Property Development Finance: What happens when the ‘proverbial’ hits the fan?

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Investing is never easy. Normally, as the risk goes up, so does the reward.
As investors embark on more ambitious investment projects they are advised to surround themselves with advisers who can help them through troubled times.

Here is a case study of how one Chan & Naylor Finance broker sorted out a client whose property development was going belly up.

The Jones family decided to knock down the family home and build two houses on the plot – the plan was to make a significant profit on the sale on one of the houses. The Jones had done everything right; they got Council approval, signed a fixed-price contract with a builder and arranged finance with a well-known bank.
The builder knocked down the family home and started building the first house.

But, before the roof could be put on, the builder went bust.

What a nightmare!

The Jones then had difficulty in getting another builder to complete the job without charging at least an extra $200,000 (this was way above their budget).
The client thought about completing the development as an owner-builder. But no bank would extend them finance. So they were left marooned with a development that could not be finished.

This is where the C&N team kicked in. Our brokers have access to specialist lenders who are not available to the public. The lender moved rapidly and offered them $1.3m within two days.
The downside is that the rate is not super-competitive and the client must complete the development within 12 months.

But the good news is that the Jones can now:

  • Complete the development (and as an owner builder)
  • Bring the development in under budget; and
  • Reap a profit on the project
Related:  When is a line of credit not a true line of credit (LOC) ?

“…what a dream!” 

The C&N Finance team have access to a wide range of specialist lenders to help you achieve your investment goals. Give us a call on 1300 306 868 .

Jenna Ford

Jenna Ford

Disclaimer: This article contains general information; before you make any financial or investment decision you should seek professional advice to take into account your individual objectives, financial situation and individual needs. Click for more detail regarding this disclaimer.

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