Development finance experts ?

[PropDeveloper]

Hi all

I want to get some finance in place, and ive noticed that there are brokers on this forum, id like to work with one and see how im going to fund my next development.
Do any of the brokers on here have experience in development finance ? Or even other developers on here have any recommendations or tips ?

I really want to make this work and obviously funding is fundamental to it all, so any opinions, tips or recommendations are welcome.

 

[Qlds007]

Why not post the type of thing you are after and then we can all comment for you.

Depending on the numbers and 101 other things will depend on the level of funding that is available.

 

[PropDeveloper]

ok so what im wanting to do is buy a property with an existing dwelling and construct behind it. i need the funds to undertake the acquisition and construction of the development.

The plan is to sell both dwellings, ive read things about gross realization loans, and im thinking that this might be an option? Do i present a business plan to the bank for this type of loan? Or maybe sell them off the plan ? Anyhow thats the type of thing im after.


If someone in the know-how would also be so kind to share what types of criteria the banks looks at when doing these types of loans, that might help too.

 

[Qlds007]

Forget your standard Banking lender on a Gross Realisation loan as this is normally the domain of specialised development lenders.

Whilst still available the average GR lender is looking at a combination of your current assets and liabilities as well as the viability of the overall project and your current income.

Certainly pre-sales will make the deal more palatable.

Is this the sole security you are offering or is there other assets in the melting pot.

A good submission take a while to put together hence most Brokers and lenders charge an application fee upfront as many of these deals dont get past first base because of a number of factors.

If everything else is ok then Yes the deal can be done to a certain lvr.

 

[Evachange]

.

A good submission take a while to put together hence most Brokers and lenders charge an application fee upfront as many of these deals dont get past first base because of a number of factors.

We went for a deal on GRV for $6m, worked on it for a few months, got approval and then our client did not get the tender, so yea a lot of work with no return, we did not charge an app fee.

Most likely won't in future either.

 

[Qlds007]

Alex

I am with you just had a deal of similar size that the clients main street Bank refused so he came to us with a short time frame and high GR lending.

I spent hours putting the submission together collating the Accounts from each of the entities, writing up the Development proposal and within a couple of days received an indicative approval at the interest rate we had initially quoted.

Client paid the lenders application fee (we told him we would get a commission on settlement) and then after a full Conditional Approval subject to valuation the client marched the letter offer back into his Bank who being so worried that they would loose all of his business agreed to match the rate and terms.

Course he went that route and we ended up with nothing not even a thank you.

Can't think of too many other industries were you offer up your time for absolutely nothing only for someone else to earn the quid.

So when a client says i am looking for development funding we normally say great our terms and conditions are XYZ. Amazing how when you quote a fee for your time they dont call back.

Just means you can get onto the clients who want to proceed.

 

[Rolf Latham]

Some lenders ( mainly one starting with N) have a BAD policy of, we wont do the deal for u unless u can put something on the table for us from another lender..............

Oddly enuff, many times the borrowers STILL go back to them after being done over the first time.

We are fee for service for any work like that, if we take it on at all, for obvious reasons. We will look after our existing clients differently but thats a 2 way street.

ta
rolf

 

[Evachange]

Hi Richard,

Thanks for your story, interesting to hear from other brokers. This client that I am talking about we do their bookkeeping, bookkeeping is not our main focus but that is how our business first started.

When I left WBC in 2007 I had had enough of the Banking/Finance world and thought that bookkeeping was the answer, well here we are as brokers and I love it.

So with the accounts for our client I had access (still do) to all their books, in our case they did not get the tender otherwise they would have taken it, our client is a commercial project manager.

We don't "charge" them as we charge them in other ways. Plus we get all the referrals for themselves and others they know.

We got a deal referred to us for $325m, but we could not get the deal accross, too bad for us.

Anyway great talking with you.

Take it easy.

 

[Qlds007]

With 3 kids you gotta be kidding me Take it easy lol

 

[Piston Broke]

It's pretty tough getting reasonable development finance in Sydney for anything more than 2-3 dwellings atm. GRV seems to be pretty much ignored.

 

[Spectre]

Alex I do the same as Richard. That being said I do it on resi as well in some cases.

 

[Evachange]

Alex I do the same as Richard. That being said I do it on resi as well in some cases.

HI,

As in charge un upfront fee? Interesting, I can see the merit in it, otherwise you could be runnig after everyone and earn nothing.

Regards,

 

[Sai]

Not my area of expertise guys, but isn't it possible to mandate your client at the stage where you start putting in a fair bit of work?

This way if they get the same deal with their existing financier then you still get paid I would have thought.

 

[Spectre]

HI,

As in charge un upfront fee? Interesting, I can see the merit in it, otherwise you could be runnig after everyone and earn nothing.

Regards,

Resi's more noncompletion rather than taking an app fee along with the bank.
Loan goes thru, the bank pays us, & no charge. If the bank doesnt pay us, we invoice for the time - and its a token for the work most apps take to put through. In my case, we fully disclose it in the finance agreements before an application is even taken.
We've only ever used the noncompletion once in the last 18 months or so.

 

[Evachange]

Thats fair enough, otherwise you could have a lot of people uisng your time and experience and then going some other place.

Regards,

 

[bcoombs]

GRV well I have had a lot of private funders say they can and just grab upfront fees. One funder had the valuation done in Sydney for a development in Hobart, valued it less than purchase price !

If its a simple deal like yours, I can generally get through as normal resi, but not NAB. So I don't charge a fee, however anything else I charge. If it goes to a bank and I'm being paid by them I refund the client at settlement.

So back to the question... a lot will depend on how much equity you put up. If developing/trading is your main income etc the banks wont like it. You may have to do a two step process. Purchase and then develop etc.

I'm new to this forum but noticed the brokers here, have plenty of experience and should be able help you.

 

[ianvestor]

Can't think of too many other industries were you offer up your time for absolutely nothing only for someone else to earn the quid.

Offtopic: Sometimes people spend ages talking to a salesperson somewhere, and then buy the same product on the internet for half the price.

 

[Qlds007]

Would have thought the two were slightly different.

In saying that some of the sharks i have seen out there maybe not ......