Forum Replies Created
Hi Robbo,
building any sort of townhouse for $130k sounds highly ambitious. A typical project builder townhouse is now costing around $160 to $170k. I am told this is even higher on the east coast. The granny flat: rules differ from council to council – I was reading one council’s policy on it recently and basically you had to demonstrate a need for it as they didn’t want people to basically have a back door for increasing the suburb’s density. To actually create a subdivision (and I assume you would be doing a land subdivision) dont forget you have to provide separate utilities meters, sewer connections, power junctions, crossovers etc. If you were going down this path though, why build a granny flat which is basically a very small home? In which case I cant see why you would want to build the granny flat first – or do you plan a subdivision of buildings? ask the question of yourself – Who do you envisage buying a granny flat on a separate title? Perhaps start at the beginning and ask – What outcome are you trying to achieve from this project?
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
I would flag Beckenham, Maddington, Kenwick as high growth areas. another interesting one is ashfield – river side of the highway, close to city, reasonably priced
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
Hi Redwing – just dropped you an email which I hope helps. sorry have been snowed under lately and not on the forum as much as I would like to.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
that’s right Jet Dollars – I couldnt think of a worse idea than buying in a place that had tripled in 2 years!
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
Gees Sean – how long is a piece of string? I know of guys who really know what they are doing to buy a block and resell it a couple of months later for 100% profit. I know developers who claim to know what they are doing being lucky to break even (and often lose money) after two years of working on a project. Your typical margin use to be 20% gross on a project, but these days developers are letting that slip down a little towards 15% as things get squeezed (land owners selling with profit already being built in, rising building costs and a flat resale market). The trouble is the second hand market is looking so cheap now compared to replacement cost. Old development stock that is just coming onto the market is also very competitive as they are constituted of land fom a couple of years ago and buildign contracts struck 12 to 18 months ago.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
a slow down? I think you may be waiting a while for that. I wish it would though, its difficult to find guys to take work an at the moment.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
The MBA are as weak as water and really only protect the builders. Their building contracts are extremely vague and offer little help. If this guy is a little builder I doubt there will be any late completion penalties as getting a builder to agree to that in the current climate is very difficult (unless you want to pay over the odds). If your pads are down and you are just waiting I would say you are another victim of the brick crisis. Unfortunately these delays can really hammer a return on a development and you need to be really careful about what you rush into (especially if you have an aggressive financier breathing down your back, your interest is mounting, the builder can’t build and hence you can’t sell…)
So are there penalties in the contract? Would be interesting to know.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
my accountant specifically mentioned this subject only a couple of days ago. He said he knows of heaps of people putting all their deals through as CGT, however he says it is too aggressive and believes anything past your first deal is really just normal income.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
Yes we recently had a QS report done on a 180sqm townhouse – pretty basic and no floor coverings, cabinets etc. He came in at $270k, we thought he was off his rocker but I got a builder friend to price it without telling him the QS quote, he came in at $259k. Seems crazy but building prices are going through the roof. Project home builders are telling me to factor in about 1% rise per month. It is certainly making second hand property look cheap in comparison to replacement value and the main reason that (in Perth at least) I think there is a lot of upside for property values.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
I believe a fundamental shift in investors attitudes has changed the landscape forever and that there will never be the abundance of CF+ property that there once was.
Rent yields are low (as a % return) at present and this will correct itself – part of the natural market cycle.
For CF+ I understand there are still plenty of opportunities for Kalgoorlie, Karratha and Gerladton. Gerladton has some huge plans in place (search this site for an excellent link on planned initiatives there.
Extensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
We have a couple of townhouses to sell off the plan in Parkin Street – $375,000. Great potential down there – you must be thrilled with your capital growth to date. The train etc will just push things along even further. What is the transit system down Wanliss Street exactly? I assume like a CAT bus is it? Or are they doing a tram.. that would be cool!
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
Hi Luke – asking for a building price is really tough. An example is a friend of mine who recently designed a 180sqm townhouse for himself. He did a QS report on it and it came in at $1450/sqm. Speaking to a builder though he says that’s rubbish and he can build it for under $1000/sqm. so who knows. I would still work on say $800-$1000/sqm for single level and $900-$1300 for 2 storey, but it really does depend on what you are doing.
