Development Finance

Development Finance Specialists for Residential, Commercial and Mixed Use Projects

Property development can be one of the most rewarding wealth creation strategies available, but it is also one of the most complex forms of lending.

Unlike standard residential or commercial property finance, development funding requires lenders to assess not only the borrower, but also the project feasibility, construction costs, end values, builder experience, market conditions and exit strategy.

At LaiKin Finance, development finance is one of our core areas of expertise.

With experience assisting developers, investors and builders across Melbourne, Sydney, Brisbane and regional Australia, we understand how to structure development transactions and identify lenders suited to different project types.

Whether you're a first time developer building two townhouses or an experienced developer delivering a multi million dollar commercial project, we can help you navigate the funding process.

What is Development Finance?

Development Finance is a specialised funding solution designed to assist with:

• Land acquisition

• Construction costs

• Professional fees

• Holding costs

• Interest capitalisation

• Contingency allowances

Development finance is commonly used for residential, commercial and mixed use projects where value is being created through construction or subdivision.

Development Projects We Finance

Dual Occupancy Developments

Construction of two dwellings on a single site.

Townhouse Developments

Multi dwelling residential developments.

Apartment Projects

Residential apartment construction.

Commercial Warehouses

Industrial and warehouse developments.

Mixed Use Projects

Developments containing both residential and commercial components.

Childcare Centres

Purpose built childcare developments.

Medical Facilities

Medical and allied health developments.

NDIS and SDA Projects

Specialised disability accommodation developments.

Land Subdivision Projects

Subdivision and civil works projects.

Why Development Finance is Different

When assessing a development project, lenders look beyond the borrower's income.

Key considerations often include:

Project Feasibility

Does the project make financial sense?

Developer Experience

Has the borrower successfully completed similar projects?

Builder Strength

Is the builder experienced and financially stable?

End Value

What is the estimated value upon completion?

Market Conditions

How strong is demand for the completed product?

Exit Strategy

How will the loan ultimately be repaid?

Understanding Key Development Finance Terms

Total Development Cost (TDC)

The total cost of delivering the project including:

• Land acquisition

• Construction

• Professional fees

• Holding costs

• Marketing costs

• Contingencies

Gross Realisation Value (GRV)

The estimated value of the completed project once construction has been finalised.

Net Realisation Value (NRV)

The estimated value of the completed project once construction has been finalised EXCLUDING the GST component.

Loan to Value Ratio (LVR)

The percentage of the property's value funded by the lender.

Loan to Cost Ratio (LTC)

The percentage of total project costs funded by the lender.

Loan to End Value Ratio (LVR on Completion)

The percentage of the completed value funded by the lender.

Common Development Finance Structures

Land Acquisition Funding

Finance to purchase the development site.

Land Plus Construction Funding

Funding for both acquisition and construction.

Construction Only Funding

Where the land is already owned.

Staged Development Funding

Funding released progressively throughout the project.

Residual Stock Finance

Retaining completed stock after project completion.

Private Development Funding

Funding solutions for projects outside traditional lender policy.

First Time Developers vs Experienced Developers

First Time Developers

Many lenders will consider first time developers, particularly where:

• The project is relatively simple

• Professional consultants are engaged

• Equity contribution is strong

• Builder quality is satisfactory

Experienced Developers

Experienced developers may have access to broader funding options and higher leverage depending on the project.

What Lenders Look For

Strong Equity Position

Developers who contribute meaningful equity often have more funding options.

Realistic Construction Costs

Accurate costings help reduce project risk.

Experienced Builder

Builder selection is a critical part of lender assessment.

Feasible Exit Strategy

The lender must understand how the facility will ultimately be repaid.

Market Demand

Evidence of demand for the completed product.

Common Exit Strategies

Sale of Completed Stock

Selling completed dwellings or commercial units.

Residual Stock Retention

Holding completed properties as long term investments.

Refinance

Refinancing into a long term residential or commercial facility.

Combination Strategy

A mix of sales and retained properties.

Funding Structures Available

Depending on the project, funding may include:

Land Acquisition Finance

Funding for site purchases.

Construction Finance

Progressive funding throughout the construction phase.

Development Finance

Funding for larger multi dwelling projects.

Residual Stock Finance

Retaining completed properties after project completion.

Commercial Lending Solutions

Long term refinancing options for completed projects.

Example Scenario

A developer in Victoria identified a site suitable for the construction of 8 commercial warehouses.

The project involved a land acquisition of approximately $2 million with a construction budget exceeding $2 million.

After reviewing the feasibility, builder credentials and proposed exit strategy, we structured a funding solution that supported the acquisition phase while creating a pathway towards construction funding.

The developer was able to secure the site and progress the project towards the next stage of development.

How LaiKin Finance Helps

Development finance involves significantly more moving parts than a standard property purchase.

We regularly work with:

• Developers

• Builders

• Quantity Surveyors

• Town Planners

• Engineers

• Accountants

• Solicitors

• Valuers

Our role is to:

• Review project feasibility

• Assess lender suitability

• Structure funding requests

• Coordinate documentation

• Present the transaction effectively

• Manage the process through to settlement

  LaiKin Finance provides finance solutions Australia wide. Learn more about the areas we service.

Useful Calculators

Before speaking with a lender, we recommend using our Development Finance Calculator.

The calculator can help estimate:

• Total Development Cost

• Equity contribution

• Funding requirements

• Loan to Cost ratios

• Potential development margins

This provides a useful starting point when assessing project feasibility.