Estimate holding costs for property development

[Claire90]

Hi All,

Refer the article link below. Is this an accurate way to estimate finance costs? What contingencies would you build in?

http://www.propertybloom.com.au/blog/holding-cost-calculations-and-considerations.html

 

[mflying]

this is how i work out (once construction loan is approved) for duplex and townhouses project:

Land cost ; @ whatever variable rate+1% (5% +1% =6%) for 12 months


Total construction cost ($100K)

@ whatever variable rate+1% (5% +1% =6%)

@12 months (100k @ 6% = 6K)

/2 (3K)

 

[Claire90]

Thank you M.

Do you add 1% in case rates rise?

What contingencies do you add in case the project is delayed?

I assume you half the cost for the building costs because you only start building after in the second half of the project and hence don't pay any interest before then?

I'm only looking to do a small development (subdivision) so I was working off residential loan rates.

 

[mflying]

I add 1% as buffer (to cover application fee and progress draw etc)