After completing several renovation and small development projects we are keen to continue with more of the same, but possibly some larger renovations in more expensive areas of Melbourne. So far we have been using standard loans from Westpac at 85% LTV and using our own money for the 15% deposit, costs, interest repayments and renovation costs. On one project at at time of $300,000 – $400,000, this isn't really any problem, but we are hoping to have maybe three or four larger projects on the go at the same time, so to cover all the deposits, costs and reno costs on that would mean a lot of money tied up. Is there a better way? Has anyone used private investors for their projects? Where do you find them, what interest rates do they expect or how much return from a project do they expect if they cover all the costs? Are there any loans available that can be taken out at the value of the completed project, loans which the interest can be capitalised on and just paid out at the end of the project?
Any information would be very welcome. Thanks.
i am actually looking for a joint venture in renovating or developing in property. email me about the business plan at [email protected] if you want a partner
Yes there are lenders out there that lend against the Gross Realisation or end value of the project but at $300-$400K per property the deals douns too small.
Most standard development deals on say 4+ townhouses / units are done on a GR basis.
This day and age these lenders want to see a good asset base (even if they are not taking security against your other assets) / track records and where possible some pre-sales. Interest rates are of course a little higher.
Richard Taylor | Australia's leading private lender
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