Property Development and Construction Finance
Financier Capital originates investment property loans for all sectors of the Australian property market. Our range of property development and construction finance solutions can assist property developers with everything from site acquisition to operational works, construction and residual stock refinance.
When financing property developments, we can offer interest-only, draw-down facilities to fund the development as required.
Often the interest on a development loan is capitalised during the development period, with repayment of the entire loan inclusive of interest charged made upon the sale of the development and or the refinance of any residual debt.
Apartments | Townhouses | Houses
Office | Hotels | Resorts | Aged Care
Shopping Centre | Strip Shops
Logistics | Warehouse | Distribution | Estates
Projects Funded by Financier Capital
Financier Capital offers businesses investment property loans for all property developments, including:
Commercial property development:
Multi-dwelling residential property developments:
- Office developments
- Industrial developments
- Shopping centre constructions
- Holiday accommodation constructions
- Aged Care and Retirement Villages
- Multi-dwelling townhouse developments
- Multi-dwelling spec home developments
- Apartment construction projects
- Mixed use retail and residential developments
- Strata titles, Torrens titles, community subdivisions
- Physical improvements
- Operational works
Borrowing Capacity and Maximum Loan to Valuation Ratio
Financier Capital has facilitated the procurement of investment property loans valued at more than 50 million (AUS) dollars in an increasingly challenging commercial lending environment.
The amount you will be able to borrow to finance your development will be determined by how well you meet our financier’s lending criteria. Our lending criteria vary depending on which lender you are best suited to and the specifics of your investment property loan proposal.
In general terms, Land Development Cost financing is possible for up to 80% of required costs, while Gross Realisable Value financing will provide 65 – 75%. Mezzanine and joint venture capital lending structures are also available and are determined strictly on a case by case basis.
Land Development Cost (LDC)
Land Development Cost financing funds the acquisition and construction of a property development and incorporates soft costs such as architecture, engineering, legal fees, and other pre- and post-construction expenses.
Many property developers prefer this option, and its borrowing scope is limited to between 70%-80% of the overall Land Development Costs of a project. To qualify for LDC finance, you may need to acquire demonstratable pre-sales or pre-leases.
Preferred Equity/Joint Venture Finance
Financier Capital is also able to offer equity or joint venture finance to development projects on a case by case basis.
These investment property loans involve one or more of our private investors offering finance through a formal partnership in which both parties agree to share the capital, risks and rewards of the particular project.
To qualify for this type of finance you must outline a clear potential for profit in your comprehensive business plan, as well as meet the equity requirements of the lender.
Up to 100% of project costs may be covered under this type of property investment loan.
Gross Realisable Value
Gross Realisable Value financing funds property development projects based on their projected completed value (excluding GST).
This financing option can cover between 65%-75% of the expected final value of the property development. Depending on the specifics of your project, borrowing under GRV terms can allow for financing of both hard and soft costs without the borrower incurring any out-of-pocket expenses.
Mezzanine finance is a type of investment property loan typically only offered to experienced property developers.
Providing property developers with mezzanine finance involves utilising Financier Capital’s network of external specialist lenders and private investors to fund capital deposit requirements that would otherwise be covered by the developer or equity partners in LDC or GRV lending agreements.
Mezzanine finance is used in conjunction with senior debt.
Securing an investment property loan under mezzanine finance will incorporate taking on a higher interest rate than other financing options as offering mezzanine finance presents more risk factors to lenders.
Financier Capital Lending Options
General Lender Criteria for Securing an Investment Property Loan
Financier Capital and our network of financiers and investors take into account a number of factors when considering approving an investment property loan. These factors include:
Experience: The level of experience the borrower and their project management team have developing similar projects will determine how much money can be borrowed and how much capital must be provided by the borrower. Borrowers with low or no experience will need to produce more capital and may also need approval before appointing their project manager.
Financial strength: The current monetary standing of the property developer is an important factor in determining the risks associated with financing their project.
Borrower equity: The greater the amount of equity the borrower brings to the proposed project, the lower the risk to the lender is. Projects with significant equity stakes will be viewed more favourably by potential lenders.
Project costs: The overall costs of the land acquisition, construction, architecture, engineering, legal fees, marketing fees, rates and taxes, Stamp Duty, interest and all other related project costs will be a factor determining the amount of finance made available to borrowers.
Development location: The feasibility of the proposed location of your development will play a role in determining your eligibility for an investment property loan. Factors that may be considered include the demographic and economic growth of the area surrounding your proposed location, as well as how well suited to that area your project is.
Profit potential: Securing finance, especially GRV funding, is often hinged upon the potential profit margins your project can realise upon completion. Part of the Financier Capital approval process involves our project valuer conducting a feasibility assessment to estimate potential profit margins.
Development type: Different financing options are available depending upon whether your investment property loan is for acquiring a residential, commercial or industrial property. If your development is for a specialised purpose, it may attract additional conditions from the lender before finance is approved.
Pre-sales/pre-leases: A high level of pre-sales or pre-leases is looked upon favourably by potential investors, but is not always necessary to secure an investment property loan.
Experience and reputation of the builders: Demonstrating that you have partnered with a reputable, qualified and insured construction company that can provide accurate construction time frames and estimates is critical to securing an investment property loan.
Ability to cover cost overruns: Planning for unanticipated differences between the cost at contract award and the completion cost is looked upon favourably by potential lenders.
Exit strategy: Including a way to transfer ownership of the development once the project is completed in your development plan is crucial to creating an attractive project management plan.
Contact Financier Capital to discuss our finance solutions - PHONE: 1300 502 006
Advantages of Borrowing with Financier Capital
Potential borrowers are encouraged to prepare a project development dossier outlining all of the above information and estimates as pertaining to their intended property development.
Establishing a business case that satisfies lending criteria will make securing an investment property loan through Financier Capital as fast and easy as possible.
Confidentiality and Transparency
At Financier Capital, we understand that the success of a potential development is often hinged upon all of the project stakeholder’s commitment to confidentiality, transparency and timeliness.
We strive to facilitate lending arrangements where all parties’ objectives are met.
We assure all our clients that all information exchanges are handled with the highest levels of confidentiality.
Banks and traditional lenders often offer property developers competitive finance, but with rigid lending terms attached.
Major banks can impose cross collateralisation of other existing assets in the borrower’s name, only offer hard cost based facilities, and don’t provide flexible loan structuring or terms.
Financier Capital works with clients to provide tailor-made flexible loan terms including:
- Interest only options
- Multiple interest rate types
- Offset accounts
- Line of Credit
- Capitalised interest
- Access to redraw facilities