Construction Finance

Hi all,

We are looking to construct a house on land and then on sell immediately. We have an entity with a builders license and want to build it ourselves.

We can pay cash for the land ($230k) and would like to finance the construction ($350) for a total of $580k. End value is around $650k based on recent sales.

This would be an ongoing project, so basically flip them every 4 months and go again.

What would be the best option to finance this?

I am thinking a line of credit, but keen to hear everyone’s thoughts.

Cheers

 

You won't get far with residential if building and selling. Most lenders treat you as owner builder even if using different entities.

But you might be able to structure around this with careful planning

 

Yes, have 2 properties at 70% lvr

 

I also have another entity with builders license that I can use at no cost, i.e. our cousin has a building company.

 

You will still be treated as an owner occ. If cousin has a different surname you might get thru

 

Yes, different name, have used him in the past for the same thing through RAMS.

 

Why not finance the land and cash the construction?
Im assuming a lot of the profit is being received by the construction entity as I would wonder why you bother for such a low margin

 

Because that will cost me almost $400k out of pocket, which will leave our business short.

There’s $100k approx in it for us and we can flip them within 4 months, so there $300k extra in it at the end of the year.