Development finance through major banks vs. non-bank lenders varies quite a lot from feasibility tests and credit policies to total lending provided and pre-sales needed. Developing residential properties is no small task as it requires a lot of capital expenditure, due diligence and cost analysis/ feasibility assessments. To get finance for development you will need to have a feasibility assessment done, understand your current land value and how was that determined? e.g. are there DA approvals, has there been a valuation completed. we will need to understand the current/future debt position on the land and lastly the costs for completing the construction/ development. As a developer you will need to understand the Gross realisation of the project this is the sum of the End Sales Value less GST and Less all costs involved which can include but is not limited to Consultants (architects, engineers, builders, town planning etc), Council fees, construction, contingencies, sales commissions, marketing, finance fees and interest. Banks and non-bank lenders will typically work on values derived from either the Hard costs (Land and Construction) or Gross realisation of total on completion sales. depending on the bank/lender you will typically need to have a percentage of presales as evidence for total on completion sales.

Some terminology that banks, lenders and developers use that is good to know are "Put Options", "Put and call option". These options within sales contracts and agreements are used to assist both developers and sales agents complete due diligence on land prior to the contract coming into existence. It is also used to either force the seller to sell the property to the buyer with that option or force the buyer to buy from the seller. We always recommend engaging a solicitor to ensure you understand your legal obligations when entering into any contract.

as usual if you would like to know more about the process for development or potentially start a development reach out.