(FINANCE CONSTRAINT) - RESIDENTIAL INVESTMENT - DA APPROVED SITE

Hi,

I'm hoping someone can help me.

I've recently secured a property in Logan Shire, subject to DD. Key facts:

- Residential house on circa 2,000sqm
- DA approved for 4 lot subdivision
- Currently rented on $380 pw

Proposed scope:
Lease for circa 2 - 4 years then refinance to complete subdivision works and sell down each lot.

Issue:
1. Due to lending conditions I'm unable to obtain finance with the big 4.
2. Through my broker, we had pre-approval with Peppers until they noted that the site is DA approved therefore, they cannot accept a 4 lot subdivision within residential guidelines.
3. Went to Latrobe finance who said they would lend but only on Commercial Terms whereby I have to contribute 35% equity and an interest rate of 8%.


I have no intention of doing any work on the site for at least 2 - 4 years therefore, adopting Latrobes proposed finance terms does not make commercial sense.

Has anyone experienced the same situation I am currently going through and how they got around it?

Alternatively, if there are any brokers here that may be able to assist on how I can get around this, it would be greatly appreciated.

Thanks in advance,
Kip

 

4 units falls under commercial lending for most funders. There are a couple of residential lenders that will do it, but you've already indicated that servicing is a problem with the Big 4. The lenders that will allow 4 unit development are a bit more conservative than the Big 4 so they won't work.

This leaves you with commercial options.

You've gone to La Trobe and they are very expensive, but they'll just about anything. There are quite a few lenders in the very wide gap between the mainstream lenders and La Trobe. As it's commercial you probably are going to have to put down a 30% or more deposit but there's plenty of commercial lenders with much cheaper rates and fees.