Not quite as granduos as Martins but anyway...
And I still do.
Here goes - maybe someone can help.
Last year I purshased an old house on a large block in Perth with the idea of subdiving and constructing 3 townhouses on it.
All of the feasabilities were good, with returns forecast conservatively at about 22%
Everything was going fine, I invested heavily tipping about $400-500k of personal funds into it. Designed the houses, got my approvals found my builder, got a contract, went to the bank....thats when everything stopped.
Dont get me wrong, I had spoken to the bank prior to purchasing the block and they said they cant approve the finance without a contract, but it all looks ok.
However they couldnt understand my situation which is;
I earn a much larger than average monthly income, as I work overseas, however I am employed by an Australian company. I dont pay tax in Australia, and earn US dollars.
I was seeking finance for 80% of the development (hard) costs + land value. On completion, I have sufficent income to pay all interest costs, once the houses are rented out.
However the banks would only consider the contract price in the calculation and excluded all the money I have already put into the development.
Also they could not understand that I dont pay tax, therefore removing about 40% of my salary. Then the fact I earn USD$ confused them more.
In addition while I am away from Australia I have no living costs as the company pays for all meals, flights, accomodation etc. When I am back in Australia I dont own a car, or have a PPOR - I have no wife, or children (that I am aware of ) - so in reality have no monthly commitments (other than a bit of debt on IP's).
In effect the banks took my salary, listed it in AUD without conversion (-10%), deducted tax (40%) deducted living costs ($30k), deducted the distance between the sun and Jupitor and concluded that I lose about $25,000pa and therefore couldnt afford the repayments.
I tried to source some funding through the commercial chanels, however, was mostly declined due to a)Im not planning on selling them b)the transaction is too small.
This is my first foray into property development (though I have a couple of other IP's). I can afford the monthly repayments, so its not the end of the world, however, it is affecting my otherwise affluent lifestyle
Can anyone shed some thoughts?
And I still do.
Here goes - maybe someone can help.
Last year I purshased an old house on a large block in Perth with the idea of subdiving and constructing 3 townhouses on it.
All of the feasabilities were good, with returns forecast conservatively at about 22%
Everything was going fine, I invested heavily tipping about $400-500k of personal funds into it. Designed the houses, got my approvals found my builder, got a contract, went to the bank....thats when everything stopped.
Dont get me wrong, I had spoken to the bank prior to purchasing the block and they said they cant approve the finance without a contract, but it all looks ok.
However they couldnt understand my situation which is;
I earn a much larger than average monthly income, as I work overseas, however I am employed by an Australian company. I dont pay tax in Australia, and earn US dollars.
I was seeking finance for 80% of the development (hard) costs + land value. On completion, I have sufficent income to pay all interest costs, once the houses are rented out.
However the banks would only consider the contract price in the calculation and excluded all the money I have already put into the development.
Also they could not understand that I dont pay tax, therefore removing about 40% of my salary. Then the fact I earn USD$ confused them more.
In addition while I am away from Australia I have no living costs as the company pays for all meals, flights, accomodation etc. When I am back in Australia I dont own a car, or have a PPOR - I have no wife, or children (that I am aware of ) - so in reality have no monthly commitments (other than a bit of debt on IP's).
In effect the banks took my salary, listed it in AUD without conversion (-10%), deducted tax (40%) deducted living costs ($30k), deducted the distance between the sun and Jupitor and concluded that I lose about $25,000pa and therefore couldnt afford the repayments.
I tried to source some funding through the commercial chanels, however, was mostly declined due to a)Im not planning on selling them b)the transaction is too small.
This is my first foray into property development (though I have a couple of other IP's). I can afford the monthly repayments, so its not the end of the world, however, it is affecting my otherwise affluent lifestyle
Can anyone shed some thoughts?