Hi Everyone
I will get my DA any day now for a 6 unit development on the northside of Brisbane. This is my first commercial development, having completed a smaller 4 unit development recently.
In relation to this deal, the numbers stack up to a good return. So now comes the fun part of getting the money!!!
I have been told that banks may do 70% of GRV minus GST at about 2% over mortgage rates. This would be good. However, I understand a bank would be looking at presales and I am not that keen on doing presales.
I have been told a non bank lender might do 60 to 65% of GCR minus GST at 3% to 5% over mortgage rates but would probably not require presales.
Does this sound right?
Also just looking to confirm my understanding is correct, in that the lender would pay out the mortgage over the lot and take first mortgage over the lot? At the moment the loan over the lot is a resi loan on good rates.
It seems to me that if a party only wants to lend 60% of GRV and they get first mortgage over the lot then they are doing pretty well risk wise, in that the value of the lot itself is worth a third of what they are lending. Is that the position? It just seems a bit rough for the old developer. Would a lender take a second mortgage over the land and lend say 40 to 50% of GRV?
In regard to serviceability, using our resi CBA calculator we should be able to service the loan if you count the proposed rents. The lender will count the proposed rents right? Is this the case even if the intention is to sell them? Should we tell the bank that we intend to keep them so that they will count the rent (BTW, I should note that we could fund the interest during the selling period out of savings).
Finally, does anyone have any current experience with presale of 2 bed units for around $375k within a 12 km radius of the CBD? Are they moving?
Thanks for your time.
Cheers
Ben
PS is there any chance of capitalisation of the interest? Or is that a pipedream?
I will get my DA any day now for a 6 unit development on the northside of Brisbane. This is my first commercial development, having completed a smaller 4 unit development recently.
In relation to this deal, the numbers stack up to a good return. So now comes the fun part of getting the money!!!
I have been told that banks may do 70% of GRV minus GST at about 2% over mortgage rates. This would be good. However, I understand a bank would be looking at presales and I am not that keen on doing presales.
I have been told a non bank lender might do 60 to 65% of GCR minus GST at 3% to 5% over mortgage rates but would probably not require presales.
Does this sound right?
Also just looking to confirm my understanding is correct, in that the lender would pay out the mortgage over the lot and take first mortgage over the lot? At the moment the loan over the lot is a resi loan on good rates.
It seems to me that if a party only wants to lend 60% of GRV and they get first mortgage over the lot then they are doing pretty well risk wise, in that the value of the lot itself is worth a third of what they are lending. Is that the position? It just seems a bit rough for the old developer. Would a lender take a second mortgage over the land and lend say 40 to 50% of GRV?
In regard to serviceability, using our resi CBA calculator we should be able to service the loan if you count the proposed rents. The lender will count the proposed rents right? Is this the case even if the intention is to sell them? Should we tell the bank that we intend to keep them so that they will count the rent (BTW, I should note that we could fund the interest during the selling period out of savings).
Finally, does anyone have any current experience with presale of 2 bed units for around $375k within a 12 km radius of the CBD? Are they moving?
Thanks for your time.
Cheers
Ben
PS is there any chance of capitalisation of the interest? Or is that a pipedream?