Hi everyone,
I have a property close to Parramatta I'd like to subdivide and build a duplex on, the property would most likely be valued at $850k and I have a $360k mortgage owing on it. From my research, duplexes in the area are fetching up to $900k and by the time my project is complete, that figure may increase to $950k for each lot, so there are some healthy gains in it. After doing a quick feasibility on it, it seems as though I may be almost as well off if I just add some value to the place and sell it, rather than going through the whole subdivision and developing it. But at the end of the day, I'm after both the experience and the profit as this is what I'd like to get into.
I'm a licensed builder but after reading through SS and contacting a bank and a broker regarding a construction loan, I need to provide a lump sum contract from another builder, even though I own a building entity. I understand the risks involved for owner builders, but I don't agree with the banks not wanting to offer builders loans.
If you have any experience in the field, I have a few questions I hope you could answer for me.
At this point, I imagine there are 2 scenarios I could use to get past this obstacle.
Scenario 1
I have friends who are also licensed builders that I could ask for a contract and just complete the works myself. My only concern in this scenario would be how and who the bank would transfer the progress payments to. If it would be to my friend's bank account, then I'd be a little worried!
So ideally, if the bank doesn't send a quantity surveyor out to inspect at every stage of construction and if the funds are being put into my account, then I don't forecast any issues.
In regards to this scenario, my questions would be does the bank send out a QS to inspect before each progress payment? and who does the bank transfer the funds to?
Scenario 2
I bite the bullet and allow another builder to complete the project. I imagine it'd be a whole lot easier for me to secure a construction loan in this scenario, but I wouldn't be saving on builder's profit, overheads and some trades/labour I'd be able to carry out myself.
Regardless which scenario I end up using, would the bank be able to fund the entire $700k to build?
Thanks in advance
I have a property close to Parramatta I'd like to subdivide and build a duplex on, the property would most likely be valued at $850k and I have a $360k mortgage owing on it. From my research, duplexes in the area are fetching up to $900k and by the time my project is complete, that figure may increase to $950k for each lot, so there are some healthy gains in it. After doing a quick feasibility on it, it seems as though I may be almost as well off if I just add some value to the place and sell it, rather than going through the whole subdivision and developing it. But at the end of the day, I'm after both the experience and the profit as this is what I'd like to get into.
I'm a licensed builder but after reading through SS and contacting a bank and a broker regarding a construction loan, I need to provide a lump sum contract from another builder, even though I own a building entity. I understand the risks involved for owner builders, but I don't agree with the banks not wanting to offer builders loans.
If you have any experience in the field, I have a few questions I hope you could answer for me.
At this point, I imagine there are 2 scenarios I could use to get past this obstacle.
Scenario 1
I have friends who are also licensed builders that I could ask for a contract and just complete the works myself. My only concern in this scenario would be how and who the bank would transfer the progress payments to. If it would be to my friend's bank account, then I'd be a little worried!
So ideally, if the bank doesn't send a quantity surveyor out to inspect at every stage of construction and if the funds are being put into my account, then I don't forecast any issues.
In regards to this scenario, my questions would be does the bank send out a QS to inspect before each progress payment? and who does the bank transfer the funds to?
Scenario 2
I bite the bullet and allow another builder to complete the project. I imagine it'd be a whole lot easier for me to secure a construction loan in this scenario, but I wouldn't be saving on builder's profit, overheads and some trades/labour I'd be able to carry out myself.
Regardless which scenario I end up using, would the bank be able to fund the entire $700k to build?
Thanks in advance