Forum Replies Created
As a rule I never buy at auction… in fact I’ve only ever done it once but in a situation where I had a distinct advantage because as a result of careful extensive research and concept evaluation before the day, we dug up some information which we didn’t even tell the agent! The information we obtained enabled us to propose the building of an extra unit that other bidders would not have thought possible.
Aside from a special case like that… I would as a rule not buy at auction.
With the market changing, you may find that there may be some bargains with development potential available through auction, so don’t completely discount it just because I don’t do it! Just be careful.
Peter.
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Peter Comben
http://www.smartpropertydevelopment.com.auHey Lisa, do you want to come and help me run a workshop??? Ha ha [tongue]
No seriously… your detailed information will really help those who are considering subdividing land and need to know what the breakdown of costs looks like.
Peter.
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Peter Comben
http://www.smartpropertydevelopment.com.auI prefer not to make comments on using options as it is not a strategy that I have used. I certainly have bought a number of properties for development on “subject to” contracts.
I guess the key in all of this is finding the best way for you individually. I would like to throw into the mix probably my most powerful strategy… that is of joint venturing with vendors.
More food for thought [biggrin]
There are specialists who are making $Millions per year by using the option strategy and obtaining planning approvals that they on-sell, but as I say, it’s not my strategy of choice.
Peter.
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Peter Comben
http://www.smartpropertydevelopment.com.auThis is a tough subject!!
Having spent the last 17 years as a registered builder here in Victoria, I now find myself having to employ builders to build for me, as I have chosen to take on new ventures and multiple projects.
I understand that even in the short time since I have stopped building, there are significant cost increases caused in part by new safety requirements and energy efficiency standards… As well as that, labour costs and material costs continue to be on the increase.
A ballpark figure per sq mtr for construction with a medium level of specification should be $1000 to $1100 (as menioned above by kimtruong).
Another good point made by Joseph was in regard to the details of the specifications for your project. The HIA have specification booklets that need to be completed to make sure the various builders you ask to quote are quoting for exactly the same work. As well as specifications, make sure you supply full architectural drawings and detailed structural and civil engineering plans.
For larger projects (say anything over $1M), lenders will require you to have a full valuation report and a detailed QS report, on which they base their lending decision. As far as estimators go, they perform a very similar role to a QS.
If your QS report is a lot less than your builder’s quote, you’ll have to put more of your own money into the project… assuming you can get the difference out of your lenders in the first place!
Peter.
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Peter Comben
http://www.smartpropertydevelopment.com.auyounggun,
You need to have the property multi-listed… However, have you obtained a DA for the property? If you haven’t you may consider doing that first before you offer it for sale, as that will ensure you maximise your sale price.
Shoot me another question if I’ve missed the point of your question… it’s a little hard to know because you’ve not given much away.
Peter.
Cheers,
Peter.
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Peter Comben
http://www.smartpropertydevelopment.com.auHi Tycoon,
I have a lot of enthusiasm for property development and want to see other people successful… however it is important to understand that there are lots of things to be learned before you will be developing full time! I guess I don’t want to dampen your spirit, but you need to keep moving forward and acquire more knowledge of the development process. So I expect to see you soon!!
Look forward to talking to you more in person at a workshop [smiling]
Peter.
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Peter Comben
http://www.smartpropertydevelopment.com.auI guess I’m not able to give legal or accounting advice, but from the point of view of the developer, he’s trying to maximise his profit and he is looking to use other people’s money to do it!
If you are putting your hard-earned money into his project, make sure that you see the viability of the project via a feasibility. Make sure that your money is secured by adequate means… whatever they are. A second mortgage, for example, may not be sufficient.
Make sure you have a good solicitor (as Mel rightly advised). Find out if you can become a JV partner rather than an investor… because that way you can go on title, as you have alluded to in your post, miracle.
Peter.
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Peter Comben
http://www.smartpropertydevelopment.com.aukattan,
I have only just started participating in this forum myself. I plan to encourage attendees from previous workshops to get involved in this forum. This will enable you to ask people who have attended my workshop to comment… as well as adding to the knowledge base of this forum.
You may not see their posts immediately, but look out for them in the coming months, as I get the word out.
Peter.
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Peter Comben
http://www.smartpropertydevelopment.com.audavidb,
I would definitely not bid at an auction for a property I had not fully analysed beforehand. It’s good practice to complete a financial feasibility on your concept ahead of time, so that you won’t make a potentially emotional decision in the heat of a bidding frenzy.
I still don’t think it’s good to buy potential development sites at auction. There are other (safer) ways to purchase that I’d seek out first.
Peter.
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Peter Comben
http://www.smartpropertydevelopment.com.auHi G7.
Keep it simple for your first project. You’ll want to carefully so the numbers and not forget various costs like transportation, re-establishment, warranty insurance (if you’re going to sell), etc.
Seek out someone with building experience to check your planning and numbers before you proceed. I personally have found the relocating of existing homes to be more trouble than it’s worth! But… if you are determined in this strategy, I know others HAVE been successful with it.
I suggest you find reputable relocation companies – the way to find these would be by asking building surveying companies for relocation companies they could recommend. And there aren’t many!
Peter.
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Peter Comben
http://www.smartpropertydevelopment.com.auBec,
The seriousness of the development finance issue is such that I have a specialist speak on the matter at my workshop. If you have already purchased the property, some things can’t be changed now. It is important to have the right structure or entity purchasing the property, for starters.
Lenders have pretty standard requirements… my checklist will give you a quick overview of these. Download it (for free) from my site (below).
Again, seek out a broker who SPECIALISES in development finance. If you’re stuck on that PM me for a recommendation or two.
Peter.
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Peter Comben
http://www.smartpropertydevelopment.com.auMisty1,
You can run a property development business for a whole lot of reasons… but for sure it is a business that you would take on with that level of seriousness and care.
If you’re an “investor” you can become involved in a development project, but if you continue in development you will have to make it a business. You’d then need to consider the proper structuring, management, accounting, tax, etc.
The whole point about getting the structure right is to properly protect yourself, and maximise the project revenue (viz tax, etc).
Peter.
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Peter Comben
http://www.smartpropertydevelopment.com.auHi Everyone.
Thanks for your warm welcome!
WAF, as far as developments go, I personally am involved in three states at the moment. I find the two states of Qld and WA are providing me with the best opportunities in the current market.
As courses go, we’re in Melbourne this Saturday and Brisbane next month, and hope to be able to include a Sydney workshop before the end of this year – no dates yet.
Peter.
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Peter Comben
http://www.smartpropertydevelopment.com.auSalacious,
One of the challenges/secrets/skills in development is getting the information you need from your local councils!
The planning departments do have a responsibility to the ratepayers and others for providing the information and facilitating good planning in their municipality.
I don’t know you… but you really need to focus on the people behind the paperwork to get what you need done! This is really a people-business, in the end.
All the best with it.
Peter.
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Peter Comben
http://www.smartpropertydevelopment.com.auSonja and others,
Now that I’m here moderating this forum, I’m happy to answer any questions about the courses I run! Fire away or give me a call.
Peter.
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Peter Comben
http://www.smartpropertydevelopment.com.auFor each project I do (and we’re not talking insignificant projects here), I register separately for GST. This makes it much easier to manage this difficult tax issue.
By this I mean that the project has its own business name and ABN. Check with your accountant about this “”structuring”.
Peter.
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Peter Comben
http://www.smartpropertydevelopment.com.au
