Retain and Refinance
Retain and Refinance is an exit strategy where the developer, instead of selling all completed units, retains some or all of them as rental or investment properties. The construction finance is repaid by refinancing the retained stock into individual investment loans — typically with a bank or non-bank residential lender.
Why It Matters
Not every developer wants to sell everything. Retaining completed units builds a long-term property portfolio and generates rental income. It can also be a smart response to soft market conditions — holding stock until values improve rather than selling at a discount. Lenders assess this as a valid exit strategy provided the developer can demonstrate refinance capacity.
How It Works
- The developer completes the project and obtains titles for individual lots/units.
- Some units may be sold via sell-down to clear part of the debt.
- The remaining units are refinanced into individual investment or one-doc home loans.
- The construction facility is discharged and the developer holds the retained units as investments.
Common Use Cases
- Developers building a long-term investment portfolio
- Holding stock in a slow market rather than discounting
- Partial sell-down to clear debt, retain remaining units
- Self-employed borrowers refinancing into alt-doc or one-doc investment loans
Related Switchboard Resources
Can I retain all units and not sell any?
What type of loan do I refinance into?
Typically a standard residential investment loan. If your income documentation is non-standard, alt-doc or one-doc home loans may be appropriate.
Is retain and refinance a valid exit for the construction lender?
Yes — provided the developer can show that refinance is achievable. Lenders may want to see indicative refinance quotes or pre-approvals for the retained stock.