GR funding

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 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

here to help
If you want to get involved in some of the projects I’m involved in email to [email protected]