Unit development / construction finance

Hi all

Have been lurking on this forum for a while with very few posts!
Have done a couple of reno's and 2 new house developments, so now time to try something more challenging!

Have a block in Rockhampton which is suitable for 5 x 2 story units/townhouses, and in the process of getting build quotes and market research.

Does anyone have any recommendations for a source of finance preferably with 12 mths interest included in original loan (to minimise cash flow headaches)?

hi Barney, shocking time to be getting into this!

I am told you need uncomditional presales with 10% deposits that will be enough to repay all your debt. plus you need between 20% and 40% of your own hurt money in the project, a broker could clarify the banks' appetite for this atm tho
Now that Suncorp have pulled out of Development lending in Qld it is getting harder by the day however that is not to say it cant be done.

All boils down to the lvr, your A & L position, income and as Ausprop quite rightly states whether you have pre-sales etc etc.

You can forget the standard lenders but there are many other sources away from the Big 4 or 5.

Like everything where there is a will there is a way.

Just boils down to how much the lender wants your deal with the 101 others he has on his table.
Thanks for the comments guys, had seen similar comments in API magazine.

May have to start looking for some cashed up partners. Or do something a bit smaller until the credit squeeze eases up!
Commercial loans are tough at the moment. Not even taking into account the competition to get funding, the additional costs that are considered as part of commercial funding need to be considered.

Keep in mind, commercial lenders manage their risk very tightly. They take into considearation the agents fees if the development is required to be taken over and sold, interest on senior debt, Legals, valuation, QS etc.
With a standard NVR of 70% you will need to inject the required equity up front, not as you go.

So for every $1m in commercial finance you require you need to inject $300k.

They also base the value of the property on it' s residual land value, not a standard valuation.

Just points to consider.