Forum Replies Created
Hi LW, as far as the use of your equity goes, when the time comes, i would consider a Line Of Credit (LOC) up to the maximum LVR you (and the lender) feel comfortable with.
This way you can use the LOC for a deposit without having to cross-collateralise (i.e. each property being secured with the next etc.). I personally beleive it’s the best structure. It also is much more flexible in how you pay it back but you do need to be disciplined.
Cheers!
Guy
djones & Sonja,
Apologies for not responding for so long! Thank you for your interest. There’s so much going on at the moment – crazy time of year.
I have put development plans on hold for the moment. I have decided to go through the development approval process in the new year. I want to have the plans through by the end of next year
Apparently the approval stays valid for 2 yrs so hopefully within that time frame there will have been some growth in the area and the market will have turned around.
I think the biggest risks are 1. the potential for building costs to blow out (including time delays and associated holding costs) and 2. the possibility of not being able to sell at the end for the necessary price.
The second can be somewhat mitigated by selling into a stronger market. I guess there are ways of mitigating the former as well but it becomes a little less crucial if the selling is more certain. I still beleive that the area i bought in will have growth in it within the timeframe. This will help make the whole project a little less skinny.
I think you’re in a great position Sonja with positive cashflow in the mean time. Would be great to know what you decide to do in the end as well.
I’ll be taking up some of the generous offers for time and consultation in the new year. Thanks!
Cheers!
Guy
Thanks everyone for your contributions. I think at this stage that the deal is a little too skinny to go through with.
I bought the property about 10 months ago and it was my first purchase ever. I saw $ signs because i could see that units were selling for almost as much as i bought the property for.
I think i was a little naive. I’m not sorry because i can comfortably sustain the cash flow for the next few years and i’ve already learnt a lot. I still beleive the area is going to grow because of all the development nearby and it’s proximity to the beach and Melbourne’s southeast growth corridor.
Perhaps i will be able to develop it in the next couple of years if/when there is some capital growth.
I wish i had someone who i could sit down with, go through all the numbers and decide whether it was worth persuing in the shorter term without having to spend a lot of money.
Maybe one of you very experienced developers (Michael, Rikky, buzzwells, Alistair or Bill) would be able to tell straight away by hearing the numbers?
Land size: 1009 sqm
Land cost: $335k
Land dimensions (approx): 20m x 50m
Council: KingstonIs it far too skinny?
Cheers!
Guy
Thank you Bill and APerry, that’s very helpful. I will certainly be following these leads up. Michael, what are the main other factors affecting how many units can fit on the block?
Cheers!
Guy
Sorry – I meant to ask if you think fitting 3 3br, 2Car, 1-2bath units into a 1009 sqm block was realistic.
Also, you knowing the area well, what would you say the market is looking for as far as these units are concerned?
Cheers!
Guy
Thank you Michael,
That’s great. When you say all up costs, does that include obtaining permits etc in the first place?
Also, is it realistic to try and fit 3 townhouses/units onto a 1009 sqm block – approx. 20m by 50m?
Cheers!
Guy
Anyone?
Cheers!
Guy
