Hi There
Is there any like minded people on the Central Coast that could help us (41 y.o dad & 15 y.o daughter) with our first deal (we have two that we are looking at) or is there anyone that would like to JV with us in a 6 x 3 br +2 x 2 br development ???
Desperate to get started
Brett B
Hi Brett,
What kind of help did you have in mind? We are based on the NSW Central Coast.
We have two property development sites that we are looking at. one is just over 600 m2. it is owned by an R/E agent I know and might be prepared to let me develop it and share the profits. I think that I might also have a builder that will JV. I was wondering if this is the done thing or is what we are trying to do unusaual (we don't have our own cash to start out, but I have never let that stop me before).
The second is a 1400 m2 plus block that we are hoping to fit 4 x 3br and 2 x 2 br townhouses on is looking to be a JV between us and the land owner (they retain 1 x 2 br in lieu of payment for the land) and JV between us & the Builder (they retain 3 x 3br in lieu of payment for the materials & construction) and we get one of each that pays the consultants.
What are the costs I should be looking for and estimates (I would rather not spend money unless I knew it was going to be feasible) and what else will do we need to look into.
If these stack up and pay off (Cash or equity & +CF), we will be embarking on a program of development on a permanent basis.
As my day job is Solar Power and energy efficiency, the townhouses that we would like to build will cost only 25% to heat /cool and power as a normal townhouse and I beleive that they will sell quite well.
I am always happy to share my projects with financial investors too (wink wink)Brett, JVs can & do work and some are abject failures.
Most of the JVs that work utilize the skillsets of each of the JV partners.
e.g. one partner has cash & no time, another has time & no cash but has project management ability etc.
Out of both your options here I see one partner (REA) who has land. Of the other option I see a landowner who can donate land, a builder who can donate time and materials,
BUT from what you've said so far I do not see what skillset your are bringing to the table.
It can't be Project Management – because you have no idea of estimates to build. You have zero experience. It would be a very brave JV partner indeed who would get invloved with you (from what you've said). Sorry if this sounds a bit harsh but that is the cold hard reality.
The other cold hard reality is that, if you need it, option 2 will not get finance (most probably) at present but option 1 probably will.Solar heating / cooling is fine – I've yet to be convinced that people would seek this out over being close to transport, shops, schools, coffee or a water view. It is something nice to have for sure but you'd need to bring more than this idea to a possible development JV.
Just my opinion – I could be completely wrong.
There is nothing more grounding then a good dose of harsh reality. Fortunately I have very thick skin and a full understanding that public postings will always reveal the truth.
I did leave out alot of the key pieces of information as I was curious to see what suggestions would be made and therefore hopefully vindicate the direction and decisions that we are making.
My day job is 'Project Manager' therefore I have spent alot of my time running projects (not property) that make other people wealthy. It is now time to apply that knowledge & experience to my own wealth growth. I will be reducing my day job and increasing my investment time over the next 6 months.
Secondly, I understand that a good idea in property is only a 'good idea' if all the other planets line up.
I have constructed my own feasibility spreadsheet and have run my own figures on both projects (Duplex = $40K margin) and (Townhouses = $220K margin). We also have set criteria that must be met before we will even enter the figures into our spreadsheet (i.e. the 3 km rule. school, transport, major shops, recreation, hospital, etc) the duplex is within 1,500 m of most and the townhouse is less that 1,200 m from all) The type of property is also perfect for the demographics that already exist or are growing in their respective areas.Does the project sound better now. I am not so conceited to think that it is perfect and I also know that I still have alot to learn, but that is why I started reading Steve's books and getting involved in these forums.
BTW, your website is good and if I can get my property dev boat to float, I would like to think that we could do business together at some time.
Brett
Lunareclipse Investments P/Llunareclipse wrote:I did leave out alot of the key pieces of information as I was curious to see what suggestions would be made and therefore hopefully vindicate the direction and decisions that we are making.
My day job is 'Project Manager' therefore I have spent alot of my time running projects (not property) that make other people wealthy. It is now time to apply that knowledge & experience to my own wealth growth. I will be reducing my day job and increasing my investment time over the next 6 months.
Does the project sound better now.Brett, you and the projects sound better now – yes. Probably would have been better to not leave out all the "key pieces" of information in the first instance but I realise where you're coming from.
Development is a risky business – ask Mr Raptis. But it can be done at a profit – ask Harry Trigubof. You need to have a min of 20-25% profit in it and more usually 30%+ before you even begin. The margin on that duplex looks very thin at $40K – but it is not clear from your post whether that is just your cut or the profit on the whole deal.
Anyhows all the best with it. Let us know how you get on.
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