Forum Replies Created
Michael Yardney,
Are you a registered building practitioner with the building commission. I think that is what colbert was asking. With all due respect, Being a member of the HIA does not ensure you have the appropriate insurances in place etc, my dog could join the hia if he wanted to and he could put their stickers on his kennel. Also does your project managment service carry public idemnity insurance and if so how much 10 million ? more ? less ? I think you must be a nice guy to put up with the mud slingin from colbert. I think he wishes he was you.This is what I consider in doing a devolpment first i conduct a thorough analysis of the physical and regulatory characteristics of a site before development begins is essential to the development process. The information
obtained about the proposed site will inform every stage of the venture. These
guidelines are most relevant to new construction developments, although some
of the site information is also relevant to sites with existing buildings.
The site analysis is important for the following reasons:
1. It guides the determination of project size, or density
2. It will determine the best area of the site to locate the buildings, and a
course of action to protect natural resources and mitigate any negative
environmental impacts.
3. A basic physical site assessment will look at the site’s capacity to “carryâ€
the type and number of proposed dwelling units, the availability of utilities
(water, sewer, electricity, gas, roads), and the suitability of the site for an
on-site septic system if one is necessary.
4. A site analysis reviews the regulatory and legal limitations to
development, such as local zoning or deed restrictions.
5. Thorough information about the site will assist bidders in preparing
accurate project schedules and development budgets.
Site conditions commonly identified and analyzed are: steams and water bodies,
wetlands, slopes, soils, surrounding area, vegetation, and habitat. A wetlands
consultant may need to be hired to flag, or delineate the wetlands for some sites.
Similarly, if there is historical information or physical evidence of possible site
contamination an environmental assessment may be required.
There are local and state land use regulations that need to be considered as part
of a determination of site feasibility. These include local zoning regulations that
outline land use, environmental protection requirements. In some instances, it
possible to get exemptions from local zoning and other land use regulation,
however a developer/owner still must comply with state requirements Outlined below are some of the questions that you should be able to answer
about the site, along with some potential sources of information. There may be a
great deal of site related information available to you as public information at no
charge or minimal photocopying charges. Consultants may be hired to prepare a
site feasibility report to answer these questions, depending on your own technical
capacity and time availability.hope this helps
Michael14 The reason I am asking as I own a property there, fairly self explanatory I thought. I am not asking anyone to do any research for me, just asking if they have dealt with a particular property manager that does his or her job well, who covers that area. Man you need a chill pill, you are an angry man, I hope you dont have kids.
I was interested to read posts on the somersoft forum about Michael Yardneys services. My advice to those considering using him, his company or attend his seminars is to read this first. Be careful before you sign anything and dont rely on his own self confidence and the ability to talk himself up to make you a dollar.
cheers
Mike
I think Michael Yardney’s seminars are a bit of a rip off / scam. He uses them as a vehicle to get peoples money to fund his developments (or project manage as he calls it) and to take a large slice of the pie. The only reason he is on this site is to sell these overpriced seminars. He says he never sells his properties but I bet if you knocked on the door of any of the developments on his web site, he would not be the current owner. Whilst I am sure he is a knowledgable man he seems to only give out small peices of information on the forum and says come to the seminar you will find all the answers, ddid this guy learn from Jamie McIntyre.
Mike
A friend of mine invested in a brothel in Manila, but lost everything when the local Mafia muscled in. He did have a good time checking up on his investments though.
Check the strata plan as some times a car space can be hidden by trees etc. There are also devices which allow a car to be parked on top of another car, these cost around 20-30K but in inner city areas are a worth while investment. Check on the strata plan who has carparking spaces if there is one that is not used eg an old lady owns it, buy a stack of scratchie tickets and offer them to her for right to the parking space. A cheap bottle of wine may also help.
chears Mike.
Sloping blocks can be cash flow positive fromn day one if you get the right price. Level the block before any neighbors build, try-link retaining walls are a sound investment. Use rendered foam to build the house as this will reduce costs and consider using pile and beam style footing arangements. A floating garage slab could be used at the front to park the cars. Before you sign up get out the dumpy level and shoot some levels. Hope this helps your decision making.
cheers Mike.
I think we used him on a reno in Elwood if its the same guy. Tall with dark hair, has a small dog with him, then he is an excellent plumber. Good for lots of free advice and reasonble rates.
I agree with rob, bad idea in these times.
If you have ever been involved with the development of income property then you may have heard this dictum: One can describe virtually any development project as…
a use looking for a site or
a site looking for a use.
Out of this ying and yang school of development arose two classic techniques to assess feasibility: The Back Door and the Front Door approaches.
Let’s first take a look at the Back Door Approach.
You might employ the Back Door approach if you have a use looking for a site. You know what you want to build and can reasonably estimate the kind of rental revenue it can generate. The question for you as the developer is, “Will that revenue be sufficient to justify the cost of development?â€
Presumably, this technique is called “back door†because you’ll back into the maximum project cost that the use will support. Then, like Hamlet examining Yorick’s skull, you’ll ponder it until you decide if you can actually do the deal. In short, if your intended use will support a project that costs $x and no more, you must decide if you can you develop it for those $x.
