Property development with its many moving parts can be both rewarding and challenging; having the right financing solution in place is essential to success. For newer developers financing can be more difficult as lenders factor in experience and brand when it comes to funding approval.
The process of financing your next project and property development is further complicated by the myriad of lenders and range of lending structures in the marketplace.
Financing your Project
For developers, the imperative is to find the right match for their financing requirements so that the needs, particulars and risk profile of each project are catered for. An impartial, independent adviser is an immensely valuable conduit to this process.
First-time development can be difficult. It can often be overwhelming putting in place all the requirements such as builders, quantity surveyors and financiers. Obtaining financing is a critical part of the process, and as a new developer can often prove difficult, many lenders will simply not fund developers with limited experience. It is arduous talking with lenders when you don’t know those who will suit your situation and risk profile best. That is why it can be valuable to let someone else run the financing process for you.
Lending Options
Property development in Australia is financed by lenders and financiers who source capital locally and internationally. Stamford Capital allows clients to access multiple sources of capital including the major banks, 2nd tier and regional banks, non-bank lenders and structured capital providers. We work with developers who are ASX listed companies to smaller niche developers.
In the table below we take a look at some of the key benefits associated with each lender type.
The major banks generally offer the most competitive rates, however 2nd tier banks, regional banks and non-bank lenders often offer greater flexibility. Your needs determine the choice of lender and finance structure in respect to leverage, pre-sales requirements, and development experience.
A developer will typically start with the major lenders as they will produce the best rates on debt. You will potentially move down to 2nd tier lenders and non-bank or private lenders if you don’t qualify for the majors. There are multiple factors that can contribute to this, limited developing experience or lack of pre-sales are two prevalent issues.
More often than not 2nd tier or non-bank private lenders can provide developers greater flexibility with respect to pre-sales requirements, leverage and importantly in relation to funding those with limited experience.
Current Market Trends
The last 6 months have seen a positive shift in the commercial and residential property market. More liquid capital markets mean lenders are increasing their gearing levels and relaxing their loan covenants, especially for smaller scale loans (loans under $20M).
We have seen an increase in alternative capital sources (2nd tier and private lenders) coming into the market vying for senior debt funding. There has been a broadening of general lending terms and conditions and this has allowed a number of non-bank lenders to become increasingly competitive from an interest rate perspective. For more information, Stamford Capital is a specialist provider and arranger of capital for property investors and developers.
To find out more about the funding options available to you and to discuss the capital requirements for your next development. Contact Domenic on 0411 879 398 or via email domenic.losurdo@stamfordcapital.com.au or visit Stamford Capital https://stamfordcapital.com.au/
Setting up a New Body Corporate?
Securing the right financing is crucial for property development success, especially for new developers who may face challenges in obtaining funding. Understanding the various lending options and current market trends can help you make informed decisions.
We work with Property Developers right across Melbourne in setting up their new body corporates. We work with developers from project inception all the way through to the registration of the plan of subdivision, we cover:
- Ensuring the Plan of Subdivision is optimal for shared living;
- Ensuring all the body corporate rules are appropriate and ready for your off-the-plan sales agent;
- Ensuring the body corporate budget and apartment levies are ready for your off-the-plan sales agent;
- Getting you ready for settlement including the body corporate certifications needed for a settlement to take place.
Change Body Corporate Victoria helps body corporates change their body corporate manager. There are tons of unvetted and untrustworthy managers in Victoria, and we help body corporates find the best strata manager for them.
Contact us today for a free consultation. We’ll help you find a management company that prioritizes your needs.
