Achieving no pre-sales construction finance for a Brisbane residential development

Achieving no pre-sales construction finance for a Brisbane residential development

Introduction

DFP was approached by a previous client, an experienced developer who had engaged a well-known QLD builder to construct 11 units in a established Brisbane suburb.  The client was seeking Construction Finance for $3.0 million.  The client wanted to complete the project with No Presales so that the selling prices could be maximised

Issues

Traditional sources of funding would not entertain the Nil presale position nor a high LVR. The client wanted a higher Loan to Value Ratio (LVR)  80% of Total Development Costs

Scope

DFP was engaged to provide a funding solution to enable the project to be undertaken without presales at an elevated LVR

Result

• DFP has been able to provide a formal approval for Finance in a timely manner   The loan facility has satisfied the Client’s funding requirements for both the land and the construction funding at an elevated LVR without any pre sales
• DFP’s facility was based on a lo-doc application with the Client’s Accountants verifying income. This saved a lot of time and provided convenience for the Client.

What the client says:

“I went back to DFP because I knew I could get the result.  I wanted to achieve finance with no pre-sale requirements.  I knew there was a fair amount of stock due to come onto the market right after us, so it was important to get construction underway as soon as possible.  We wanted to get our stock onto the market before others as much as we could.
We went with DFP because of the pre-sales side of things in particular.
We were surprised to get an 11 unit development with no presales, it’s something we would not have gotten from any of the major banks.  I went back to DFP because we’d gone through the process of working with them not too long ago.  I knew what was involved, what information they would need, and that we could turn it around pretty quickly.
They do deliver on what they say they are going to deliver on.  It’s one thing to say they can get funding with no pre-sales.  Having a broker say “this is what we’re going to achieve” and then have them deliver the result is unusual.  There’s been a number of occasions with brokers or financiers when they say they will get you a certain solution and then 2 months down the track you don’t get what you want.  DFP deliver what they promise.  They tell you how it is.  It’s a trust thing for me and I trust what DFP say, which is important to me.
I would definitely recommend them to other developers and have.”
Alasdair Baker, Director, Omira Property Group