There are a number of different methods of funding for a property development and each solution will be specific to each client’s

• current situation,
• what they are looking to achieve with this current project and
• what they may have on the agenda over the next 5 years.

However it will generally operate as an interest-only, draw-down facility. Often the interest is capitalised during the development period, with the entire loan amount, including interest being repaid upon the sale of all or a portion of the development or if the loan is refinanced based on the increased value.

In some cases, if a client has sufficient equity in their property, it may be an even simpler proposal, just requiring a refinance to free up that equity to put toward the development costs.

What are the costs of Property Development?

Depending on the scope of your project, the costs of Property Subdivision & Development may include -

• Land/building acquisition costs
• Stamp Duty
• Subdivision (S.D.) Costs
• Development Approval (D.A.) costs
• Holding costs whilst the SD & DA are processed and approved
• Construction or refurbishment costs
• Professional/legal fees
• Architect, Engineering, Quantity Surveyor
• Finance Costs
• Interest
• Selling and Marketing Expenses
• Contingency allowance
• Capital Gains Tax (CGT)

You already know that Sub Division and Property Development are specialised areas that require the services of an expert. The funding for these projects is also specialised and therefore requires the services of an expert. Remember, this is a big project with potential to realise significant profits so why leave the specialised details to someone who isn’t experienced in this field.

Finance Mentors have been in the Finance world for over 10 years and in that time have assisted many clients in this specialised area. Each situation is unique and requires a unique solution.

Mark Powers
Finance Broker

59 Derham Street Port Melbourne 3207
markp@financementors.com.au