Development And Construction Loans

Property development offers a unique opportunity to level up your investment game, combining the excitement of construction with financial strategy

Finance is the backbone of any successful development and SOS has a passion for helping developers achieve the finance they need for their project.

Are you looking to subdivide and build multiple houses or are you wanting to develop your existing property? We have solutions that can help with any project.

Before diving into property development, it’s crucial to understand the risks and rewards. Begin by evaluating your capacity for handling stress, your risk tolerance, and your willingness to be hands-on in a project. Successful property developers need problem-solving skills, thick skin, and the ability to manage projects efficiently.

In property development, time is money. Delays can cause project costs to spiral, leading to lost profits. Managing construction timelines, keeping subcontractors on schedule, and maintaining strict oversight of all aspects of the project are critical to success The best advice we give is to ensure you start talking about your financial requirements before you start spending your money on a project so you are aware of what construction lending entails.

The most common barriers we see developers facing are:

• Pre-Sales – Typically non-bank lenders don’t require the same or any number of pre-sales that a main bank will require. This can mean your project gets moving faster.
• Quantity Surveyor - Depending on the lender the requirement to have QS involvement might be waived. Typically, with a main-bank funding for multi dwelling projects QS will be required which can add significant cost to your project.

SOS assists to place your project with a lenders across all stages of your project from land acquisition to construction to assisting with your long term plan.

If you’re looking to build a single residential house or subdivision with multiple dwellings, SOS Non-Bank has a proven track record with commercial property finance. SOS Non-Bank works with you to provide a solution for your development costs.

• Residential
• Standalone houses
• Duplex and terrace town-housing developments
• Multi-unit apartments
• Industrial & commercial construction
• Commercial offices/retail units
• Industrial warehouses
• Childcare centres and other specialist commercial assets
• Subdivisions
• Residential – Freehold and Unit Title
• Commercial
• Industrial

Construction loans require a comprehensive breakdown of various budgets, consents, and contracts. As part of our process we review with you:

• Project feasibilities and construction budgets
• Building plans and consents including resource consents, building consents, and engineering approvals
• Build contracts
• Pre-sales
• Exit strategy assessment

A few key metrics you might want to consider

• Development Margin typically refers to the profit margin on a property or project development. It represents the difference between the total cost of developing a project (including land acquisition, construction, fees, and other associated expenses) and the final selling price or value of the completed project.

• Loan-to-value ratio (LVR) is a financial metric that compares the size of a loan to the value of an asset being purchased. It’s used by lenders to assess the risk of lending money for a mortgage or loan. With development finance, we typically look at the LVR on what the consented land value is (Often called the As-Is Value) and what the LVR will be on completion (Often called the As-If-Complete Value).

• Loan-to-Cost Ratio (LCR) is a financial metric used primarily in construction or development financing to compare the amount of a loan to the total cost of a project. It helps lenders assess how much of the project’s cost is being financed through debt versus equity provided by the borrower

 Key Points:

• Higher LCR: Indicates that a larger portion of the project cost is being financed with debt, which can be riskier for lenders because there’s less equity from the borrower in the project.

• Lower LCR: Means the borrower is contributing more equity, reducing the lender's risk.

Don’t wait—call us now and secure the funding you need to move forward with confidence!