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Self funding developments

Discussion in 'Property Finance' started by Ace in the Hole, 1st Jun, 2016.

  1. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    Just wondering if anyone does this?
    We did this for our last development for construction costs of 6 townhouses, bar the last 300k which we got private funding for.

    Thinking of doing another similar and just using cash for the buy and construct costs.
    Can source the funds from other entities or offsets.

    Question is, if offset accounts are only giving a 5% return and you could get 15 or 20% for the same cash for a quick development, is there anything wrong with that?
    It's basically self funding isn't it, without having to go through the hassle associated with finance, especially involving construction and progress payments, valuation's, etc.
     
  2. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    There are so many opportunities to invest and make money so for me personally I try and fund/leverage as much as I can and use as less of my personal cash/offset as possible.

    I think if you can do the development under residential lending its a no brainer but commercial/development finance definitely adds layers of complexity and hoop jumping.
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Nothing wrong with that. But just consider some asset protection strategies.

    e.g. Different entity developing to the entity with the money and a related party loan agreement with mortgage.
     
  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Hassle.............often minimises currently unforeseen risk

    cash is cash and should ideally remain so, esp if you can borrow and offset that borrow with the cash......



    ta

    rolf
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    It depends how much cash you have!