Hi
My business partner currently owe a land in central Melbourne and has gone through all the steps in getting plans and permits for 5 story apartment block. Everything has basically been done, however we found it impossible for institutional money to lend for the development as they have alot of requirements, biggest one being pre-sales. We also find out that private lenders might lend the money to complete the development if the project has a good profit margin. If anyone could help me or direct me in the right way of finding a private funder that does development finance, it would be highly appreciated.
Cheers
There are a lot of different comercial lenders and most have specific niches that they are suitable for, if your project has good margins and presales is all your concerned about then there are lenders that can assist you. Having said this, i would suggest that having some presales for an apartment development is not a bad idea, it lowers your risk obviously, but it is also good for marketing to have have some of the apartments taken prior to it being finished.
Regards
AlistairI agree with Alistair whilst it is very a horses for courses matter pre-sales are a confort level for both you and the lender.
If the LVR is appropriate then not all institutional lenders require pre-sales.
If the LVR is bound the norm then you will find that private lenders may still require Pre-sales to cover their risk or the interest rate will be adjusted accordingly.
Personally for any of our funding in Qld we want to see a healthy profit margin or a percentage of pre-sales to consider funding.
Richard Taylor | Australia's leading private lender
Hi
I agree with Richard that depending on the LVR then pre-sales are not a pre-requisite.
There are some private lenders out there that will lend on Gross Realisation rather than Hard costs, whcih is probably the type of facility you will want to look for if you don't have pre-sales but the bottom line of the deal must be solid. If I know a few more details regarding the deal I could point you in the direction of some private lenders you may be able to help you.
Cheers
Matt Centrone
Investor Finance
[email protected]
Ph: (08) 8212 0788 Mob: 0402278019Thanks guys. In regarding the deal, its as Matt suggested. I was after someone to lend on gross realisation. LVR would be around 80% or even 75% on the land component, and about 70% on the whole overall project. I know 85% is pretty hard to get with no presales but i will even onsider an option with 2nd mortgages.
cheers
Sorry to rain on your parade but 70% of gross realisation on a 5 story apartment block with no presales is not feasible unless you have significant net worth and experience ot you are offering supporting security.
Regards
AlistairWhat are your chances of finding an equity partner for the deal? ie sell 20-50% of the development to another party who is cashed up. You can benefit in a couple of ways: lowered financial risk to yourself , realise profit on the DA/CC (may be able to sell the DA as part of a separate deal), share some of the risk & ownership with a 3rd party.
The cash injection/partner will then give you a better footing with the banks.
We fund developments without the requirement for pre sales, we are particular about location and product.
Sross
Please post your product details for all to see.
Richard Taylor | Australia's leading private lender
We lend at above bank rates, in the Melbourne Metro area only, we specialise in lending to developers. Because we lend private funds we do not have the same requirements as banks. We will lend to 78% of land value and 100% of construction costs. We do not lend to outer suburbs.
Hi Sross,
Can you please pm or email me through the site. I'm interested to hear more.
Regards
Alistair
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