There are many reasons that non-bank lenders are an attractive option when financing a duplex build. Senior Credit Manager, Kate Rundle, explains why.
Interest in duplex developments is at record highs these days. The national accommodation shortage and moves by councils to densify urban living are part of the reason, but so are the lifestyle advantages these versatile multi-unit dwellings offer.
Duplex developments can either suit homeowners wanting to keep parents or children nearby, or savvy developers looking to create high-yield, high-growth investments. And they come in all shapes and sizes. Some may offer two identical homes which share a common wall, while others consist of completely detached units on the same plot of land.
A great first step
“Tackling a duplex project can be a great first step into the property development business,” says Kate Rundle, Senior Credit Manager for Development Finance Partners. “Smaller builds such as duplexes, even triplexes, are not as complicated as some bigger property deals, but they still create substantial value for the owner.’’
As with any property development, arranging the correct finance is one key to success. However, this is where many developers run into problems, as the banks take a very conservative approach to this type of funding.
“Time and time again we see duplex developers of all sizes turn to non-bank lenders. The reason being that we really do specialise in the industry. Whatever stage your project is at, we understand development needs and know how to solve the challenges that the banks find too risky,” says Kate. “This bespoke approach seems invaluable for many."
5 reasons to use a non-bank lender for duplex developments
There are many other reasons that non-bank lenders are an attractive option when financing a duplex build:
1. Project feasibility
Every project, no matter the size, should begin with a professional feasibility study.
Feasibility is something the big financial institutions won’t help a developer with. However, specialist property lenders can work closely with you to assess whether your project stacks up before getting started.
“For example, DFP partner with some large, experienced developers,’’ says Kate, “but we also provide a full range of support for people tackling smaller projects, or those who are new to the industry. For these clients, our conversations around feasibility are an essential part of their planning.’’
“We also help to give real value on what the property can be sold for – which helps clients to see their full 360 degree approach.”
2. Development approvals
Development approvals can become a sticking point when approaching banks for duplex finance – they’ve always been more reluctant to work with developers who don’t have them in place.
When you work with a non-bank lender, a DA doesn’t have to be a deal-breaker. “For example, we know how to secure finance for those who don’t already own property or land, but need to secure their future site until they‘re construction ready,’’ says Kate. “Once complete, we can roll the finance over to help them with construction.’’
3. Quick response
Negotiating with a big financial institution to arrange funding may take months, during which a lot can change. However, approval times through smaller and more agile non-bank lenders can be as short as 24 hours, and loans may be settled within a week.
“This is because as property specialists, we’re focused on the project rather than your personal financial information,’’ says Kate. “You don’t need to waste time proving serviceability, or even show you can cover interest costs, which can be capitalised.’’
4. The right finance for you
Duplex properties are an excellent investment opportunity and a smart way to maximise a single block of land. However, there’s a lot of confusing information about duplex finance, and securing this type of loan can be tricky. Especially if you’re trying to do so through traditional lending.
“Some non-bank lenders can tailor solutions specific to your duplex development needs.” Says Kate. “For example, we’ve carefully curated our solutions to meet the majority of lending circumstances. Maybe you need to acquire land, or you may already have an existing property. Or maybe you already have land with a DA and need to progress with the construction phase of your duplex build. The joy is, we take the hassle, research and lending leg work away from you.”
5. Expert help throughout
Non-bank lenders have the industry knowledge that the banks don’t. Teams like DFP can guide you through each step of the process, from project feasibility to completion value, how to acquire your site and the construction phase.
Beyond project feasibility and help with structuring finance, the experts at DFP can provide you with ongoing project management support until your duplex development is complete.
“Our finance team have an average of 25 years’ experience in the industry, and a wealth of expertise in areas such as property law, negotiation with builders, and finding solutions for troubled developments,’’ says Kate. "We’re always ready to lend a hand if you need us at any point.’’
Case Study | Bank refinance and equity cash out for development development approvals
"Working with DFP has changed the way I work as they do the heavy finance lifting for me. They helped me progress my duplex plans by securing me with an LVR on the completed value."
"The bank wanted me to have an approved DA, which would have taken at least 18 months to achieve. That's 18 months worth of increased interest rates and costs while I wait. I would have lost my opportunity. It was refreshing to work with DFP - they're invested in their clients and find a way to make finance work." Adrian Banks - Abode Projects
Speak to us
At DFP, we’ve seen the need for duplex finance accelerate over the past year, with more people turning to non-bank lenders for support. Unlike the banks, we don’t push back on duplex finance. We apply knowledge and practical expertise to negotiate the right funding angle that ensures the success of your duplex development.