Finance for Multi-Unit Development

[BringOnTheBoom]

Hi All,

hope some of the experienced developers or brokers may be able to help me out.

In summary - I have just completed one development - I own three houses worth $1.52m. My current LOC mortage is $1.3m. My costs were $900k so I have a redraw available of $410k. I have no income, being unemployed. Would earn $120k pa if employed. Wife earns 65k but is on mat leave.

Here is what I want to finance

Site 300k
Building cost 1.7m
infrastrucure charges $135k
holding costs 146k

Would make a profit in normal developers range (25-30%) and be cash flow neutral (positive after depr).

I would hold all the units, not sell (if it all goes to plan!)

Have I got any hope at all? I personally don't think so, so. . . Could I do a development exactly half this size (which is another site i'm looking at).

Crucial question is if I can't do it - how much cash would I need to be able to do it? I have someone with cash who may invest, but I'd prefer to go it alone if possible.

I don't have a broker so if anyone could help I would happily give you the business.

Cheers,
BringOnTheBoom

 

[Qlds007]

Unless the project is in Brisbane or one of the Coasts i dont think you have any chance at all to fund such a deal.

Not having any income is not going to inspire too many lenders and even done on a lodoc GR basis you have limited assets for such a deal.

 

[BringOnTheBoom]

Hi Richard,

yes, the project is in Brisbane - how does that make a difference?

Also, if employed, would it be do-able?

I have someone with around 250k to invest as a possible partner.

I'm in brisbane next week for a week - is it worth meeting up, or is it a lost cause?

Cheers,
BringOnTheBoom

 

[Qlds007]

I am not aware of any private lender who would touch it had it not been outside Brissie.

Yes without being employed clearly cant demonstrate sufficient income to be able to substantiate the existing loan let alone the new loan post completion even with rental income.

Assuming incomer was not a hurdle and you paid cash site for the land and the basic DA and other infrastructure costs then you may get a GR loan but of course would be net of GST so you would need to fund this also.

65% of GR still available if everything else is right but lender would want to see an exit strategy and even on 120K PA there is none as with combined incomes of $180K and rent insufficient so probably going to need the odd pre-sale.

 

[BringOnTheBoom]

thanks for the help Richard, knowing that the max GR is excl net was very useful to know.

cheers,
B