Buying Development Block, Cash vs Lending?

[JCM]

Hi all,

I am cashed up and ready to purchase a development site and am wanting to know which will give the best long term benefits if I am to continue developing. Would it be buying the property cash and then borrowing for the construction loan later or borrow to purchase the site and also for the construction phase?

I have $450K cash from the recent sale of an IP and I also have $250K in my PPOR which I plan to sell and rent thus releasing more cash.

The development sites that I have been looking at range are around the $420-$450K. Would it be wiser to buy the property outright then borrow against it for the construction costs or put down the minimum on the property purchase?

Also I am not working.................studying!

Thanks Everyone for your Input!!!

 

[Belu]

if it were me then yes i would buy the block with cash. that way you can move quickly - and thereby you should get a better deal, and you have a clear title to take to the bank which counts for a lot.

 

[Rolf Latham]

Also I am not working.................studying!

not many traditional lending options then

Cash purchase looks good

ta
rolf

 

[Aaron_C]

If you are in a position to borrow, then borrow. If not, then cash.

 

[Mick C]

Also I am not working.................studying!

Thanks Everyone for your Input!!!

Looks like your going to def need quite a bit pre-sales done + commercial lender that will take on future forecast or predicted cash flow in terms of your serviceability.

Borrow if you can( service) cash the rest...
But what ever you do PLAN ahead...dont buy the place and realize later NO banks will lend you enough to finish the project or the rate is so high that you can't afford it anyway....having a half finish project =

Regards
Michael

 

[JCM]

Some food for thought!

Yes I have been informed to purchase the property cash and then borrow for the construction from a Commercial Lender. That is probably where I am at with financial knowledge. I agree with Michael on the importance of planning way ahead as there are many obstacles in this game of developing that can stop one in their tracks.

Thanks everyone on your thoughts and advice!
Regards
JCM