Forum Replies Created
HI Gavin
Most financiers will want to see at least rough plans as they do their own feasibility on your site before they decide whether or not they will lend on the project. We get provisional finance all the time for developments without a DA but you do need to have at least some concepts and a property prepared feasibility with ALL the details. The better your feasibility the more confident the lender knows what you're doing.
You might find that your lender will be prepared to give you conditional approval on the proviso that your DA is accepted. Obviously if it's not they're not going to lend you.
As you your question as to whether or not you can fund the DA costs from the lending, if they're lending on the development itself, then obviously it will need to be approved. YOu might have to foot the bill for the initial stuff from your own pocket (or get an investor partner) but might well be able to repay yourself once the DA and finance are approved.
Hope that helps!
Regards
A
Hi noclue
Good question – and the bane of every developer's existance – especially in the early stages.
Some of the Quantity Surveyors around have guidelines – I use BMT as a guide for my feasibility calcs – http://www.bmtqs.com.au. Of course, as you get closer, getting builder's quotes will give you a much better idea.
Regards
Congrats!!!!
Yes, anything is possible – and you went about it the right way – trying to find out what the vendor wants.
I find it so important to get past the agent and directly to the vendor in order to create win-win situations – so often the agent jinxes a deal that could be great for all parties.
Well done – with that attitude it’s all up from here! Looking forward to hearing about more of your successes.
Megan
http://www.propertyhub.net
Your Investing, Structuring and Developing Information Hub.There are a number of “build it yourself” site support systems around – all are terrific and v. easy to use (you don’t have to be a techie). In the time it takes you to brief a designer, you could have your site up and running and change it as often as you want.
Email me at [email protected] for details and I’ll give you the names of the best ones.
Hope this helps.
Megan
http://www.propertyhub.net
Your Investing, Structuring and Developing Information Hub.Dianne
You can lend money to the Trust to get started and pay back the loan from profit. As well, as suggested, you can distribute profits to beneficiaries.
I’d recommend you talk to an expert – see our site, we have links and info re structuring.
Hope this helps.
Megan
http://www.propertyhub.net
Your Investing, Structuring and Developing Information Hub.Hi Mukta
Just did a transaction like this. Got 1st mtge from major bank, vendor left in balance of 20%. Bank did’nt have a problem so long as vendor didn’t ask for “Letter of Priority”.
Shop around with brokers, if you have no luck with the bank. It amazing what’ll they’ll do if you just ask. Ask “how can we do this” not “will you”.
Brokers or even solicitors funds are other options
Hope this helps.
Megan
http://www.propertyhub.net
Your Investing, Structuring and Developing Information Hub.Burlboy
My suggestion is talk to a good mortgage broker. With that kind of equity, you should be able to access it through a NODOC loan and even, if you weren’t borrowing all the equity, capitalise the interest.
A good broker should be able to set up a Line of Credit that would allow you to do this.
Hope this helps.
Megan
http://www.propertyhub.net
Your Investing, Structuring and Developing Information Hub.Hi
I agree with Roy – you really need to consider the costs – strata levies are usually high because of facilities, lifts etc and maintenance on these types of blocks.
As with any investment the things to check are re-sales in the area, real values (not what the agent says, vacancy rates as well as outgoings. Then there’s your rental return (residential or holiday).
Demographics also come into play for these types of apartments. High rises are traditionally occupied by couples or singles in groups, not families. Is this the demographic for the area? Might influence whether or not it’s easy to get tenants.
I’d have a look around for other properties in the area of a similar price and do you calcs as to your overall return to see if it meets you investment objectives.
Hope this helps.
Megan
http://www.propertyhub.net
Your Investing, Structuring and Developing Information Hub.Hi
Syndicates can work really well but you need to abide by the rules (as outlined above).
If it’s small and with colleagues or family etc, not so much a problem but I would still have everything checked by a solicitor – is well worth the cost.
Regards
Megan
http://www.propertyhub.net
Your Investing, Structuring and Developing Information Hub.The whole Trust/Company issue can be very complicated and depends very much on what you’re trying to achieve.
Trusts will certainly give you some asset protection but there a number of different types of trusts and the ones you use depends on your circumstances, what you’re trying to achieve and, even which state you live there (there are different rules for each state.
I highly recommend you get a copy of the book by Ed Chan – details are on our site – and talk to Ed or one of his team who specialise in this area. It will explain to you the different kinds of trusts and how they can be used.
At the end of the day, you should always get professional advice BEFORE you buy any property as it could save you 000’s. And, yes, every situation is different so you will need individual advice.
Ed’s firm can be contacted on 02 9684 2011.
Hope this helps.
