Background
The client is an experienced small-scale property developer with a proven track record delivering residential projects of similar size. With a clear understanding of local buyer demand, the developer focuses on creating practical, well-designed housing that aligns with market needs while maintaining strong project margins.
Project Overview
The project involved the construction of four detached homes in a well-established residential suburb of Toowoomba. The site had been held by the client for several years and already benefitted from development approval, positioning the project for immediate execution.
The developer’s strategy centred on increasing site density by delivering smaller, more affordable homes with medium to high-end finishes. This approach directly targeted strong buyer demand in the area, with the intention to sell all dwellings upon completion.
Key Metrics
Loan Amount: $2,150,000
Loan to Value Ratio: 70%
Loan to Cost: 80%
End Value: $3,075,000
Presales: Nil
The Challenge
The developer had already commenced construction using their own capital and required a funding solution that could both reimburse funds already deployed and support the remaining build costs.
The brief was clear. The client sought a high-leverage facility with no presale requirement to maximise return on equity and maintain liquidity for future opportunities. At the same time, the transaction involved the transfer of the property into a corporate structure, introducing additional complexity that required careful coordination across multiple parties.
These moving parts created a scenario where both lender appetite and execution capability were critical. The transaction required a funding partner that could assess the project holistically, manage structural changes, and still deliver a flexible solution aligned with the developer’s commercial objectives.
DFP’s Strategic Solution
Development Finance Partners took control of the funding process and leveraged its lender network to secure a suitable non-bank construction facility tailored to the client’s objectives.
DFP coordinated closely with a local valuer and quantity surveyor who understood the Toowoomba market, ensuring the project was assessed accurately and positioned effectively within lender parameters. This local insight played a key role in supporting the higher leverage outcome.
By structuring the facility to accommodate both the capital reimbursement and remaining construction funding, DFP delivered a solution that reduced the developer’s out-of-pocket contribution while maintaining compliance with lender requirements.
The result was a well-aligned funding structure that balanced risk, flexibility, and efficiency, allowing the developer to continue construction without disruption.
Results and Benefits
DFP successfully arranged a $2.15 million senior construction facility, providing immediate funding certainty and unlocking capital already invested in the project.
By achieving 80% loan to cost with no presales, the developer significantly improved their liquidity position and avoided unnecessary equity dilution. This allowed them to preserve working capital and remain active in pursuing future development opportunities.
The structure also supported the developer’s sales strategy, giving them flexibility to complete and sell the dwellings without restrictive conditions.
In addition, the facility featured a fixed rate with no line fees, no early repayment fees, and no break costs. This created a highly efficient and cost-effective exit, enabling the developer to repay the facility seamlessly upon completion and sale of the homes.
Client Testimonial
“DFP quickly understood my requirements, were proactive and easy to deal with and helped deliver the result we needed”
Conclusion and Advice
This transaction demonstrates the importance of accessing flexible funding solutions when traditional bank structures limit leverage and restrict project momentum.
By working with a specialist advisor and engaging the right non-bank capital partner, the developer was able to maximise leverage, unlock equity, and maintain control over both delivery and exit strategy.
For developers undertaking similar projects, the key takeaway is to engage early and structure funding strategically. The right approach can significantly improve cash flow, reduce equity pressure, and create stronger outcomes across the entire development lifecycle.
Whatever the size of your development plan, DFP have a wealth of experience and strong relationships to help you succeed. Contact us to explore your tailored finance options.
