Development & Construction Lending
Whether you’re building your first home or building three homes at once, finance is often a key hurdle to overcome.
It is vital to understand the process from the start as finance is not always the first thing you do, given the time it takes from the initial idea through to receiving Code of Compliance.
Property development can be a highly rewarding and profitable activity, but also carries many risks if you don’t have the right people involved and the right research complete.
The right advice will ensure you reduce your costs and time in a project while maximising your returns and making sure that a project is feasible. Ascend Financial can help in this area, providing many different financing options and structures to get the project moving.
Development loans are assessed quite differently across banks to non-bank lenders with a key factor being whether the purpose is to build and sell for profit or build and hold for investment/rental income. It is highly recommended to speak to an accountant first regarding tax implications of your plan and structuring ownership before you engage in developing property and seeking finance.
Give us a call to discuss this and get it right upfront as mistakes in development can be costly and irreversible.
There are 6 Key Steps in the Process to Property Development
Engage with an architect or property developer prior to going unconditional on land to assess feasibility of the project and get an estimated overall costing.
Purchase Piece of Land
We can help connect you with real estate agents and lawyers throughout this process.
Work with your architect for all council and planning tasks, namely getting resource consent, building consent and engineering plan approval (you can use your own engineering connections if not through your architect).
Once planning approvals are all in place, civil works begin which comprise of connecting all the public services to the site and digging the foundations.
Construction of the property is when the various tradespeople come in and execute the plans (eg. builder, electrician, plumber, brick layers, roofers, tilers etc.) If the build is self managed, lenders are tougher with borrowing criteria and will generally lend less.
Construction is Complete
Once construction is complete, you can either rent out the property or sell. Selling will incur costs, such as marketing, real estate agent fees and tax.
Costs of development will vary wildly depending on many factors.
These factors include project size, complexity, site specific issues, materials used, trades people used, council process, architects and more. As a guide, here is a comprehensive list of costs to expect in development: