Lending for SDA - brokers with experience

Hi All,

Can one of the knowledgeable brokers let me know how lending for SDA works?

Ie commercial or residential loans, LVRs, etc,,?

also how banks value new builds given the premium capex for specialist use

lastly given the very cashflow positive nature how does this affect future servicing? Ie if I can keep in coming up with deposits can I keep on scaling?

thank you!

 

Not a broker but we have several hundred under development so get to see a lot.

We have had our valued on cap rates of 8 - 10 percent in most instances.

Some valuers have done a lot of work in this space and understand it well. They get it.

Many High Physical builds out there just aren't. Many Robust builds just aren't.

Some sit empty while others are full.

Many banks and lenders and valuers have no idea and don't touch it.

 

Not a broker by any means, but I've chatted with a few banks about this as a potential project so happy to share if it's any use.

They seem to vary on the terms - one would be commercial at max 70% LVR, another said they could do it as residential at 75-80% LVR.

Either way the valuation will be a challenge to get it financed. They don't seem to take the SDA into account and will just value the project at market rates, so I would expect the valuation to be lower than the build cost. So even if you only need a 20% deposit, you'd also need to cover the difference between valuation and project cost.

Unless you can get tenants signed up before the bank values the property to decide on finance (unlikely), or you have deep pockets, it's tricky.

Happy to be corrected if anyone has had more joy on the pre-construction valuation.

 

We have many houses valued at $1m - $1.05m which is based on return and $200k above cost. Units we have up to double cost.

 

Hi @RPI
When you say that you get houses valued based on return and 200k above cost, does this mean that the bank takes into account the rental return in their valuation and it somehow increases the valuation?

Does it also mean that if I was to get an 80% LVR loan, the bank would almost lend me the full cost of the house? For instance you have said that you have houses valued at $1M, which is 200k above cost, this means cost was 800k therefore if the bank values it at $1M and will lend you 80% LVR then they will lend you 800k which means you would not need any funds to make up the difference?

Looking forward to hearing from you. We are looking into the NDIS space and one of our main questions has to do with obtaining finance.
Many thanks!

 

Hi
Yes bank values the house/unit/villa based on returns
I've seen 70% lends but not 80% but then I don't see many of the loans, they don't go through me.