All Topics / Help Needed! / property development

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  • Profile photo of charlie123charlie123
    Participant
    @charlie123
    Join Date: 2007
    Post Count: 19

    Hi all,

    I am interested in getting involved in property development, primarily units. The problem is that although I have a sizable cash deposit I could contribute towards the deal I do not have a tangible income stream. Is there a way of somehow offsetting the interest charges until the end of the project as I could not comfortably carry the burden of a construction loan on top of my current commitments. Can anybody possibly advise on lenders that may be able to assist.
    Best regards,[eh]

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Hi

    It would depend on your level of cash deposit. If there is enough equity in the deal, many lenders would consider capitalising the interest. But you could also reduce the amount of cash put in and then use the remainder to fund the interest.

    Terryw
    Discover Home Loans
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    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Capitalise the interest and also go for a lodoc / nodoc commercial development loan.

    A little higher rate but still very do able.

    Cheers

    Richard Taylor
    Residential & Commercial Finance Broker.
    Licensed Financial Planner. Ph: 07 3720 1888
    [email protected]
    New 100% Shared Equity scheme coming soon – Email us for details.

    Richard Taylor | Australia's leading private lender

    Profile photo of Alistair PerryAlistair Perry
    Participant
    @aperry
    Join Date: 2004
    Post Count: 891

    Hi Charlie,

    It is common that developers of sizable projects are not in a position to service their end debt, so lack of income is not really an issue in obtaining a loan. As long as there are good margins in your project and you put some money in (as a rule of thumb 20% of costs) you should have no problem getting a loan with the interest capitalised.

    Regards
    Alistair

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