Hi Guys,

Just recently I told you of a development I am currently doing, well I actually have another one which is only 20-30 minutes up the road and its also a beauty. Its on my mind today because I just picked out which one I am going to keep (I always like to hold onto property when I do a development) and I will probably use this as another holiday house, as its in a beautiful location in the Blue Mountains with a magnificent view.

Katoomba is a deal I have been working on since late last year. It is a DA approved site for 21 villas in the Blue Mountains, Sydney. There was one existing house on the land. I am doing the development using one of my favourite financing strategies, vendor financing.

The land purchase price was $1,450,000. I paid $700,000 to the vendor on settlement and the vendor left $750,000 in on contract. Bankwest are financing construction of $3,600,000.

The 21 villas will sell for $8,000,000. Rather than giving the vendor the $750,000 at the end we have come to an agreement that the vendor will get 45% of the end profits.

In this case we were really keen to get vendor financing so sometimes it is necessary to offer a bit more so that it is worthwhile for the vendor to leave some money in the deal. In this case we have come to an agreement that suits all parties and makes it a very profitable deal for the vendor to agree to vendor financing.

With vendor financing it is a brilliant way to get into property development using none of your own money. It is one of my favourite methods of developing and in the current market it is an excellent way to succeed in getting financing for your project. You will have to come to an agreement with the vendor based on the merits of the deal and create a win-win situation for all parties involved. In this case we offered the vendor more than the original asking price which gave him an incentive to agree to vendor financing.

Carly