hi new_world_monkey
i’m in the high lvr box but with rentals to cover it.
I am alittle with Derek but and yes banks don’t like high geared structures but I use developing to keep adding, with the help of growth and the built in profit margin in developing fuels you portfolio.
via this method and by having each project individual and stand alone without any cross collateral I find for me works very well.this is not to say it will work for you and should not be looked at in that manner.
I draw out as much equity as a lender will lend me so yes very highly geared.
I then use that cash across different lending enviroments not just property( in this current market the majority is currently in this market but thats because is a buyers market for a developer)
to give you an idea my structure has the ability to adjust to market change and for the last 2 years I have changed its direction to investing in development sites.
I have taken it from a lvr of 30% to currently upwards of 75% and trying for 80% which is near impossible for me.
I usually run two developments a year on average and have two in for lending this year already with green lights and I’m looking at another 4 by the end of the year.
it not just gearing you look at.
first
can you cover the cost of holding the project.
second
return and is it worth holding
third
if the worse happens have I got an out

mine
first
yes as I factor it in at the start
second
min 23% or I don’t look at it
and third
mine have cash flow mins to cover for 3.5 years without a tennant.

Hence I don’t worry about the lenders and there are a couple of thousand of them.
so you have to hit alot of walls before you can’t get lending from anyone nor am I worried about lvr’s
the other thing i don’t worry about but alot of people seem to want to know is net worth but thats another question.

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hi leesafinch
first forget return and or even investing
first learn.
you are in bris so go to a couple of investing meetings
next get to an accountant in bris that does investing structure somersoft.com have a bris meeting good place to start. or if they have a property invest group bris go there.
next sit down and work out what you are going to invest in
next what your risk levels are high risk /low risk.
next time how much time you are going to put into this project and money to learn.
then and only then
spend out money on your journey to wealth.
at this stage you will already have your structure and with the knowledge you have learnt,
you should know what returns depending on risk you wish to make.
the biggest and best weapon in your fit to get thru that journey to wealth in knowledge.
its no good getting in a car to go somewhere unless you have a map.
map it out first.
but make sure your car is ok hence get the structure right.
sounds simple but thats what investing is.
get it wrong and its expensive to repair a car
same is it repair a structure( the structure is alot more)
my .002 worth and this is not advice and should not be taken as such

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hi grant7
Just trying to digest all that.

first you get a end value of the project in your case 580k then you take 66.79% which is norm not 69% of the 580k which is 387,380.00 thats is the complete lend you have out of this 5% contingency cost 19.37k the lender hold this and interest 27.12k = 340.89k]

So are you saying the lender lends 340.9k (yes). Purchase price was 400k so would I have to put in 59k deposit (+costs)?? (yes)Why do they keep back 12 mths interest, does that mean I dont have to make repayments for 12 months?(yes as the loan is capitalised)What is the 5% contingency? (its the value the lenders hold for blow out and cost to complete if you run out of money most lenders run it at 5%)

will require a fixed price contract and will pay that in the way that the fixed price has been drawn up and can’t be higher then this amount and that is working out that the land is free of debt.
Is that just the sale contract for 400k?(no the fixed price build contract which must be in place prior to getting lending)

you don’t need council approval but its valued by a valuer on the lenders panel and they wont extend more the 66.79% of the value or work done and if its classed as a raw site the value is alot less.
The 580k is just based on comparable sales, if land subdivided. If I dont need council approval how would they know it is subdividable (ie. I havent made a mistake in zoning or something). ?( has the site got da approval if it hasn’t its classed as a raw site)
What do you mean classed as a raw site? (a raw site is a site that has not been given approval to increase it value via building or rezoning)

the above is also all ex gst so you need to fund the gst component which is 40k in this case on top on the lend.

Should I need to add GST on a residential block if the existing house is old and if I build 2 more I will rent for 5 years before selling (therefore no GST)? (check with your accountant as there are lots of different rulings with regard to site and what state)

Thanks for your time, and I’m having lots of fun.

