Arranging Your Finance

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Your Top 5 Tips ...

IT IS NO SURPRISE that banks are still rather coy about funding Developments, so maybe a few ideas on how to get your projects across the line could be helpful.

Here are the Top 5 Tips …

  1. Properly Assess Your Capital Requirements
    Do a thorough feasibility before proceeding with any project, to ensure you have sufficient funds to complete the project based on 80% funding of total costs. Make sure you factor into your calculations capitalised interest, for least 12 months.
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  2. Lock In Enough Pre-Sales
    Make sure you are aware of the number of pre-sales you will require. And also properly research the market — so you are confident the properties in your development will sell off-the-plan. If your development is not suited to pre-sales, ensure that you are able to arrange finance without pre-sales (or with a lower pre-sale requirement through a non-bank) before proceeding.
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  3. Select The Right Builder
    Always ensure your builder has successfully constructed similar projects to yours in the past. And at least drive past to inspect these developments for yourself. Make sure your builder has all the correct licensing and capacity to handle your development.
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  4. Underpin The Valuation
    Ensure you undertake your feasibility study is using conservative projections. Research your market well, and obtain sufficient comparable sales in your area. Communicate with the valuers, to assist with obtaining comparable sales; and any other information they may need to complaint their valuation.
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  5. Avoid Having Too Much Other Debt
    Regardless of whether a project stacks up in all other area, lenders will still want to ensure that you are able to service your other debts. Make sure any previous developments are completed before you start a new development, unless you have a large amount of capital available.

Bottom Line: Hopefully, you found these tips helpful; and for each article we’ll be covering a fresh Finance topic.

Perry

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