Residential property development finance

Typically, would be developers get started by undertaking a renovation or extension project to gain experience in dealing with some the parties involved in the planning, approval and or construction aspects of undertaking a residential property development. These projects typically are lower complexity, require small amounts of capital and are low risk. Sometimes the novice developer undertake this to add value to their existing home or investment property. Typically these types of developments do not need specialised property development finance and can be funded through cash on hand, a personal loan, equity releases / line of credit or a standard construction loan.

After undertaking a small project or projects the developer with a small amount of experience often moves to something larger such as a knock down rebuild single dwelling or three of four unit or townhouse development.

These types of small development can often use a construction loan.

A larger project will need a development loan.

The maximum borrowing capacity varies between lenders and types of funding.

Institutional: Senior – Full Doc, with pre-sales

Total Development Cost (TDC) up to a maximum of 80% LVR

Gross Realisable Value (GRV) Up to a maximum of 65% LRV

Minimum 80% debt cover in pre-sales (case by case)

 

Private: Low Doc, no pre-sales options

Total Development Cost (TDC) up to a maximum of 80% LVR

Gross Realisable Value (GRV) up to a maximum of 70% LVR

Bad credit history applicants considered

Partially complete projects considered

 

Stretched Senior – Structured Senior Debt

Total Development Cost (TDC) up to a maximum of 90% LVR

Gross Realisable Value (GRV) up to a maximum of 75% LVR

Pre-sales required (flexible parameters)

 

Mezzanine Finance

Total Development Cost (TDC) up to a maximum of 90% LVR

Gross Realisable Value (GRV) up to a maximum of 80% LVR

Pre-sales requirements same as the senior debt provider