Hello all,
We are looking for finance to fund a development in Adelaide.
We are in the process purchasing a block to divide into 2. We require funds for subdivision costs and a build of 2 new homes. We have not had a full price as yet on the build but have planned around $180,000 each home. Block purchase price is $140,000 sub division costs $23,000. were told most commercial loans are based on a million dollar loan so we are under this. We come to approx $550000 after all fees etc. We would like the interest to compound throughout the loan until completed or sold. Expected sale on completion is approx $330,000 per home (hopefully more).
We are purchasing under the company and will guarantor the loan. Our current home is on a redraw / line of credit and we wish to keep that as we use the funds to get by until the deals are completed.
Any suggestions would be appreciated.
Regards
DarrenHi Darren
Small Development funding has some many variables it is not a matter of 1 loan fits all and will depend on so many factors it is not funny. Had to believe but a lot of lenders will not allow for 2 properties on the same Title so unless you can get the land subdivided prior to construction this will eliminate some choice.
Buying thru a Trust with Corporate Trustee will make no difference as would be an expected structure however may add a little to some of the costs as some lenders charge for perusing the Trust Deed. Small bickies if the rest of the deal is correct.
Make sure you dont use your PPOR redraw for investment purposes as you will contaminate the interest deductions and not be able to claim such if it is not set up correctly.
Also many lenders will not factor in potential rent on the new properties until such time as they have been completed so that is something you need to bear in mind if serviceability is tight.
As i say we do a fair amount of this sort of funding and without a lot more hard data an answer is impossible.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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