Development loans are often necessary to complete large development projects. Residual stock loans in particular can assist developers who wish to hold onto the unsold units in their completed development project while maximising the return on investment.
Hodgestone Finance regularly deals with clients in such scenarios, including a client who had completed a circa 300 apartment building Queensland. 43 of their apartments had settlements delayed, primarily because of the FIRB restrictions, as the total value of their residual stock was $17.82M.
The client therefore needed to realise their profit immediately so they could then settle on a few other sites. Hodgestone Finance assisted by setting up a residual stock loan equivalent to 65% net of the security value (totalling just under $11.6M net funds).
Hodgestone Finance’s funder accepted valuations from a major firm that was instructed by the client. The interest rate agreed upon was 9.90% p.a. with a minimum 3-month interest earn.
The time between presenting the scenario to Hodgestone Finance’s funder and settlement was just over 2 weeks, allowing for a quick resolution of the client’s issue.