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Australian Residential Property Development for Investors by Ron Forlee

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CHAPTER 10 Raising equity finance

In most instances a developer seeking debt funding from a lender will be able to secure only a certain percentage of the overall project cost as a loan. The balance will have to be provided by the developer as equity. The lender will require the cash equity in the development deal on the front end, by purchasing the land or part of the land, by depositing a cash equivalent with the lender or by using another property as equity. Depending on the developer's cash position, they may contribute the equity themselves, borrow funds or have other individuals contribute the equity needed to close.

For developers involved in larger projects where funding generally runs into the millions, a proportionally larger equity ...

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