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From: Mike .
Finance Hurdles!!
From: Brendan.
Date: 5/23/00
Time: 10:36:35 AM
Hi all, I am currently looking at a Duplex development that would in the final wash up look like this;
Total cost = $550,000
Estimated market value( based on research of the area ) = $ 650,000+
My current security value (without new prop) is $725,000 with total debt of $494,000. LVR=68%
If we add the new values this equation becomes, securuty = $1,375,000, with total debt = $1,040,000. LVR = 76%
If we were to borrow 80% of the construction value we could borrow $520,000, with the other 30 - 50K (allowing for some unfoseen costs) being secured against our existing properties. At completion we would sell the 3bdr., pay 300K back to reduce the debt to 250k on a 340K+ property thus creating equity and +cashflow to move on to the next one.
Problem is, Westpac who we have a very good package with will lend to 80% on an existing I/P but for this scenario with borrowing costs and using the realised market value, will only lend to 60%.
Can any of you number guys out there suggest an Institution that will come to the party, or a more creative structure? I believe the deal is sound and there is no reason I can see why I can't do it. Comments appreciated.
Kind Regards, Brendan.
Finance Hurdles!!
From: Brendan.
Date: 5/23/00
Time: 10:36:35 AM
Hi all, I am currently looking at a Duplex development that would in the final wash up look like this;
Total cost = $550,000
Estimated market value( based on research of the area ) = $ 650,000+
My current security value (without new prop) is $725,000 with total debt of $494,000. LVR=68%
If we add the new values this equation becomes, securuty = $1,375,000, with total debt = $1,040,000. LVR = 76%
If we were to borrow 80% of the construction value we could borrow $520,000, with the other 30 - 50K (allowing for some unfoseen costs) being secured against our existing properties. At completion we would sell the 3bdr., pay 300K back to reduce the debt to 250k on a 340K+ property thus creating equity and +cashflow to move on to the next one.
Problem is, Westpac who we have a very good package with will lend to 80% on an existing I/P but for this scenario with borrowing costs and using the realised market value, will only lend to 60%.
Can any of you number guys out there suggest an Institution that will come to the party, or a more creative structure? I believe the deal is sound and there is no reason I can see why I can't do it. Comments appreciated.
Kind Regards, Brendan.
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