Buying vacant commercial land to develop

[Glucose]

Can anyone help me with a few questions regarding financing the purchase of a fairly large commercial vacant block of land to, say, build storage sheds or something similar on?
Can you get the finance in one go to both buy the land and do the buildings?
Can repayments be deferred until the construction is finished so that you can get the rental income to meet the repayments?

If anyone's done this sort of thing, I'd appreciate knowing how you went about it.
Thanks.

 

[mortgageman]

Hi Glucose,

If the plans and permits are in place to construct on the commercial land it can be done as one loan facility with the purchase of the land as the first drawing down. Interest is typically capitalised over the construction term.

If development approvals are not in place then you would need to land bank the property. Once again you are able to capitalise the interest, but only up to the maximum LVR amount, which through most lenders is around 50%, although it is possible to go much higher in some cases, particularly if servicing can be shown and/or other assets can be offered as security. I hope this helps.

Kind Regards,

Cameron Perry
Perry Financial Strategies

 

[keithj]

Can anyone help me with a few questions regarding financing the purchase of a fairly large commercial vacant block of land to, say, build storage sheds or something similar on?

Be v. aware of infrastructure costs.

One local horror story - Syd Water quoted $700K+ to connect 8 new industrial units to sewer. The block currently has 1 ind unit connected to sewer, and is worth about $750K.