The way you fund a development varies from client to client. The easiest of it all would be if a client is self-funded. However, because of the cost of land and construction on top of that, usually someone needs funding from a bank or (and what we’ve seen recently is) using the help of superannuation.
Depending on your structure, bank funding is a little bit less complex in most cases than funding through super where you basically just apply to the bank for a loan. However, it depends on what you’re funding. If you’re funding the property purchase, that’s a lot simpler than going to fund the development itself and getting development finance which is usually; higher rates of interest, a few more hoops to jump through and they will lend you less as a LVR than if you’re going to buy a standard property from the bank or just a rental property.
So whether you’ve got all the cash you need in a bank already to carry out the development, or you need access to superannuation, bank finance or developer finance – they’re the three different ways to fund property development.
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