My wife and I are thinking about buying a small plot of land to develop and build 5-10 duplexes. She is reluctant and I need help to convince her or discourage me. The plan is to buy 3-5 acres to build on in our area. The first unit we plan to build out of pocket and do alot of the work ourselves to build equity faster. We have built our own home, parents home and I have a General contractors license and electrical license. We both have jobs and know the time required for a project of this nature but are willing to put in the extra hours to build some kind of investment for the future. I have also, in previous years worked as a framer, boxing and siding contractor and very skilled in most trades. We had hoped with the equity we obtained through the first unit, that we would have an easier road obtaining financing for units after this. We would probaly not self preform as much work on the addtional units as the first, although we would be our own general contractor and still do some of the work. We are looking are an average of 900-1000 square foor units. Any ideas, advice, encouragment would be appreciated. Can anybody give me an idea of what a realistic payback would be without any numbers at hand? Is there a general rule to this?
Before rushing in, the biggest bogie will be zoning. Can you find a large site, with access to services which can be rezoned to allow medium density or more than a single dwelling? Speak to a town planner or the TP at council before rushing in.
Thanks, very good advice. The zoning would be one of the first questions about potential sites. Just wanted to add also we are looking at plans that would be average and not on the high end scale. Our area is well suited because of local military base and colleges and a growing area. Don't think it is overrun with vacant properties. Our plan as far as the self preform work would be site prep, foundations, framing, electrical, outside siding and trim, inside trim and painting, HVAC, plumbing, drywall and roofing would be by others. The land would be financed.
Sounds like you plan to sink a fair bit of money into this one basket – I'd suggest talking to several estate agents to get an understanding of how long properties are taking to sell in the area (on average), and how many have remained on the books for ages…
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
re my above comment, you might as well ask about vacancy rates in the area as well, then you can consider the properties from the perspective of build and sell, and also build and rent
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Financing maybe an issue as on 5-10 blocks you probably wont get more than 65% of cost price.
Unless you have good equity elsewhere or a good cash deposit you might just find yourself with a nice vacant block.
Richard Taylor | Australia's leading private lender
If they are going to be relatively cheap units, you may want to look into NRAS. This would increase your cashflow. It is normally only available for large scale developments for cheaper housing, so this could fit in perfectly. It could potentially give you a guaranteed cashflow with significant tax benefits and no vacancies.
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