Megan
http://www.propertyhub.net
Your Investing and Developing Information Hub.Hi Ron
Welcome to the wonderful world of developing!
As mentioned above, you will have lots of homework to do. First and foremost, do a comprehensive feasibility on your project. I know that software has been recommended but a spreadsheet will do the same thing. You will need to take into consideration the following (and more) – design costs (architects, surveyors, engineering, etc), DA lodgement costs, council contributions (DA will tell you this), purchase price of land, construction costs, finance costs (including establishment fees, bonds, etc), interest on loans, construction costs including site costs, subdivision costs, marketing costs (if you sell them), legal on both pch of the property (if you don’t already own it) and the sale of the units (if that’s what you’re planning to do).
The potential errors are underestimating costs or leaving out costs, not budgetting for full finance costs, not including a margin for hold ups for bad weather, slow sales, etc, overestimating final values of completed properties – just to name a few.
You can get some free info on our site.
Hope this helps.
Megan
http://www.propertyhub.net
Your Investing and Developing Information Hub.Vernon
Without knowing what service it is it’s difficult to comment however I would hazard a guess that it’s very difficult to give an accurate valuation without actually seeing the property (and it sounds like they don’t).
Depending on what you’re aiming to do (buy, sell, refinance etc) a low (or high) val might be advantageous however overall, if you’re aiming for accuracy, I don’t know if a service like this would achieve it.
Hope this helps.
Megan
http://www.propertyhub.net
Your Investing and Developing Information Hub.Can you clarify what you mean by “tax free”? Do you mean stamp duty free?
In relation to which way to go, it really doesn’t matter. It’s the deal itself you need to analyse. Whatever you buy, you’ll make more money (increase equity) if you buy below market. Also, you need to weigh in rental return.
Overall, you need to compare deal vs. deal regardless of whether you spend $250K or $499K. What are you looking to achieve? Cashflow? Capital growth? Have a think about your overall strategy and they find properties that deliver the result. The price is sort of irrelevant.
Hope this helps.
Megan
Megan
http://www.propertyhub.net
Your Investing and Developing Information Hub.Psyduck
Congrats on taking the big step on your first property. You’re on your way now!
Sounds like a great return for capital city. You’ve made a good choice.
All sounds advice above.
Can i add – you can’t claim depn until it’s a rental property. Chan & Naylor (Dave Austin) at Oatlands (Dundas) are great accountants and understand property totally. They will be able to advise on all of the above plus why you should use structures and which ones suit you best.
It’s probably too late now, but buying this one in your name was probably not the best idea, esp, if you’re planning a decent portfolio. Before you sign anything else, go have a talk to them (or someone). Could save you thousands if not more, by getting it right.
Don’t let that put you off however. Most of make the same mistake first up!
Hope this helps.
Megan
Megan
http://www.propertyhub.net
Your Investing and Developing Information Hub.GR
I assume you’re talking about manufactured home sites. In my experience, depending on location, (obviously) site costs vary however, as a guide, existing sites typically start around the $90K mark and go up to around $200K (including the relocatable home). Weekly returns start around $80 and go up to around $130 pw.
Hope this helps.
Megan
Megan
http://www.propertyhub.net
Your Investing and Developing Information Hub.Haven’t heard anything negative – and they seem to have ok info – but it’s all a bit “bland” to me – nothing too specific.
There’s nothing like doing it yourself to really get a handle on how it all works.
Megan
Megan
http://www.propertyhub.net
Your Investing and Developing Information Hub.MissK
It can be daunting starting off. I might be able to help – or point you in the right direction for a chat. Send me an email and we can exchange details.
I agree that you need to read as much as you can however there comes a time when (as it seems you know) it’s information overload. If I can answer any questions for you, I’m happy to help.
Regards
Megan
Megan
http://www.propertyhub.net
Your Investing and Developing Information Hub.You’ll probably get a better response from a broker who does construction finance than a bank (unless you have a previous track record.)
100% construction finance is not unusual but most lenders will look at Gross realisation (end value) of the development before working out what they’ll lend.
Hope this helps.
Megan
Megan
http://www.propertyhub.net
Your Investing and Developing Information Hub.You’ll probably get a better response from a broker who does construction finance than a bank (unless you have a previous track record.)
100% construction finance is not unusual but most lenders will look at Gross realisation (end value) of the development before working out what they’ll lend.
Hope this helps.
Megan
Megan
http://www.propertyhub.net
Your Investing and Developing Information Hub.20% is considered minimum by most developers. If you can get 30% you’re doing better than most.
Hope this helps.
Megan
http://www.propertyhub.net
Your Investing and Developing Information Hub.
