In-Fill Subdivision Finance with No Pre-Sales

by | 18 Jul 2019 | Property Development

Small-lot in-fill subdivisions can be great little projects – getting in & out quickly with good profit margins can result in solid returns on an annualised basis (IRR, for the finance geeks!).

For small projects and relatively inexperienced developers though, banks often aren’t keen; particularly when there aren’t yet any pre-sales (which are notoriously hard to get prior to any work, particularly in Qld).

With this project, the developer had only done 1 project previously and didn’t have pre-sales. Whilst the interest rate may seem high-ish on the surface, the Line Fee often catches people as the true cost of these fees is actually much higher than a simple “all up” number – in this case the rate was the rate, with no line fee to drag up the cost.