Hi all…
We attended the conference and loved meeting everyone and learnt so much, thankyou to all involved. We have a property in Cannington (a suburb of Perth) which we owe $300,000 on, we could sell it for about $470,000 (given the current market in Perth). It is a corner block with subdivision potential into four blocks each with street frontage. If we were to build on the block each unit would sell for anywhere between 350,000 and 490,000 today. If we were to build on the block it would be our first development and I assume would max out our borrowing therefore make it difficult to work on any other smaller projects during the time of development.
We are confused as to whether to develop this block or to sell it and work on a few renos and small subdivisions (increasing capital) first before jumping into such a large and time consuming project.
Any comments would be greatly appreciated.
MichelleConsider the following: get the site approved for 4 dwellings, stage the development building 2 at a time. Alternatively, seek a jv with someone who will share the risk. Option 2 get the DA and sell the site. Option 3 DA approval, do the required works for subdivision and sell the blocks.
Many thanks for your comment Scott. We have had the plans in while trying to make a decision so they should come through soon. I think a JV or your suggestion of building 2 at a time sounds good. thanks again.
Hi Michelle,
Most people take on a number of smaller projects to raise the capital to go on to a larger project, so it may be going backwards not to develop what you already own. Having said this, there are many people who never build and do very well out of selling land with permits.
If you do decide to develop you will need to contribute around 20% of the costs (your equity will form part of this contribution), so make sure you have enough cash or other equity behind you if you decide to take this route.
Regards
Alistair
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