Developing Full Time

[Chomp]

I'm trying to figure out how I can leave my full time job and develop full time.

How do I lend money when I cant show an income ? I mean I could buy the next one, quit my job, then get another job a few months before I need to borrow again, seems a bit awkward though, any ideas ?

I'm single no kids, so I'm not under the same sort of pressure as most. As long as I can create the equity and income to cover it, then exposure to debt doesn't bother me, more the better !

 

[pinkboy]

In the early stages of a developing career, you need the J O B so you have serviceability and an income so you can maintain the holding costs while your developments are underway until you get the keys. It may take you several developments to get enough income to service the ongoing debts.

If you sell off all your units, you only get paid at the very end.

Without a job, it's a long time from payday to payday with developing.

pinkboy

 

[Chomp]

I have done a couple of sub divisions and have done well, I do have enough equity to go again and cash (LOC) to last me 18 months comfortably.

So I can quit work and do another one, but how do I get a loan for the one after, is my question I guess.

 

[Daveh]

I would love to hear how this is done also, especially if we're not builders and have to rely on higher build costs.

 

[Corey Batt]

The developers that I know who don't have any income outside of their dev's generally do smaller scale developments and pay cash, or alternatively have a small group of silent JV partners who put up funds.

Most do run other businesses related to the property industry (RE agencies, building companies, PM's, Solicitors), which substantially reduces the risks of property development.

 

[Ideo]

The developers that I know who don't have any income outside of their dev's generally do smaller scale developments and pay cash, or alternatively have a small group of silent JV partners who put up funds.

Most do run other businesses related to the property industry (RE agencies, building companies, PM's, Solicitors), which substantially reduces the risks of property development.

This.

It is where I want to eventually end up and something I am working towards. But early on you need a steady income to support it.

But, if it was easy, everyone would be doing it.

 

[John_]

Developing is risky but so is running your own business everything has risk.

Once you do 2-3 successful developments with plenty of juice in them you stop relying on the banks less and less.

 

[Chomp]

The developers that I know who don't have any income outside of their dev's generally do smaller scale developments and pay cash, or alternatively have a small group of silent JV partners who put up funds.

Most do run other businesses related to the property industry (RE agencies, building companies, PM's, Solicitors), which substantially reduces the risks of property development.

That's the frustrating thing, I am a registered builder, but I work full time as an estimator, and doing the sub division / refurbs at the same time is really time consuming. I cant do a triplex / quad, I would go mental I think with all the calls & emails etc...

 

[MTR]

That's the frustrating thing, I am a registered builder, but I work full time as an estimator, and doing the sub division / refurbs at the same time is really time consuming. I cant do a triplex / quad, I would go mental I think with all the calls & emails etc...

I think what you are trying to achieve is what Oscar (OC1) has been doing for the last 4-5 years, it would be good to get some feedback from him.

MTR

 

[INVSTOR]

I have done a couple of sub divisions and have done well, I do have enough equity to go again and cash (LOC) to last me 18 months comfortably.

So I can quit work and do another one, but how do I get a loan for the one after, is my question I guess.

I just had a quick flick through some of your previous threads, if you don't mind me asking, how many developments have you done? Who have you previously built through? Have you changed methods as you've become more experienced?

 

[Chomp]

I have only done two sub divisions, renovate the front house, sell the rear and hold the front.

I do all the organizing and some of the work my self, I dont use a builder.

I have 25yrs experience in the building industry and have tendered on jobs up to 50mill for my employers, so this sort of stuff is easy, its just all I can afford to do at the moment.

I haven't had to change methods yet, there is always money in the subdivision / reno's if you buy right, but considering triplex single storey as there would be more in that than a sub division. No money in double storey town houses that I can see, until prices rise. (in the areas that I look at).

 

[INVSTOR]

I have only done two sub divisions, renovate the front house, sell the rear and hold the front.

I do all the organizing and some of the work my self, I dont use a builder.

I have 25yrs experience in the building industry and have tendered on jobs up to 50mill for my employers, so this sort of stuff is easy, its just all I can afford to do at the moment.

I haven't had to change methods yet, there is always money in the subdivision / reno's if you buy right, but considering triplex single storey as there would be more in that than a sub division. No money in double storey town houses that I can see, until prices rise. (in the areas that I look at).

Thanks for sharing. Yes, the prices to build two-storey in Perth are excessive.

 

[Aaron_C]

Once you have equity you can do whatever you want.

 

[MTR]

Once you have equity you can do whatever you want.

That's very true

 

[imbi3]

To answer your question re bank funding, you will need to go to commercial loans with presales as this will be the only source of loan clearance

 

[Chomp]

All that just for a triplex ?

I'm thinking all up 1.3m and I can give them 500k security.

I would still have 160k cash in a LOC to live off and cover interest payments.

 

[westminster]

My vague plan - which is very nebulous - is to use my rents as my new 'income', plus equity in my assets to help gain future finance. This may or may not work.

 

[Aaron_C]

All that just for a triplex ?

I'm thinking all up 1.3m and I can give them 500k security.

I would still have 160k cash in a LOC to live off and cover interest payments.

If you cannot show servicing, it has to be commercial funding with pre-sales to demonstrate an exit strategy for the bank. If you can show servicing (through rental even without a JOB) then you can do residential funding. All depends on your numbers.

 

[Chomp]

This is the sticky part, I could take the LOC and go cash bonds but not enough return to be worth squat.

 

[Aaron_C]

This is the sticky part, I could take the LOC and go cash bonds but not enough return to be worth squat.

Speak to someone about your numbers. You'll be surprised at what you can borrow even without PAYG income.