Hi, this is my first post. My husband and i are looking at purchasing a triplex block to build 3 villas in Perth. My question is, do we purchase the existing house and land first and then re apply to the banks for funds to demolish the house and develop the 3 units or is it set up some way different from a normal loan at the commencement of purchase? Thanks in advance, any help appreciated :)
annie
moving fwd through the minefield!
Tread carefully with how you finance the original purchase. Your lender won’t be pleased if they suddenly find they hold security over a vacant bit of land rather than what they originally financed which had a house on it. The act of doing the demolition will make the site worth less for a period of time.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
JacM has touched onto some of the basics here, be careful!
You need to use the right lender who will allow you to do a 3 on 1 development, with favourable conditions.
There needs to be a careful balance of the LVR with the demolition and construction, as well as end values as they will initially value it as OOL, (three properties on one title, not 3x individual properties) which always tanks the val until new titles are issued.
If you haven’t got an investment savvy broker, get one ASAP who can walk you through the process and make sure you don’t make any costly mistakes moving forward. :)
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
thanks, how do you know when you have an investment savvy broker?? or a good accountant for that matter??! we have used the same peeps for 10 years or so but i often wonder whether we could be doing better. it is the not knowing factor that i find hard.getting back to the triplex block , what time frame is average for a subdivide , demolish , build and issue of titles? and obviously it would be beneficial to buy a house which is tenanted so i can at least keep the rent coming in while the initial work is being done with designers, shire etc?
annie
moving fwd through the minefield!
That really is the difficulty in life Annie – you don’t know what you don’t know! The best you can do is look to people with a strong track record with investment clients and preferably investors themselves. Referrals from other investors obviously can help. Otherwise you can end up with poor selection which ties you down a more expensive path, or have to switch to a lender who will allow you to go down the path you need.
Development time frames, really dependent on the shire, current zoning, any potential objections to the developments etc. I’ve had a few WA developer clients recently aiming for 18 month turnarounds – but very possible to go over this depending on the construction method.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
thanks , and that is good to know re the 18 months , i will keep plodding. my fear is we are already stuck in a poor cash-flow situation with 6 investment props, but lacking cash-flow to move fwd ! anyway as they say , start thinking outside the box and never never never give up!
annie
moving fwd through the minefield!
Hi Annie
Hate to say doesn’t sound like your peeps having been giving you proper advice if you have 6 IP’s and still lack cash flow.
3 Units on a single title can be done but limit lenders especially at the higher lvr’s.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Richard,
One is a broker and one is an accountant. they are not financial advisors. i got stung here in perth a few years ago wasting a lot of money on a so called financial advisor who did absolutely zero for us. i find the whole are so murky from all i read i am not sure who is good and who isn’t.
annie
moving fwd through the minefield!
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