Duplex finance

Hi Everyone,

I'm looking to build my duplex this year after a hell of a year last year. Theirs still some hurdles to overcome but I'd like to put forward my plan and get idea's of whether its possible to get green light from the banks.

Current Mort - $400k
Current Value - $530k
total Build cost - $550k

So from my calcs - my total project cost including absolutely everything will be 950k.
Income from the project when sold will be 630k x 2 = 1.26mil


Income - 1,260,000
Costs - 950,000
Profit = 310,000

Total cash or equity

Private funds - 250,000
current equity - 130,000
Total C/E = 380,000


C/E 380,000 less
Costs 950,000
= 570,000 mortgage needed ?

These numbers are my cash/ equity position and the funds needed to complete the project.

Return on project is 24%+ that looks good.
With the cash and equity I'm looking at an End Val loan of 45%.

Now to throw a spanner in the works..... I have quite high personal debt from carrying a huge investment loss last year. I also now have a Judgment marked on my veda credit file for a court case I lost against a builder.

Although not a simple arrangement?? Brokers what are the ins and outs of this deal.
Is the high cash/equity enough to sway the banks or is the judgement on the my credit file to much to work past?

would an offplan sale of 600k appease the bank that only has a lend of $570k?

Thanks in advance for the feedback.

This is not any help for the financial side but I assume the judgement awarded against you to the builder was for dispute on payments? and thus maybe an issue in getting another builder, maybe something to also consider. Funds without a builder will not much help either.

Good luck with your project

Forget anything that has to do with LMI pretty simply

Does depend on the amount of the judgements as well, if its repaid...?


In current climates - judgements/defaults/craa issues can be a kiss of death from many a lender

Where is the pro for the lender to give you the money (i.e. not trying to be rude but asking what do YOU think the strength of your position is - to get them to think you're not 'too high' on the risk scale). High debt, bad prior investments due to losses, judgement on a cra?

That needs to be addressed as well as the returns if you see what I mean
Have you factored in GST and CGT in those costs? Don't you need to pay these especially if you sell OTP?

You could live in one side for more than a year to avoid GST and CGT. Keep the other side as an IP.
As the other guys indicate, really depends on your default details as to whether current lender (or any other) would do construction loan and how good your figures are (need the GST and CGT in there) as the bank with scrutinize these.

At least you a putting in a fair wack of your own funds so that will help and if you can demonstrate experience in doing this before that will be beneficial.
thanks for the replies, I've calculated using my equity but once I look at construction finance the equity is non existent as its no longer a 600k house and land its now only a 400k block of land :(
So for the banks etc the loss of the equity means a larger mortgage and there for no real chance of it happening.

Just to answer a few questions from above -

The pro for the bank with one pre sale was the bank was (based on the equity included figures) more than 100% secured. Mort 570k presale = 600k. As I mentioned above I've now realised this equity only exists in the property in its current state. I believed this outcome would appease the banks as there funds are not reliant on anything other than the builder completing.

GST is included and the margin scheme is to be used. The CGT is not an issue as i have a 6 figure loss to be taken up on the next build.

As the property has grown 25% in 18 months its looking like time to sell cash out and start again without the development issues of not being able to borrow for a few years. The old story of asset rich cash poor, not able to refinance and looking at upto 200k sitting there that has bound my hands fairly tightly. I've fought tooth and nail to keep this property but with the latest jump in value it might be a great time to cash out and buy acouple of nathans for cash or atleast with very low LVR so i can borrow.

Anyone want to buy a DA approved duplex site in Dundas Valley :D
If its DA approved sell them both as house and land packages. If they are worth say 600, minus the building costs and variations and settle on that basis. You may have to discount a little, but you will end up with a better result.

Land $200
Build $275
finish ??? $25

= $500

Sell both @ $580,000 with council approvals and building contracts transferred in the purchasers names.

Your settlement amount is $580,000 less builds, less finish = $280,000 each

$160,000 more than dumping @ $400,000. You have done all the work, get paid for it.

You just have to give an undertaking the properties will be finished - landscaping, storm water, floor coverings, air etc all the things not in the building contract.
Sorry Brett I may have mislead you a little. I can sell the house today for around 600k. Its only if i choose to build would I loose the equity as the house/land component is changed by bank valuation to just land value which is around 400k.

In NSW you can't subdivide till after building is completed and the property officially is two sites. I'm not sure how the splitting of the building contract etc would work? If at all.

With the value growing daily its just not worth the added stress and expense to to use 2nd or 3rd tier lending to get it built.