Funny guys! Yeah we did 100% 3 units through Nab in jun/jul. St George would only do 2 units and other lenders would only do 70% etc. Looking at a new opportunity GOM? If the lending goes to commercial for 3 unit developments it’s going to grind to a halt real quick. Sorry typing on an iPhone:) if this thread is still going next week will comment lol

Awesome! How many other people are buying the house? I like the way the agent chucked a sickie when they realized they were in the nasty. was the other persons offer the same as yours or higher or lower? They just pull out everything to get a sale and a huge price!

We put in an offer the day a property came onto the net. Yesterday actually. The area where we are looking to develop next everyone is auctioning big blocks and u can't get ur hands on them. Anyway put in offer middle of asking price range. Sorry too much interest we are putting the price up 50k. Yeah whatever, someone will buy it but it takes 50k worth of profit out of the deal for us. Then the text message with put in your best offers after 3.30pm as there is another offer going in and the property "will be on the market". So much for no bidding wars. Needless to say no thanks we'll just keep shopping thanks! I'd say to you unless this property is seriously going to make you huge cash just walk away and get another.

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Hey Jac,

I think that sort of info is the other mag Your Investment Property.

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You can apply the formula in the revised edition which does give you the yield. If the yield is high bingo. Hence the revised edition.

And yes these properties are not just floating in the air for people to pluck, we would all be really rich (nice but ain't happenin). You need to look in different areas. Where I rent you would NEVER EVER EVER find a CF+ property. But plenty of regional areas with decent populations and industries hey presto, found one. These properties are not pretty mansions by the sea. These properties are not places YOU would like to live in. But they are where people will rent and what people will rent. (And I'll skip the regional blah blah, risk, blah blah lack of CG spiel thanks) I've tried getting my name on realtors "lists" but hey maybe I'm just not that rich! Then again I might be "unknown person no 20" rather than "person who buys most of the time"

Go shopping, somewhere that is other than past the local window, because if you don't seriously shop you wont buy anything. I don't go grocery shopping hoping that someone will sell me the cheapest, tastiest bread, and then complain when it isn't in the first shop I go in. Shop around.

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That's really true Christianb if there is not demand there is no profit and if most sales in the area are 1/4 lots with single dwellings then you may be looking at putting something there that is not feasible. The other thing I forgot in my previous post is the location. Are you walking distance to shops, trains/buses, schools/unis something that will draw in couples or people without kids. TH's narrow your market slightly and the majority of people who will want to rent/buy them will want everything at the doorstep so if you are 20 clicks outta town you might be in the wrong spot for something like this.

Keep us posted,

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Wow 10 huh? Have you done all your numbers on how much it will cost to build and how much you can sell for? Has someone (architect or town planner) said you can definitely fit 10 units? If you speak to an architect they are able to advise you as to exactly what can fit on the block, how and where. They can also give u an aproximation as to a build cost.

Scott is right on about the speaking to people before the builder. If you get a good architect they can help you find a builder and negotiate price at that stage. maybe call a few people ask them what they think something like this would cost. I'd also call the council and tell them the address and the ideas that you have and see what they think. They may tell you that in that part of town they are not happy with medium density or they might say great idea it is likley to be approived (this doesn't mean definitiely)

In the contract you may want to negotiate a longer settlement 120 or 150 day to save you in holding costs while you get approvals and you may want to get a due dilligence clause inserted as well to give u something like a 2 week window to do more research and an out if you find you can't do what you want on the block.

As for costings for example (very rough)

$420k land
$70-100k for asscociated costs such as demolition, permits and approvals, intitial drawings, working drawings (for builder) holding costs and any other misc costs
$1.2 build cost (you would need to try and get as accurate here as possible)
$60k minimum for lanscaping, fences, blinds, etc
100k contingency for unforseen costs, longer waiting times from council resulting in higher costs, or for application fee for commercial finance as you will need to have a different level of finance for 10 units.

So say total of 1.8- 1.9 mil cost.

So if you could only sell these at 200k each you would barely break even. If you could sell them each for $350k you would make a killing.

Get some good advice from people who know what they are doing with this because if you do it right it is fantastic, done wrong and it is a mess.

Good luck let us know how you go and also where about the property is (no not street addy ) There are some great people on this site who can probably add further to this and if you do a search on this subject you should find a HEAP of posts outlining it further. Another great resource if this is your first development is a book by Ron Forlee on residential development (man I should get royalties from all the plugging I give that book!)

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