Finance on construction of two townhouses

[CaliAngel]

I have subdivided a piece of land in Khandallah Wellington. A fee simple subdivision resulting in two titles which are now freehold.
History:
This has been a decade long project that I am just keen to complete and wash my hands of. The conditions for resource consent for subdivision were completed in 2010. Our consent for the construction of two townhouses that we had the plans drawn up for in 2005 lapsed and WCC wouldn't extend it in 2010. Our surveyor didn't see much chance of a reapplication being successful at that time. The town planners were being quite anal about new plan changes (2004) which scotched our ability to get the project financed and completed before the lapse.
We've had a long term relationship with Westpac - we have a number of investment properties in what was originally an LAQC. They've been obstructive and have tightened the LVR requirements to 70% on 3+ properties. They'd never be comfortable with lending over a development so we're getting them to release title once we've paid off the loan facilities.

The planning issues have now been resolved and the surveyors are hopeful the conditions can be satisfied. My team is working on the project to push through to commence construction

I want to set a plan in place for financing the construction of the townhouses.

Question1 :
Can anyone recommend an institution to approach to get lending secured over the project? Building societies or large lenders that have been amenable. What do they require in the way of a business plan?

Question 2:Other than the usual sales links on QV, does anyone have links to recent sales activity or information on what kind of buyers are out there in Northern Wellington.

Summary
It's been a pigs-ear of a project with significant engineering issues (retaining walls and rock anchors etc) .I bought as a naive 25 year old but my feeling is I could get the houses up now in a low inflation environment; sell the unit we always intended to develop and sell and hold the other.
A higher inflation environment in 2015, 2016 should ensure there is no loss of equity over the long term.

[Orkibi]

If you have some equity in another property you can approach a private asset lander who may lend you up to 65% of the asset you secure the funds to.

the interest rates and fees are relatively high around 8% and 3-4% fee.

BUT first you need to do some Due diligence and make sure you can afford it and if there is a demand for this product.

from memory that areas have alot of unsold new builds and sections...
the last thing you want is to be stuck with the project paying high interest rates etc.

It maybe a good idea to get planes approve and ready to go with new titles and sell it as is, for someone ales to complete the project.

But remember to leave something to the buyer as he is taking all the risk.
If the mainstream banks will not lend you the money then it means that your financial situation may not be suitable to undertake a project like that.

[CaliAngel]

Thanks Orkibi.

How would I shop around for a private asset lender? Does a building soc fulfill this role? I guess that is bridging finance - when we first looked into doing this Bridgecorp was all the rage. We almost borrowed to build and sell before the GFC but I was suspicious. As far as our financial situation, we can pay part cash but as far as possible want to use other people's money and as you say it's critical to ensure the market is there for the final product.



How do larger scale developers get on?

[Orkibi]

you need a mortgage broker to help you out, did you contact any?

using some of your cash as working capital is not a bad idea provided it is short term.
using other people money gives good rate of return on a long term asset who reduce income.

if you are not confident to put your own money in the deal DON'T DO IT.

[speights boy]

How do larger scale developers get on?

New breed fills finance company void

A new breed of mezzanine funders are becoming increasingly active in the property development market as they attempt to fill a void left by the demise of finance companies.

www.stuff.co.nz/business/8370027/New-breed-fills-finance-company-void

[motivated]

Suggest you try Beryl at Bricks and Mortgages in lower hutt

[Craig Pope Mortgages]

Hi CaliAngel, I can send you some statistics on sales in the area, houses on the market etc, feel free to email or message me the street name.
Whenever there is equity there is always scope to make a development work, a non bank lender/asset lender would required 30-35% equity as a minimum. But we would always try and see if a major bank could do it first. Sometimes it just requires a fresh prospective.

[Rosco]

As Orkibi has suggested, I would investigate just selling the sections with the resource consents and plans in place.

Otherwise you invest more time and money into the project, but don't necessarily make anymore. Developments and building sounds easy, but it is not normally, and most people have extra costs and issues.

Ross

[Davo36]

Ross's idea is good. Try selling them as-is.

The only reason I can see to do it is to learn about developing, in case you want to do more of it in the future. I doubt you will make any more money on this project by the sounds of it.

And if you want a rental, buying existing is much better than building one.

All the best.