澳洲Australia property Finance for Development. Commercial vs Re


在澳大利亚 This has been on RE.com.au for ages. Not a bad rental return. Low PP. Why hasnt it sold? http://www.realestate.com.au/property-unit-nsw-mount+druitt-112536595 评论 ab100 said: This has been on RE.com.au for ages. Not a bad rental return. L Hello everyone, first-time poster, long-time lurker. My wife and I have just bought a house in Hamilton, Newcastle (also own an apartment - or a bit of one at least - in Sydneys inner west which well rent out once we manage to relocate). As


Hi there, first post for me but have long been lurking...

Firstly a bit of background for my current situation and development proposal...

I have been looking at developing a block of land for which i have a holding deposit on to put a 4 bdr 2 storey house (260 sq.m) and detached unit (120 sq.m) on a single block under a strata title. Have checked with council and have consent to the concept so no problems there.

Drafted up the plans and went to tender to all the usual project home builders. Needless to say the tenders came back way too high and basically made it a nil profit investment. Going by the general rule of thumb of 20% profit for a development feasibility i think it is achievable if we can build it ourselves (im a PM by day so well within my capabilities and JV partner is architect). The headline numbers are as follows

Land = 290k
build = 360k (@ $950 per sq.m)
additionals = 70k (interest, surveyor, solicitor, council, s.94, fencing, driveway etc)
End Value of development = 550k (house) + 320k (unit) (conservative)

Everything is covered in the feasibility study including 5% contingency and interest holding costs (6 months)

After doing all the due diligence the hardest part for us has been obtaining finance. Residential finance generally only lend the build cost + Land value but as we are trying to build ourselves will not lend anymore than 60% of this value. Will a commercial loan help in the fact that we can borrow the entire development costs? Any advice in this regard would be helpful. Together my JV partner and I have about $120k in cash as a deposit.

Is it perhaps feasible to add a 3rd JV partner to inject some cash so the banks will lend but eventually diluting our profits?

Any advice will be appreciated (sorry for the long post)  

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Hi Fonzie

The issue is the OWNER build

Lenders hate it, and GRV lenders as far as I am aware dislike it even more (

A 3rd party JV with someone that has the CASH or equity in another property is a soln as u say

ta
rlf  

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Eeeeeeeeeeehhhhhhhhhhhhhhh!!!!!!!!!!!  

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A commercial type lender will look at the feasibility differently than you have. They will get a quantity surveyors report to find out how much the build would cost if a third party builder did it. Based on that figure they won't lend to you as you say that eats all the profit. You see they might have to take over the project if you get hit by a bus, loose the Plot or go bankrupt on another venture. That's the reasoning anyway.

I think you need more margin in the deal. 20% plus builders margin.  

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Owner Builder = Run Away....

You cannot make money from a single or two dwelling development....you need at least 3-4 dwellings to make money using a third party builder.  

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Aaron_C said: ↑
Owner Builder = Run Away....

.Click to expand...
4 minute mile :)


We do em, but for favours only, certainly NOT for the money

ta
rolf  

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