I have no idea what a square is so can’t help you in that regard. Anyone know how many sqm in a square?
The titles depends on the land that you purchase. If it is a single block zoned for a duplex, then you build first and get the titles afterwards. Beware of the delay that can happen at the end of the project – DLI were having huge backlogs and waitng an extra 2 months for your sales proceeds pending issue of titles at the end of a project when your loan is fully drawn out can be an unnerving experience.
City or country – if the returns stack up go for it.It’s typically a lot dearer to build in the country though.
Part of a wealth creation strategy – by all means. They can be good projects to start out with. Once again it all comes down to the return you expect to make out of it – no point going to all this trouble for no reward!
Build and sell, build and hold – depends if it is CF+ or CF- at the end. Often even when you develop the buildings yourself they are negative geared, so there is a limit to how many you can hold on to. Consider selling one and holding one.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
the problems do not seem insurmountable. Assuming you borrowed on 80% LVR the 20%+ equity in the 10 or so performers should cover the losses on the couple of untenanted ones? Can you sell a couple of the better ones to cover the untenanted ones?
In the worst case scenario, i.e. you go bankrupt, it may not be much fun but there is no real ‘shame’. It’s a rite of passage for most tycoons – Trump, Bond, Branson who went close.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
https://www.propertyinvesting.com/forum/topic/12080.html
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
Selling without an agent can be a dangerous business. back in my younger days I sold a property myself – the place next door had just sold for $10k under what I advertised at and I thought I had a pretty good grip on what was happening, was thrilled to have recieved 30 calls on the first day. it wasn’t till months later I realised the market had become hot, I suspect an agent could have got an extra $20 – 30k, but hey I saved $10k in commission! The trouble with this age old debate is you will never know the outcome of what would have happened i.e. it will always be “an agent could have got me more”, or, “gee that agent cost me $20k and he sold it on the first day – what a rip off!” (somehow people feel better when their property struggles and the overworked agent finally sells it – yep got good value out of that agent). And to close with a cliche – “first offer’s the best offer”
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
Niki – it does seem rather odd that you have gone through the rigorous process of buying 15 CF+ properties and only just discovered the discussion board that is referred to in Steve’ book. CF+ property is so highly sought after now that I would expect you would be inundated with buyers to take your properties off of your hands and can’t really see the problem… off load the 10 or so that still have tenants, using any capital gains to cover your mortgage on the last 2 until you find tenants. You may even be able to sell the untenanted ones to CF investors that will take a bit of a chance.
Assuming your post is genuine I suspect the problem may be that these properties aren’t really CF+. $300 a week clear divided by 12 is only $25 a week yet you haven’t paid for insurance or created a maintenance fund. I would consider these to be CF- and not even negatively geared as they sound as though they have no growth potential.
Do not despair as there are plenty of people here who can help you through this. Perhaps you may like to start by picking your worst (or best?) property and disclosing all the details here so we can go through the financials of it and offer some advice.
Extensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
yes, as an interesting strategy you could register your own church and effectively use it as a super/savings fund that you can get immediate benefits from rather than waiting till 65 (whilst promoting whatver it is you believe in). the ‘church’ could own a land holding, art,gold etc. if you aren’t ‘religious’ in the biblical sense you could set up a representation of the Agnostic Church, so everyone could benefit from this. Does anyone know how hard it is to register a charity or how you do it?
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
Traci don’t stress too much – most of that fencing is hardi-flex that does not contain asbestos. If the fence is 1990s onwards it probably isn’t asbestos.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
my rule of thumb for WA is (assuming flat blocks here)…
villa approx 100sqm $100 to $110k
townhouse approx 115sqm $160 to $180k
plus $10 to $20k site costs and incidentals. then add interest etc
So you can see how much peoples numbers vary! At the end of the day you dont get nothing for nothing. If someone can build you a townhouse for $50k, will it be something that you can sell?
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
I am not sure but I have a feeling that undistributed profits are taxed at the top marginal rate. ask a tax accountant or check out http://www.ato.gov.au
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
