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How banks fund a development project?

Discussion in 'Development' started by Ravi, 6th Sep, 2016.

  1. Ravi

    Ravi Active Member

    31st Jul, 2015

    I am newbie in development arena so my question may be naive.

    How bank finances a townhouse project compare to an investment property (a house)?
    I know that for building an investment property bank require 20% equity (w/o lander mortgage insurance) + enough cash flow (salary income + future rental income).

    If I develop a $2.5m 6 townhouse project and plan to retain all townhouses(few short term and rest long term).

    My questions are:

    1. Can I tell bank that I am going to retain all townhouses so that future rental income can be counted towards cashflow? Will bank agree to it?
    2. How can I prove to bank that I am not going to sell all on completion?
    3. Can I get finances the same way as if building an investment property? (i.e 20% equity + cash
    4. Can I avoid going GST route?
    5. Which approach is more profitable in terms of tax saving -
    - Go GST route and sell half keep half on completion. vs
    - develop as investment property then keep half for short term (is there a limit?) and half for
    long term.
    6. How can I avoid qualifying for GST in a townhouse project?
    7. If I have both options open for me. Which one is more financially rewarding?