and it seems it is doing a lot better than some other areas in the North West. I, unfortunately, have just finished building he in Karratha and it seems I will get around $200k less for it than i would have 6 months ago.

Regards

Ozman,

If all you are interested in is the interest rate on your loan UBank are probably the cheapest at 4.62%, you have to go direct with them, it will be very much a no frills product and i'm not sure if there are any upfront fees. The lowest carded rate that I know i can write, from the top of my head, is Mac Bank 4.84%, there are some bells…[Read more]

The answer to both questions is "yes", do you have a PPOR as well though? To maximise the tax efficiency of your structure you need to address all debt, debt payments and income flows, but you are on the right track.

Ozman wrote:
Alister I agree that on the face of the information supplied they are not in a very strong bargaining position. They are certainly not in the Premier banking customer category and
the deal they can cut will depend who they bank with in this case. In the present financial climate first time buyers need to be looking at their figures…[Read more]

Sorry Ozman, but it doesn't work like that. If there is no broker there are branch and related costs. Broker commission is not a direct added expense, there is no lender that will discount the potential brokers commission just because there isn't a broker involved. I'd be pretty surprised if any individual could negotiate a better rate than a good…[Read more]

Hi BertieB,

I'd be interested to know what you think the job of a broker entails?

I'm not aware of them not disclosing commissions and I don't know how much they charge. It is ridiculous to suggest that anyone buying through Blue Wealth, or any similar company for that matter, would not know that the company is receiving a commission. As for PIPA, who are they? I've never heard of them, I've never heard of Ben Kingsley and,…[Read more]

I know Tony Hayak, the owner, personally. Tony puts a lot of work into both where they buy and the developers they deal with. They get well paid for sales, but as a developer you can't buy Tony just with high commissions, I know this because my main business is financing property developers and i can't get Tony to do my clients pre-sales because…[Read more]

Better idea, go to http://www.townplanning.com.au which has zoning maps and overlays as well as a measurement tool so you can measure the area of the block you are are interested in and any other block in the area that is of interest. as with onthehouse.com.au the measurement accuracy is not perfect, but it is certainly sufficient for an initial…[Read more]

Hi Harry,

If you are just going to build 2 or three dwellings then get yourself a builder and manage it yourself. If you end up going larger then it may be worthwhile to get a project manager and tender out the work.  

Regards

Hi Tom,

My view is that despite the various issues that have confronted the industry in recent years it remains a great industry, particularly if you enjoy being involved in and talking about the property industry. The average age of brokers remains pretty old, so there is a need for new blood. The downside is that it takes a while to obtain a…[Read more]

You are probably wasting your time speaking with CBA re this project. Firstly, because you will almost certainly be building more than 5 dwellings they will apply an 20% "in one line" discount to the valuation, they will quote a max loan amount of 70% GRV (Net of GST), but post the discount you really only get 56%. Is worse though, if the loans…[Read more]

My understanding of the legislation is that you can capitalise rental losses s there is no requirement to top up cashflow from outside an individual investment but, as Terry stated, you can not have a particular structure that's only purpose is tax reduction. It would be pretty difficult to justify how directing all income from a property to pay…[Read more]

No problem. Depending on the size of the development you end up doing the file may be dealt out to a property finance specialist within the bank, it certainly will if you are building 18 apartments, they have different policies with regard to things like the balance sheet of the borrower than a regular relationship banker. Your banker's advice is…[Read more]

Hi Getafix,

One thing you have to understand is that there can be a big difference between what a relationship manager says they can do and what they will actually do. The %'s you quoted are not the policy of any of the majors, although they are closest to what ANZ can do. ANZ would require 75% debt coverage with presales, I suppose this may end…[Read more]

Hi David, It depends if you are wanting to borrow to develop the land or just for the acquisition. These are two very different scenarios, but either way, rates are very low at the moment.

Hi,

some lenders are willing to apply an enterprise valuation against the profitability of a business and lend against this figure. With a Motel Leasehold there are also lenders with specific policies on valuing businesses. I haven't done a loan against one of these for a while, but have done quite a few in the past, I'm sure there are still…[Read more]

We've put up a short summary of the changes on the web site for our town planning business:

http://www.town-planning.com.au/reformed-planning-zones-victoria

I think the biggest changes have been with regard to the Business and Industrial zones. Particularly with regard to where you can put supermarkets and offices.