“you can dispute the new rate however then you must pay for an independant valuator to determine the current market rate!”

— The hotel chain will maintain a room rate that they are confident will sell – and achieve the required occupancy.

The rate can decline – or discounts apply throughout the year, to achieve target occupancy and…[Read more]

First red flag – “Melbourne apartment”

Second red flag – “leased as hotel/motel rooms” = minimal to zero upside in terms of capital growth.

Third red flag – apparently reliant on 3-4 percent annual rent increases [which is not likely on an ongoing basis].

Fourth red flag – the “major” hotel or serviced apartment chains are handing the risk over…[Read more]

You are moving in the right direction by considering who should assist you with this project at an early stage.

But first, you mention buying land by way of vendor finance, and building 7-9 units. Then you add “I do not have a site in mind yet”.

If you have not located a suitable site and commenced discussions with a vendor re: finance, then…[Read more]

“I suppose that story is applicable to any inner city apartment development in any Aust city as well ?”

My comments do reflect typical trends in any location which has experienced substantial short-term growth – more specifically apartments and other larger scale developments, and is now on a decline due to over supply.

— Michael

“Our current quoting rate for our clients for Sydney mid to hige rise apartments is $1500 to $2000 per square metre.. as usual, depends on level of finishes.”

In terms of mid to high-rise developments, the construction cost varies subject to the number of floors/levels. The higher the building, the more costly it gets.

[$2,000 square is on the…[Read more]

” michael – i think kay was just trying to make sense of it all. it is a property investing forum btw and not everyone has studied economics.”

My response was not an economics lesson, the tone reflects my dislike for backhanded generalization directed at Americans.

— Michael [Washington DC]

“i’m really trying to determine is an acceptable IRR for a property over its investment life.”

This is a very subjective question and you should not proceed on the basis of someone else’s preferred IRR [internal rate of return].

For many reasons an investors IRR target can be quite different, i.e. leverage, interest rates, market conditions.

— Michael

Capital growth is the key element of obtaining “wealth” – I am not referring to passive income.

If there is limited or no upside in a CF+ property, then in my book, there is no point acquiring it.

Real estate investment is all about risk management and your acquisition and exit strategies.

An investment strategy focused on capital growth -…[Read more]

Unfortunately I don’t have time to read the entire article in detail at this time, but a couple of comments regarding the Auckland market – specifically apartments.

The influx of apartment development continues not because of demand, but rather the fact that these projects transpire over a period of 12-18 months or more – high-rise projects…[Read more]

“They still have a pissily small official interest rate. Why do the Americans make such a big deal of everything?”

As someone who actually understands the adverse effects of rate hikes has highlighted, raising the “pissly small official interest rate” has far wider economic ramifications than Americans paying “a bit more interest”.

In fact, if…[Read more]

I am interested to know where you got this advice – and whether you have an accountant willing [or able] to find a solution.

Firstly, you need to speak to a qualified and motivated accountant – someone with knowledge and experience in cross border tax issues [btw NZ and Australia], and a lawyer who can advise on the appropriate company…[Read more]

To reiterate, the reason I pointed out a difference between a developer and someone who subdivides land is if a location is limited to land that has been subdivided into smaller parcels, then a developer will locate and acquire adjoining lots for the purpose of conducting the proposed development. Whether the lots are improved [built on] or not -…[Read more]

As I have touched on in earlier posts, “guarantees” are generally nothing more than a marketing ploy.

You are likely to find there is no solid “guarantee” due to the developer/lessor/guarantor having an out-clause or contingency to protect their interest.

If there is no out-clause or otherwise, then I would avoid the deal because the party…[Read more]

“Anyone got any bright ideas on how to source a property?”

Either a local buyers agent, or research land/property of interest then approach the owner directly.

Personally, I prefer to have as much information at hand as possible – about the site, local market, sales trends, etc. We then approach the owner with the intention of negotiating a…[Read more]

“May be pointing out the obvious, but if there is no land left on the central coast… look somewhere else?”

There will always be land – whether you can obtain a parcel or two depends on how much you want the land and your ability/willingness to negotiate a feasible deal.

— Michael

“I am interested in the answer to this too.”

Two townhouse [apartment, high-rise, etc] projects can be developed within 100 meters of each other and vary in cost substantially.

There is no magic number.

There is more to the cost of any development than bricks and mortar.

As noted above, contact a local builder or QS [quantity surveyor] to…[Read more]

To expand on my earlier comments, the advertised area typically does not include the space within the wall cavities and/or service shafts.

The area should be calculated as length x width – from wall to wall within the liveable space – plus garage and other space under the certificate of title.

The buyer must be made aware if the advertised area…[Read more]

We sell a number of apartments OTP, but unlike most RE development companies we advertise the “finished” floor area first and foremost.

Finished area is the interior living space – includes closet space; excludes balconies, garage/parking.

Many developers include balconies and parking, etc, in the advertised apartment size [i.e., 100 sqm] which…[Read more]

Your local council and/or city/regional planning authority.

— Michael

From a profession standpoint, the following definitions are more common.

Developer: builds on land thereby increasing its value. The developer may be an individual, but is often a partnership or corporation.

Development: improving land for use by adding or replacing buildings.

— Michael