Development Finance

[TasInvestor]

Hi all, looking for development finance for a land and house development in Tassie. We have 100% pre sales, and can easily do 65% GR and 80% of Hard Costs (even down to 75% but much rather 80%).

Heres the breakdown-
8 houses @ $330K = $2.64M @ 65% GR = $1.716M
Current Val based on our building cost = $240K x 8 = $1.92M @ 80% = $1.53M (assume no lend on land).

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So GR = $1.716M
& HC = $1.53M
with 100% PreSales @ $330K sales price (we assum end value of $400K)
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Currently land has been strata titled so have to get development finance because banks won't lend until they can get titles and titles won't be released until development complete.

Land owned by 2 owners in their name, one is a builder (licenced but not 2yr ABN registration but has job) and the other has 2yr ABN (sole trader).

Land was bought spectacularly cheap, only $150K, dont have date but lets assume less than 6 months ago (on the market for 3 days!)...

Land was bought cash. Land would sell for $40K per block (development very close supports the price) - but can't sell due to strata....

Looking to get finance without jumping through every hoop know to man... Any thoughts? Perhaps private lender because high number of pre-sales?? hmm.

 

[Qlds007]

Looking to get finance without jumping through every hoop know to man... Any thoughts? Perhaps private lender because high number of pre-sales?? hmm. We will accept that it is Xmas and you are in a festive mood.

In the current climate even with unconditional contracts any lender is going to want to see a good asset base, experience and sound income flow.

With these such a loan could be structured.

Most development lenders use HTW in Tassie so assuming their valuation was acceptable and the other criteria could be met then the rest should be achievable.

 

[sue78]

I agree with QLDS007. But even with unconditional contracts, some still don't settle. It's just such a long time away until you see the finished product. This is exactly what the banks got caught out on with small and big developers a like.

History and experience will go a long way. I would stick with the traditional banks and apply for a bridging loan. Mezzanine finance is a bit risky and high interest.