“u can only borrow money from people u know personally and less than 20 in total.”

The above is somewhat correct.

The Australian Securities and Investments Commission [ASIC] stipulates that you do not need a prospectus if you are raising less than $2 million from 20 investors in any one year.

There is also an exemption to the prospectus rule if…[Read more]

Generally your best and easiest option is to only raise the “shortfall” capital privately – being the difference between what a primary lender i.e. bank, will loan and the cost of the property.

As noted, private funds typically incur a higher rate of interest than a bank.

The two most common scenarios when forming a joint venture are 1. offering…[Read more]

“wondering how most developers buy land they want to put units on”

The objective is to “control” the land, which does not necessarily mean you “buy” the land.

A conditional contract [or “option”] is typically subject to planning approval, finance, etc. In many cases the option may require no money down – the length of the contract is also…[Read more]

“no matter how good your lawyer is, there is no guarentee you will win the case so it is a punt”

My point being.. it is very rare that legal action transpires from a sunset clause if the provision and agreement are properly drafted in the first instance.

I am not referring to your subdivision, rather the importance of using qualified legal…[Read more]

As you said.. “We found out too late that our lawyer was not good enough”.

If you did have an experienced and/or competent lawyer you would likely of had legal grounds to ensure the transaction went as intended – if the developer clearly intervened with the intention of terminating the Agreement.

It is also likely that the developer would have…[Read more]

Sunset clause – A legal clause giving a final date after which no remedy may be sought, regardless of the grounds of complaint.

“Be aware of sunset clauses, particularly if you are buying an apartment.”

Sunset clauses are common and more than often a provision intended to protect both/all parties interests.

“many court cases result from sunset…[Read more]

To become a professional real estate developer [not referring to someone who simply builds the occasional low-cost spec home] you require a diverse set of skills, including; finance, negotiation, planning, legal, communication, analytical, team building – and attention to detail.

Most importantly you require the ability to identify opportunities…[Read more]

“Don’t you think that if oil runs out and we move to other things, that will affect the US and the US dollar??”

Not negatively.

“But that’s up to the media/TV to let them know”

A logical statement.

— Michael

“How many have a Plan B?”

If you don’t have a “Plan B” you shouldn’t be undertaking any form of investment.

— Michael

What the media overlooks when they compare median prices is the effect “supply” has on those prices.

Month to month sales are down in Auckland, Wellington, Queenstown, etc [using New Zealand as an example] but supply is playing an influential role in this equation.

For example, there are not many worthwhile $million plus properties available at…[Read more]

Never make investment decisions or assumptions based on what you read in the media.

An adjustment in any market, no matter how severe, can result in a profitable outcome for those who are prepared.

— Michael

Why do “you” think the investment is not such a good idea?

If you can afford to pay for the land at settlement, and you conducted sufficient due diligence to determine if the land was a viable investment, then it could be “a good idea” .

Otherwise, you may have to forfeit $1000 – a small penalty for a mistake in this business. If this is the end…[Read more]

1. What does it mean if a purchase is subject to a title being issues? (what is a title?)

A certificate of title, issued by the local land titles office, defines the property you have purchased and any encumbrances or mortgages over the property.

Apartments are at times sold off-the-plans “subject to title” when the developer has not had titles…[Read more]

A couple of comments in response to points highlighted;

“When I emailed CE to ask how they calculated the measurements they responsed by saying “The apartments/title have been professionally surveyed by a qualified surveyor. The areas are calculated in accordance with the Property Council of Australia method of measurement.”

Contrary to what the…[Read more]

“it is land that appreciates and buildings that depreciate.”

Apartments typically have a land component in the valuation.

Houses can depreciate as much if not more than an apartment.

Apartments in the right location can appreciate at a faster rate than houses in the same vicinity.

— Michael

Always use a lawyer.

— Michael

The fundamentals of real estate development [and investment] are the same worldwide – more or less.

If zoning and/or tax issues need clarified, then this information can be sourced through local authorities.

One of the better publications focusing on property development is:

Real Estate Development: Principles and Process. [Mike…[Read more]

“houses make better investments than apartments (mainly because of the capital growth linked to the land content of houses).”

The above statement is correct at times. The preference is often more aligned with “best use” which provides options and can increase capital growth at a faster rate than a typical apartment.

For example, single family…[Read more]

“what I hate is the strata fees. Every unit is another corporate fee.”

And there are no costs associated with maintaining a single family home.

Do not only account for tangible costs, also take into account the “time” spent maintaining a SFH and property.

In most cases a strata fee is less than the cost to maintain a SFH on an annual basis.

–…[Read more]

“One bedroom units are the way the experts are saying to go.”

This is the second post in as many days where “experts” have been used to qualify a statement which is not quite correct.

One bedroom apartments are not necessarily the way to go, especially in Melbourne at this time.

The fundamentals of real estate investment stem from supply and…[Read more]