Hi All, Was hoping for an outside perspective Purchased a 787m block in Willagee Perth for 510k (404k owed), have knocked the house down and split into two green title street front blocks, which based on recent historical sales is worth circa 330+ each. The whole plan was to sell the blocks and move on, but with the improving WA economy (not necessarily property market ) i am pondering how i would go about getting finance to construct two individual homes. Currently low on cash on hand so im hoping for some perspective before i head down to the bank. Theoretically have improved the value of the venture by 150k, can that be used as a deposit on the build, or am i only eligible for 80% of that 150k , in which case i dont have enough cash to purchase 1 let alone 2 properties. Servicing is no issue with cashflow, just no substantial saved cash. Appreciate a thought process from someone who has done this before. MM
You get a fixed price building contract to build the houses. You can then finance up to 80%-90% of the end value of the project completion via a construction loan to build the houses. For each individual block: Block value $330k Loan on each block: $202k Cost to build: $250k Total value of the end project (assuming it's just land + build cost): $330k + $250k = $580k You've borrowed $202k for each block but need another $250k for each house. Total loan required against each block: $202k + $250k = $452k End loan to value ratio is $452k / $580k = 78% LVR (less than 80% so the security is available to qualify for the $250k construction loan). Fundamentally this is a fairly simple construction loan. Speak with a mortgage broker to explore your options.
I don't drink... But if you want to give me a call I'll walk you through the specific numbers of this deal and figure out what really is possible.
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