ABOUT THE BOOK
Regardless of your next project being your very first or your 21st, the insights provided in this book can help save you time and money.
Whether it’s to help gain an understanding of some of the more technical aspects of structuring the finance options available to you, or simply to help decipher some of the jargon used in the industry, chances are you will find the answers you are looking for here. Aside from that, it’s a damned good read.
Have a plan and do your research
Every project is different, so it’s critical that you understand the market expectations and can clearly and succinctly explain it to your financier.
Set yourself up to succeed by knowing who is buying, how you will differentiate your product and how you can leverage those points of difference to steal a march on the competition and secure contracts. Ask yourself, does my product mix, design and finishes meet the market expectations and have I got the price points right for my buyer demographic?
In short, researching and understanding your target market is one of the critical steps towards securing a strong sales performance to impress your financier.
When is a finance 'approval' reliable?
The lending market has never been more challenging with the constantly evolving landscape of new lenders and changing loan requirements. Even experienced developers, with a proven product in a desirable location, can sometimes struggle to get their deal approved, on terms they would like.
So, your application has been lodged and you have received correspondence which appears at first glance to be an offer of finance. But how reliable is that document? Chances are there are numerous hurdles to be negotiated right up to the point of settlement. It pays to understand how to navigate these requirements, how to be flexible or find alternatives to ensure you get to the starting line in good shape.
Funding table comparison
Bank and non-bank lenders can have differing positions regarding loan ratios, and in some cases even calculate these ratios differently.
Most non-bank lenders are so-called gross realisation (or ‘asset’) lenders and the main criterion for them is that the loan to value ratio (LVR) does not exceed 65% of the ‘on completion’ value of the project.
Banks are prepared to extend to a maximum LVR of 65%, but they may impose a further limit to ensure they do not fund in excess of 70% of the total development cost (TDC) of the project. As they will opt for the lesser of the two this can result in a significant difference between both approaches.
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A great read for anyone wanting to be in the development space. Well thought out and to the point. A must read.”