All Topics / Finance / Townhouse development finance needed

Viewing 7 posts - 1 through 7 (of 7 total)
  • Profile photo of steve the paintersteve the painter
    Participant
    @steve-the-painter
    Join Date: 2011
    Post Count: 4
    August 6, 2014 - 8:25 pm

    Hi
    Can someone please provide assistance/advice on my situation.

    I am looking at doing a 3-4 townhouse development in Melb (NE suburbs) with an all up cost of $1.6m.

    I have $1.1m in cash.

    I have no other income.

    Where do I obtain the $400-500k to fully fund the project.

    Any help would be much appreciated.

    Regards

    STP

    Profile photo of wilko1wilko1
    Participant
    @wilko1
    Join Date: 2010
    Post Count: 510
    August 7, 2014 - 12:29 am

    If you obtain 1 presale for a home for say the end sale price 400-500k for one of the homes. Some banks will consider funding it. As it should be residential/ investment type lending up to 80% LVR and including rental income from the properties in the servicing.
    Also technically your 1.1 million is producing a income a high interest account of 4percent would at least put you on 45k a year.

    You should be fine getting finance.

    Profile photo of TheFinanceShopTheFinanceShop
    Participant
    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271
    August 7, 2014 - 8:57 am

    You will require at least 50% presales maybe more depending on the level of servicing required.

    TheFinanceShop | Elite Property Finance
    http://www.elitepropertyfinance.com
    Email Me | Phone Me

    Residential and Commercial Brokerage

    Profile photo of Rhys AdamsRhys Adams
    Participant
    @rhysadams
    Join Date: 2014
    Post Count: 14
    August 7, 2014 - 1:31 pm

    Hi Steve

    Your project will be easily funded with or without presales.

    Presales reduce the risk to the developer, not just the lender but I would go down the no presale path unless you have a negative view on the market as you’ll be able to achieve better sale prices marketing the completed product. At the proposed leverage you are proposing, the risk mitigated by presales is quite low.

    Without knowing your financial position, assumed rent on the completed townhouses will sufficiently prove servicibility on the debt limit.

    As far as where to go to get this funded…a finance broker would be a good first step. They will be able to provide advice on structuring, feasibility as well as funding options.

    Cheers
    Rhys

    Rhys Adams
    http://www.redcommercial.com.au/
    Email Me | Phone Me

    Commercial Property and Construction Finance Specialist

    Profile photo of steve the paintersteve the painter
    Participant
    @steve-the-painter
    Join Date: 2011
    Post Count: 4
    August 7, 2014 - 2:24 pm

    Thanks Rhys and to all for your suggestions. I think the finance broker route looks right for me.

    STP

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024
    August 9, 2014 - 12:00 am

    Steve straight forward Nodoc finance deal. Not a lot required to get such a deal over the line.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    August 9, 2014 - 10:08 am

    Yes should be easy without presales. You could almost just mortgage the land and do it for cash.

    You should seek legal advice on structure as there are many tax and asset protection issues to consider.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

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