If you are not a seasoned developer, you may find it difficult to obtain
finance from a mainstream bank when looking to construct multiple dwellings such as duplexes, town houses or units.
After all, the bank will want to have a good look at your income position and personal expenses, as well as your level of experience in conducting such projects. They will also require a high number of pre-sales, which means you will likely need to sell a large majority of your properties at a reduced amount off the plan, thus cutting into your profit margin.
If you are not seasoned in this area, this may end up costing you more than you anticipate, and potentially cause unneeded delays to your ability to secure a contract for land and/or construction.
Or, if you are commencing a relatively small project, they will treat this like a normal purchase (depending what you tell the bank, as banks also don’t like small projects that are going to be sold shortly thereafter – as this cuts into the banks profit margin!), meaning they will strictly look at your ability to repay the loan based on your provable income, and will not take into consideration that you plan to sell at a profit. They also won’t look at the gross realisation value in such circumstances for small projects, and will not offer the ability to capitalise interest, which can also affect your cash flow during the construction phase.
Fortunately, we have access to many bank and non-bank lenders, whom will consider this type of finance, including if it is your first or second time.
If you have a sizeable deposit, we can match you with a lender whom WILL look at your expected profit margin, without overly judging your level of experience, or income and expense details. They will treat this like the commercial project that it is, without penalising you for being a relative newcomer.
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