In my town all the good easy positive IP’s have gone! typical of many rural NSW towns.
Land is still cheap – $ 12,000 a quarter acre.
Been speaking to some builders and we reckon build cost for two bedroom units are $ 70k and rental $ 130. Getting close to the 11 second rule!
Anyone had any experience doing this as it seems a logical way to find properties? Local (only) agent in town feels that it’s time to sell “off the plan”
He has only two houses for sale in a town of 4000 some 20 minutes from the largest inland city of NSW and the available rental list is only best described as “dregs”
Any tips/warnings etc.,
You may want to consider that OTP is great for people who buy with a calculator but if you want to catch the moer emotive home buying market then showing them finished will be more effective.
Cheers,
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985XYZZY12
Mortgage Hunter is right.
Buying OTP relies on the development being completed on time and to the standards and finishes expected and fingers crossed that the market doesnt move the wrong way during the construction period.
Buying OTP has its merits but I wouldnt do it for my first property and its not for novices.
You need to not only do a lot of research…but you need to know WHAT to research.
In particular check the contract for sunset dates, under what conditions the finishes and inclusions can be altered and most importantly the track record of the builder and the developer.
Kind Regards
Rob [8D]
I’m developing a couple of things in WA. One thing to watch is the difference in prices now and when you complete the development. Selling off the plan in a rising market can hurt you, particularly if you’re only doing small projects and don’t need the pre-sales for any finance arrangement.
I’ll give an example:
Triplex block in Mandurah, WA.
Purchased 18 months ago, yet to build (other projects going on).
Feasibility unit sale price at purchase of land: $169-$179k.
Current similar unit sale prices: $200-260k.This will double my profit for the deal.
Other interesting point with developments is the land appreciation aspect (maybe not for rural stuff). I bought the block for $109k, valued 2 months ago at $165k. This growth in land value can mean that no further cash is required to develop the units.
I’m starting to factor this growth in land value into development plans. Rather than rushing in to develop straight after settlement, waiting for 12-24 months can make a big difference to the numbers (if you’re in a rising market and can afford to carrying costs). Not exactly cash flow postive property, but one deal like this a year can yield $90k+. Thus, less time required overall.
Regards,
Brett
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