To do the math, start by determining the extent of rentable square footage that you can build on this parcel. Obviously you need to take into consideration issues such as lot coverage, height restrictions, floor area ratios, parking requirements and so on to determine what is permissible as well as possible. Depending on the complexity of the use, you might then simply multiply the total rentable square feet by the average rental rate or you may need to create a proposed rent roll on a space-by-space basis. In any event, your first step here is to establish an estimate of the project’s Gross Scheduled Income.
From this point, you work through the numbers. From the Gross Scheduled Income you subtract a Vacancy and Credit Allowance. That gives you the Gross Operating Income (or Effective Gross Income, as some prefer to call it). Next you subtract all operating expenses, which leaves you with the property’s expected Net Operating Income.
From here you want to establish the maximum loan amount that the NOI can support. If you want to take the quick route you can download the free real estate calculator program we provide at realdata.com and use the section called, of all things, “Maximum Loan Supported by Property Income.†If you’re a rugged individualist, you can also do the math yourself: Divide the NOI by the lender’s required Debt Coverage Ratio; then divide again by the annualized mortgage constant (which is 12 times the monthly payment amount for a $1 loan at the interest rate and term that the lender will provide).
Now you know the maximum loan that this project can support. The Loan-to-Value ratio should define the relationship of this loan amount to the maximum value of the whole package. So, divide by the lender’s maximum Loan-to-Value percentage and you’ll have the Maximum Total Project Cost. Put it all together and it looks like this:
Total Rentable Square Feet x Average Rental Rate
= Gross Scheduled Income
– Vacancy and Credit Allowance
= Gross Operating Income
– Operating Expenses
= Net Operating Income
= Maximum Total Project Cost
To put this more succinctly, you started with the gross rent, pared that down to a NOI, found the maximum loan the NOI could support and then applied a Loan-to-Value ratio to reach the Maximum Total Project Cost.
The next step in assessing the feasibility requires you to pick apart that total project cost. The total is made up of three parts: Hard costs, soft costs and land. You know what you’re planning to build, so you can figure the first two:
the hard costs, which include primarily construction but also items such as civil/mechanical utilities and environmental remediation;
the soft costs, such as architectural and engineering, loan fees and interest, appraisal, legal fees, permits and zoning-relating costs.
The hard costs and soft costs combine to represent everything in this project except the value of the land. So, if you subtract those hard and soft costs from the Maximum Total Project Cost, what’s left is this: the maximum value of the land for you to be able to consider this project feasible.
Keep in mind that if you already own the land, it’s the land’s current market value not its purchase price that you want to consider. If the land is worth more or costs more to buy than this maximum value you just calculated, then according to the Back Door approach the deal is not feasible.
Maximum Total Project Cost
– Project Hard Costs
– Project Soft Costs
= Maximum Site Cost or Value
Example:
You propose to build an income property with 2025 rentable square meters. The average rental rate will be $20 per square metre. You provide a 10% allowance for vacancy and credit loss and expect operating expenses to total $44,000 per year.
Your lender will provide financing at 8% for 240 months and requires Debt Coverage Ratio no less than 1.2 and a Loan-to-Value Ratio no greater than 80%. What is the Maximum Total Project Cost?
You estimate Hard Costs to be $2,430,000 and Soft Costs to be $625,000
You own the land, which has a current market value of $750,000. Does it seem feasible to build the project on this site?
Start with the Gross Income and work your way through the model above:
2025 Total Rentable Square Feet x 20.00 Average Rental Rate
= 405,000 Gross Scheduled Income
– 10% Vacancy and Credit Allowance
= 364,500 Gross Operating Income
– 44,000 Operating Expenses
= 320,500 Net Operating Income
= 3,326,142 Maximum Total Project Cost
If your lender requires that you have enough Net Operating Income to cover 1.2 times the debt service (i.e. 1.2 Debt Coverage Ratio) then your NOI of 320,500 can justify annual debt payments up to $267,083.
Given your lender’s financing terms (expressed in the Mortgage Constant), the mortgage can support a mortgage of $2,660,913.
If the Loan-to-Value ratio is 80%, that $2.6 million represents 80% of the project’s value; so 100% of its value equals $3,326,142.
What will it cost you to build, not counting the land? Your combined Hard Costs and Soft Costs total $3,055,000. If the Maximum Total Project Cost that the income stream can support – in other words, if the most you should spend on the complete package, given the potential rental income – is $3,326,142 and the cost of physical construction is $3,055,000, then the difference of $271,142 is the most that you can justify spending on the land. But the land is really worth $750,000. So it appears that it won’t make sense for you to build this project on this site. The cost of physical construction plus the value of the land are greater than the rent can support.
For those of you familiar with RealData’s Commercial / Industrial Development software, that program uses some of the back-door rationale while adding a few twists of its own. You can indeed let the program back you into the maximum development loan, but our experience is that developers are interested in projects that are profitable, not just feasible, so you can work with other considerations in that program to guide your project model.
Hope this helps mike
