From: Patrick Bruadair
Does anyone know how much banks (or other financial institutions) will lend for small developments, as opposed to retail IP purchases. I have come across a pretty good 5-6 unit site with an old house, ripe for demolition. Price around $250,000 + purchase costs. Costs (incl design, management etc)for constructing a 5 unit (townhouses)development are estimated at $710,000 excluding interest holding cost. The costs are pretty accurate and are from a similar development just completed a few streets away. The broker I am dealing with says it becomes very difficult/impossible to get LVR greater than 70% if the development is for more than three units, and also that banks may want you to show evidence of pre-sales. I actually would like to develop and hold, not sell, so I couldn't show this evidence.I would also like to maximise the loan amount (80%if possible).
Anyone got any experience with a similar scenario?
Thanks
Pat
Does anyone know how much banks (or other financial institutions) will lend for small developments, as opposed to retail IP purchases. I have come across a pretty good 5-6 unit site with an old house, ripe for demolition. Price around $250,000 + purchase costs. Costs (incl design, management etc)for constructing a 5 unit (townhouses)development are estimated at $710,000 excluding interest holding cost. The costs are pretty accurate and are from a similar development just completed a few streets away. The broker I am dealing with says it becomes very difficult/impossible to get LVR greater than 70% if the development is for more than three units, and also that banks may want you to show evidence of pre-sales. I actually would like to develop and hold, not sell, so I couldn't show this evidence.I would also like to maximise the loan amount (80%if possible).
Anyone got any experience with a similar scenario?
Thanks
Pat
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