Forum Replies Created
Why didn't you use a different bank first time around that would accept the higher valuation?
If they are poor tenants, I wouldn't consider selling to them under vendor finance.
As a first development, 18 units is far too large and with limited capital you would likely get yourself into trouble.
Even if you were to get a DA approval and onsell the project, you still need to ensure that the profit margins stack up for the eventual developer based on the design that you get approved.
In this scenario, you still need to be very diligent with your feasibility and make sure that there is demand for the product that you would create. I have seen many DA approved sites, where the original owner has spent tens of thousands of dollars to end up with plans that have no profit in them at all.
I have created a very simple development profitability indicator which is a starting point to determine if an opportunity is worthwhile pursuing further, which you can download for free at http://www.smalldevelopments.com.au/store/show/free-development-profitability-indicator
Cheers,
Matt
You can get free trials of both services and discounted group memberships at my site http://www.smalldevelopments.com.au
So is there a sunset clause that is for 18 months?
I haven't done the course, but know people who have.
Unless you have money to invest during a mentoring programme, you probably aren't going to get the most out of it. A lot of the value is in having access to experienced people to assist you with investments at the time you are making them.
About to go into Beta testing in about 2 weeks, official launch early August.
Hi Nathan,
I started small and recommend the same for anyone else as well.
I have created a series of videos which cover the types of developments that I would suggest you start out with (and how to use RP Data to find them)
1. 2 lots on 1 title http://www.youtube.com/watch?v=perF03avcZw
2. Corner blocks http://www.youtube.com/watch?v=UpGb0oU3D0Y
3. Battleaxe blocks http://www.youtube.com/watch?v=KjPz0rESi8E
4. 2 street fronts and duplexes http://www.youtube.com/watch?v=Jrep25mKotI
The website mentioned in the videos will be launching later this month. It is designed specifically to assist aspiring developers when starting out.
Cheers,
Matt
I would suggest doing a buy renovate and subdivide, especially in Brisbane, where there are great opportunities to find 2 lots on 1 title.
I have created a video series exploring some of these opportunities, this is the first one http://www.youtube.com/watch?v=perF03avcZw
Note that the website mentioned in the videos won't be live for another month.
Cheers,
Matt
Hi Geddo,
I have sent you a PM. The opportunity to join is available on an ongoing basis.
I can now also offer a free 3 day trial for anyone who is interested, just PM your email address and I can set it up for you.
Cheers,
Matt
You can join at any time, there are no limitations. It is a national subscription.
I'll send you a private message with the full details including subscription price options, which are significantly lower than the normal rate you would pay.
Cheers,
Matt
Just sent you a PM.
Only if you can demonstrate serviceability. They will only allow around 75% of your rental income. Are your properties still cashflow positive after you refinance the $300k? What would they rent for in worst case scenario? Is this also cashflow positive on the cost to build?
Its normally around 65% GRV and net of gst, also based on the valuation on completion, which is typically 10%+ lower again than the value you can sell them for, as they value it on an "in one line" basis. In your case, likely to be based on around 65%*1.8M/1.1*0.9 = $957k
Also ANZ advised me that they need 10% contingency on the construction cost, so looking at $50k higher costs from their perspective.
There are 2nd tier lenders that can do that sort of deal.Typically 3% of loan value in fees plus 12-15% interest, no presale requirement.
When you say $300k in equity, are you referring to equity that you can redraw, or total equity stuck in properties, that you would need to sell to extract?
i.e. $1.5M in property with $300k equity you can't access
Do your numbers include interest payments and gst on the sales?
You want the interest rate to mirror your loan with your bank. Don't set it at 6.8%, as if interest rates hit 9% again, you are going to suffer a huge loss.
Set it at Standard Variable Rate for your bank plus x%. In the deal that I have, it is 1.5% above the SVR of my bank.
Make sure that the borrower gets independent legal advice from someone who understands vendor finance deals and that they have the capacity to pay the loan.
As a developer, I am probably biased, but that sounds great from your perspective. You get to pay off your mortgage,have more cash in the bank and keep the house.
Just check that the deposit is non-refundable. Some of the options strategy gurus advise their students to offer deposits that are fully refundable if they don't proceed.
Obviously get an experienced property lawyer to look over the contract before you sign as well.
When you say "we would need to buy an easement through for storm water and sewer so time is of the essence", is it literally you that has to pay for this easement, or is the developer paying for it? It would be unusual to expect you to purchase the easement for someone else's development.
$800k build sounds really low to me. This calculator estimates $1.3M incl gst for a low spec build of that size http://www.washingtonbrown.com.au/building-cost-calculator/
Look into Dixon Homes if you want a bargain basement build cost
Here is an example http://202.131.91.250//newsearch/designs/details.aspx?LID=3150PHC9&DID=DC6001
What are the side setback requirements for building in the area?
Can you run the easement down the length of a driveway, in which case it won't impact you?
18m is a decent width and you will still have a large 800 sqm block to work with. Unless they are building a mansion, it shouldn't be an issue. Plenty of building plans will fit on ~15m width.
Thanks Freckle.
My site is being built by a professional developer and SEO expert, so should be fine. Good to know the options.
Cheers,
Matt
