Hi Corinne,

Have you resolved your insurance issue?

I'm in a similar situation and was wondering how we went about yours?

I got a quote from OAMPS Insurance brokers for $385 for Strata Unit Insurance. But the schedule of insurance cover mentions it as "Broadform Liability". I'm confused whether it covers my common area or not?

Regards,

Kumar

Would agree with others, that you won't need pre-sales if its a 3 unit development.

We are talking to couple of banks for a six unit development. Although me & my business partner meet the servicieability requirement for the develop & hold strategy, the bank was 'suggesting" we should get some pre-sales.

We appreciated their advice, because they were pointing towards that fact that, if we want to do more developments in the future, then this would become an issue.

So we said, we won't do any pre-sales, but definately sell some after the development, before we approach them again for the next development. Verbally they said its fine. Will see how it goes…when the actual application goes…..

All the best.

Hi Banker,

The assumption you have made is that beneficiaries lend the trust. Instead of lending, if the settlor/testator or beneficiary contributes to the capital (not sure of the legal term) of the trust (i,e the amount bequeathed to the trust) and that trust money if used as deposit for purchase of asset, then doesn't it afford asset protection.

We have unit trust. Me and my business partner have bought equal units in the trust. The amount contributed towards the units was used as deposit to purcahse the property at 90%LVR. A trustee company of which me & my business partner are directors were asked to give the Personal Guarantee.

Since it was our first acquisition and we didn't have any other assets for the trust, we gave the personal guarantee. In that sense our personal assets are at risk, if the bank doesn't recover the money from the trust. But my thinking was, once the trust has positive cash flow and property has appreciated, we could request the bank to let go the personal guarantee.

Once we acquire more assets in the trust, we will transfer our units in the trust to our respective family trusts. The family trust could be a discretionary trust, which will help in income distribution.

So I believe we have good asset protection and will potentially have income re-distribution oppurtunity once the family trust is set up.

Your analysis would be much appreciated.

Regards

B

Hi Richard,

I rang our Architect/draftsman to double check whether individual title will be issued before construction. He said definately "yes"..

So it looks like its quite possible. Will only know the reality once we actually walk the path.

So assuming we have individual titles for the six lots and the one existing house, is the idea of getting refinance from three banks feasible in your opinion?

Thanks for your help.

Hi Guys,

We've got 2100 sq mtr block of land with an existing 5 bedroom house.

Council has approved construction of six units on the block.

Obviously we'll have issues with financing the construction.

Our solution is to sub-divide the property and will seek refinance from three lenders for say 2 property each. That way they consider it as residential contruction and the land value will form part of our equity. The refinance will be at 80% of land value and then we seek the money for construction. We expect we'll have excess cash, if we manage to get 80% finance.

When we refinance for each lot, the existing financier will partially release the existing title.

The above strategy was formed after reading through the various posts and talking with the bank.

Do you guys think this approach is practical? Is there something else that we should be aware of? Has anyone had a similar experience?

Doesn't this effectively solve the multi-unit construction finance problem?

Your comments will be much appreciated.

Thanks