Cheers
Grant

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hi BDM
I have read with interest this post and the main part of this game is not the offer nor the agent,
neither is that important the main part of this game is to get the deal across the line.
first you have made some sort of contact with their solicitor and you have a value that you wish to pay and you have a unhappy real estate.
so lets move the players and you must to get any deal to work.
first the real estate.
organise your own have a chat with a real estate you can work with and tell them in they can do the deal at this value they get a commission.
next ring the solicitor and tell them that you arn’t a negotiator but your real estate agent is and to contact them.
next ring the owner and tell them the same.
next give your real estate a cheque to be put in there trust account for the deposit of the value you want.
then organise a meeting in your real estate to organise a deal and ask all concerned that you don’t keep being annoyed by the other real estate and that any of their cost are carried by the vendor or split listing.
now comes the good bit when this is all done and they all meet at either your real estate office or their solicitors office( and thats where they will say) you then take over the meeting and tell them what a waist of money you have spent to organise this and you want them to pay part of your real estate costs or a reduction to the value to cover this cost.
if you leave that meeting without the deal it was not going to happen.
so get over it.
just because some one is not within what you class as acceptable does not mean you can’t win a deal the aim of the game is to win and if you have to take out a player so be it and in your case its the real estate so take him out and work around what you have.
and from what you have posted what you have called this real estate and his opinion of you is slight compared to nab’s view of me but they still do deals.
and suncorp is worse most of my builders have told me that they haven’t had a lender that likes me but if i want a friend leave that for a saturday bbq.
this is business so forget the real estate and work on the owners and the solicitor.
and a very interesting little piece of information with regard real estate agents if you buy thru one agent but you have registered an interest ie you have rang up about it with another agent you can get hit with two commissions.
read the contract and the part that says the purchaser will pay the commission of the introducing agent cross it out(nsw) and ask for it to be deleted,
I do as standard
if not you can get multipul claims for commission as they can say they are the introducer even thou they did not sell it.
you should see a contract for sale after my black marker has been thru it.

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hi Nat R
until you start to look you are very surprised at the level of the market that is out there that is either above, below or outside the asic arena for me it real unbelievable some times.
a very slight change here or a different way of doing it over there and it out side and once its outside it sailing heaven.
example
lending
house loan( simple structure) if its from a bank its regulated if its non conforming (its higher risk but still regualted to a degree) if you go mezzanine from a trust or fund its can be regulated but could be out side any regulator but if I borrow on one of my properties @7% and lend you to buy your property as a one on one agreement at 15% its unregulated and outside any lend criteria and as its under 18% is ok in wa and this is just a house loan 15% you may who would pay that well once you own it you refinance and pay me out.
you need to get a couple of sharp pens people to have alook at your project and work from there.
three people you don’t upset ato, osr,and asic, and try to work your deals around all three.
like going for goal around the forwards past the midfield around the keeper and into gaol.
sounds easy tell that to any soccer team or in this case anybody that wants to organise what is called fluid pen work.

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hi M_K
you can still develop in australia and produce posi properties.
its not easy but yes is very possible sorry not possible actual.
some are out side the cbd cities but posi with growth depending where they are.
you won’t find them on the net or waiting for some one to ring you and tell were they are you need to go bush and find them.

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hi Qlds007
on what resi end product or resi constuct or ppor need to give us a little bit more info.
still getting over the westpac 85% no lmi and when I spoke to westpac told no said but I was told this????
told no
went to head of lending
told no.
so whats this on
need to know on what and what criteria
sorry Qlds007 but not going to check twice.

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hi grant
maybe I can answer this one.
first you get a end value of the project in your case 580k then you take 66.79% which is norm not 69% of the 580k which is 387,380.00 thats is the complete lend you have out of this 5% contingency cost 19.37k the lender hold this and interest 27.12k = 340.89k the lender will require a fixed price contract and will pay that in the way that the fixed price has been drawn up and can’t be higher then this amount and that is working out that the land is free of debt.
you don’t need council approval but its valued by a valuer on the lenders panel and they wont extend more the 66.79% of the value or work done and if its classed as a raw site the value is alot less.
this is a brief explaination and a broker can explain it the best to your site.
usually 66.79% grossrealisation loans are the easiest to get thru a lender but most developments don’t fit this box because it relys on the project having 33.21% profit most projects have between 22 and 26% profit margins.
the above is also all ex gst so you need to fund the gst component which is 40k in this case on top on the lend.
I only have two projects that have grossrealisation loans at the moment and have top up internal funding to do the projects via equity.
have fun and hope this helps

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hi to both of you
each month this topic comes up and each month we get about 4 or 5 replys and it doesn’t change so I take it that it won’t,
I am of the opinion that what is posted there is of no interest to me so flip past them.

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