LVR (Capital) required for subdivision

Hi all,

I want to find out what is the minimum LVR required to do a subdivision (based on your experience or knowledge)

EXAMPLE ( how much capital do I need to do a build ( 600k land + 400k build 2 townhouse )

I know that you can buy a property up to 95% or 90% LVR but can you build up to 95 or 90?

I would love to hear your opinions

thank you in advance.

 

It won't matter if you already have owned the property as long as the lvr doesn't drop

 

Theoretically you can go up to 95% with some lenders however it worries me when clients talk about 95% lending and construction - its a dangerous cocktail.

You need to factor in a bit of fat in case you have variations and you hit construction issues. If this is your first development then its most likely you may be missing some key items from the building contract and you won't pick this up until you come across it midway through construction.

The last thing you want to do is be in the middle of construction with a variation bill and no money to pay for it.

 

I did a small retain and build at 90% cause I wanted to keep as much buffer as possible for the bugger factor that inevitably comes with these projects.

It's possible, LMI premiums will be high and most likely the interest rate as well.

I leverage borrowings to preserve cash buffers.