Finance dilemma

[morty]

!!!Development Finance dilemma!!! Help please!!

Hey guys

I've been checking out this forum for a fair while now and have learnt a heap by reading everyones posts, especially loving the interviews!

With so much knowledge out there i thought i'd post my dilemma and any input would be fantastic, good, bad or otherwise!

I 'm pretty stuck loan wise at the moment and westpac have really got me by the balls (my fault i know!) and i need a new plan to allow me to properly put the wheels in motion

A quick summary : I am a licensed builder with my own building company and also have a development company set up with a couple of family members.

The dev company has 3 properties:
1 reno'd house in Yarrawonga (home town)
worth 200k owe 164k
1 vacant block in same town
worth 80k owe around 70k (about to start building on it)
1 house in brunswick, melb
worth around $750k, owe 470k and just got DA for 6 townhouses.

Now here's the dilemma. I need to arrange finance for the 6 units but westpac have me so tied up that they are making it terribly hard to move.

They might give me the money but they are wanting me to sell quite a few off the plan. If i was attacking this on my own i'd certainly have to make some pre-sales, but there are 5 of us in this and i want to keep the whole block and never sell it.

My plan is to organise finance for the townies and then build and sell around 3-4 houses per year to cover any shortfalls. (meaning more loans)

The units will cost around $2m all up but have been valued at around $3.2m on completion. They are in a fantastic spot and i want to build my portfolio around them.

I know this scenario's doable but i just don't know how to structure it.

I've pm'd a recommended broker but would love to hear what you guys have to say about it.
Thanks for your time

Morty

 

[Alex P Keaton]

I 'm pretty stuck loan wise at the moment and westpac have really got me by the balls (my fault i know!) and i need a new plan to allow me to properly put the wheels in motion


The dev company has 3 properties:
1 reno'd house in Yarrawonga (home town)
worth 200k owe 164k
1 vacant block in same town
worth 80k owe around 70k (about to start building on it)
1 house in brunswick, melb
worth around $750k, owe 470k and just got DA for 6 townhouses.

Now here's the dilemma. I need to arrange finance for the 6 units but westpac have me so tied up that they are making it terribly hard to move.

They might give me the money but they are wanting me to sell quite a few off the plan. If i was attacking this on my own i'd certainly have to make some pre-sales, but there are 5 of us in this and i want to keep the whole block and never sell it.

My plan is to organise finance for the townies and then build and sell around 3-4 houses per year to cover any shortfalls. (meaning more loans)


Morty

Maybe you need to sell something. The vacant land, so that you have more funds available. The bank might not be confident in your ability to service everything.

I dunno, i am real newbie at this thats just my opinion.

I'll leave it to the experts!!

 

[Nth Brisbanite]

Is there someone higher in Westpac you can talk to? Or can you get someone independent (who knows what they are talking about) to represent you but it may cost you money.

I'm sure there is someone out there who could help you achieve what you want. There are some savvy mortgage brokers on this forum who could help.

 

[Bradsdad]

Hey guys

I've been checking out this forum for a fair while now and have learnt a heap by reading everyones posts, especially loving the interviews!

With so much knowledge out there i thought i'd post my dilemma and any input would be fantastic, good, bad or otherwise!

I 'm pretty stuck loan wise at the moment and westpac have really got me by the balls (my fault i know!) and i need a new plan to allow me to properly put the wheels in motion

A quick summary : I am a licensed builder with my own building company and also have a development company set up with a couple of family members.

The dev company has 3 properties:
1 reno'd house in Yarrawonga (home town)
worth 200k owe 164k
1 vacant block in same town
worth 80k owe around 70k (about to start building on it)
1 house in brunswick, melb
worth around $750k, owe 470k and just got DA for 6 townhouses.

Now here's the dilemma. I need to arrange finance for the 6 units but westpac have me so tied up that they are making it terribly hard to move.

They might give me the money but they are wanting me to sell quite a few off the plan. If i was attacking this on my own i'd certainly have to make some pre-sales, but there are 5 of us in this and i want to keep the whole block and never sell it.

My plan is to organise finance for the townies and then build and sell around 3-4 houses per year to cover any shortfalls. (meaning more loans)

The units will cost around $2m all up but have been valued at around $3.2m on completion. They are in a fantastic spot and i want to build my portfolio around them.

I know this scenario's doable but i just don't know how to structure it.

I've pm'd a recommended broker but would love to hear what you guys have to say about it.
Thanks for your time

Morty

You mention $2M all up....does this include the existing $470K? Also does this include interest costs, & a contingency allowance?
Have you also factored in (or intend to have) an qualified QS?
Do you have experience in similar developments?
Is the Brunswick property cross securitised with any of the others?

As there are 6 units you will find that the finance will more than likely need to be done as a commercial transaction NOT standard residential. If you are intending on keeping them all serviceability would need to be demonstrated on retaining them. As there are 5 people involved this may become messy (still possible) depending on what existing commitments each person has. If you are building 6 townhouses all identical maybe you could look at each party retaining one property each with the other to be sold on completion (end finance maybe easier this way).
If servicing isn't evident on the end debt (after contruction) you would need to have at least some pre-sales, this would be determined by the lender and the strength of the deal but I'd suggest a minimum of 3.

These are a few things that need to be covered. I'm just heading out now but this gives you a bit to work with.

Regards
Steve