Has anyone here got into property devt bigger than renos? i.e. building townhouses on several adjacent lots, subdivisions, apartment blocks etc…
Obviously, the way I am thinking is to try and create my own CF+ properties, seeing I can’t find any existing ones with good CG potential.
Bruce
Mooloolaba, QldHi Bruce
Good idea, that is the path I am looking down too, although there are a number of factors to consider.Personally I am taking my time to learn all there is to know about the development side before doing one myself.
A common problem is that there are a lot of small developers out there with existing relationships with local agents. trying to get them to call you first on a deal is difficult.
Another factor you need to consider is that it can be a lenghly process, so you need to have some spare cash in case of setbacks. And in terms of finance, you cannot get a high LVR lend on developments as they are seen as riskier by the lending institutions.
I would recommend finding a couple of small developers who would be happy to share their time and knowledge with you, possibly in exchange for a bit of research on your part.
Good luck
Brendon
Acute Mortgage Reductions
‘Better Finance for More Homes Sooner’“I am taking my time to learn all there is to know about the development side before doing one myself.”
The key to real estate development is selecting a qualified “team” to assist you – in effect you become the co-ordinator/development manager.
“you need to have some spare cash in case of setbacks”
You will require cash reserves to meet the preliminary costs which include research, planning and marketing – contingencies should always be accounted for in preliminary budgets.
An option is finding “silent” partners to finance this phase in return for equity in the project.
“you cannot get a high LVR lend on developments as they are seen as riskier by the lending institutions”
You may want to consider selling x number of units/lots OTP [off the plans] before institutional funds are required – sold subject to financing, etc – deposit held in escrow.
Lenders are then more willing to proceed with financing – especially if you have an experienced team involved in the planning/preliminary phase i.e. architect, engineers, project manager etc.
— Michael
Thanks Brendon. I have also been trying to learn all I can about bigger developments. And like you, know one has to be cashed up to carry lower LVRs, higher acquisition, holding, and dev’t costs. The one gotcha that scares me is local council fickleness. I have friends who are big players and they have spent heaps on the best legal representation to counter some adverse rulings. When the council want to play hard ball, they can drag a DA out over 2 years, which would be fatal for most.
At this point, I have come up with these options re entry ito the game:
– don’t be afraid to think big, as long as the risk is well known.
– do a joint venture with experienced developers.
– buy an ongoing project. From my research, there are plenty of inexperienced developers who half complete a project and don’t have the skill or stamina or cash or nerve to take it to completion or hold the finished product until all sold. There can be plenty of bread left in these, especially if the developer just wants to be free of what has become a psychological burden.The one thing I have come to realize is that it has to be treated like a serious business.
Bruce
Mooloolaba, QldHi thefirstbruce
We are doing 3 now
2 x 4 bd project homes subdivide and sell to neg gear investors. We will lease them to Defence housing Authority to make them more attractive to the investor. It is hard to add value with these and to a certain extent the rising market will carry us – to profits.
2nd one is a subdivision of a corner block and we have a DA & CC for a commercial downstairs and 2 x 2 bd flats up stairs. This job is more what Steve talks about finding a problem and creating a solution. the block had an old house (office) on one frontage, however it had 2 DPs ie 2 titles. With the advice of our surveyor we did a boundary realignment and then pushed through the DA, using a planner,geotech engineer,stormwater engineer and landscape artichoke (on their fee!) The old office was renovated and leased. The back block is ours pretty much for free. Building prices are crazy right now so we are selling it rather than build & sell.
Finally we have a 2 x 3bd & 1 x 4 bd development in an upmarket seaside suburb. We have used an architect, consulting engineers and surveyor trying to build a team with a demonsratable record in these types of jobs. The team is really only a tool like a hammer. They will not do it for you, you have to be the driving force especially when you have openly hostile neighbours objecting and council officers under so much pressure due to the flood of developent applications that it is easier for them to say no then yes. We always have a plan B if it doesn’t work out ie and exit plan.
Why do we do it? Firstly we like it – even with all the associated problems and secondly any profits are put back into +ve cf IP’s to get us to the retirement stage quicker.
Best of luck
Tony
PS find a mentor and a good accountant
Even developing at cost can leave you with hopelessly negatively geared properties. allow at least six months to a year to get your plans through. Be careful with the building contract. Most of them will run way over their contract time and trying to get a builder to sign a contract with penalties built into it will be expensive. you will also have to have a strong constitution to fight off all the variation claims from the builder and keep the bodgy trades in line. then the ATO will want 10% of your profit for GST and half of whats left (if your on the top tax bracket). if your objective is just to acquire property it may be less stressful and just as profitable to pick up stock from distressed developers who are suffering under all of the above problems. I know of one very good value apartment that a developer has been trying to sell for a year – I have been looking to pick it up for what must be close to his build price.
Extensive list of new Perth property available for sale.Alternatively, become a joint venture partner in one of our property development partnerships – contact me to find out why our developments are unique. John – 0419 198 856
My brother and I were at the Brisbane seminar in November and met a few of you that are here on the forum..
About a month b4 we attended I discovered a really cool website on Developement by a developer in Brisbane.
http://www.yourproject.com.au/report.htmI did have to pay for subscription, $279. But I pay $350 for an hour of my Solicitors time so I gave it a go.. BTW other than being a subscriber I have no affiliation with this website or company at all.
I have to say that for the novice developer, or the wanna be developer this site is great..
So anyway, after going to the Bribane seminar we sat down and thought about our direction..
Me having 8 properties at the time and my brother 6. All of them +ve geared enough to bring in $50 – $300 perwk profit and also over 30% avrg equity in each property.
Wrapping and renting is what our folios consisted of both commercial and residential and a couple of flips. All well and good you might say total value of around 6mil..Well we’re both pretty lazy at heart and have a goal to stop working by necessity and enjoy our families. Me having a wife and a 3 month old boy and my Brother his wife and 2 kids.
So looking at what we had, we came to the conclusion that what we were doing amounted to spending lot’s to make play money.So after a few months and learning more about the development side of things we decided to jump in.
The first one we looked at was a win win for a wrappee of our’s and my brother (I had already put the investment in and I just wanted him on my team for his expertise in project managin).
Our first and only wrappee at present, bought on acreage and being a war pensioner has no chance of getting refinancing from the banking institutions. So we made a deal to develop the acreage that he is on.
We come out of it with a tidy profit and he comes out of it with a fully paid down house and 5 acres.This is currently going through the preliminary stages of planning and approval from the local council. So were are looking forward to finalising this in the not so distant future.
This will be a subD consisting of 4 x 2.5 acres or 10 x 1 acre blocks.The second developement has been approved for 230 blocks of land. That from 2 lots of about 110 acres.
Obviously there’s now an issue of selling these off and building the infrastructure but because of careful planning, research and engineers assessments etc, we have given the bank an easy desision to make..
Now were talking about “real money” which is gonna equate to “real freedom”.
We saw Reno’s as a hassle… Lot’s of work for little return..
Building units as lot’s of capital risk because on completion clauses etc..
I think that we have hit our niche…
Just as this website has developed so have my brothers and my ideas and we really have learnt what property investing is really all about…
FAMILY, FREEDOM.. and FUTURE.
Cheers..
Chris Long
Learn to give and you truly will receive.
Calron the Alcamist
Turning things into gold is fun.
[email protected][
]Bruce
I retired at 37 but got bored playing golf 5 days a week on the Gold Coast and after 2 years am back to work part time.
I spend my days looking at development sites and property deals and have 2 full time staff managing the affairs of First Home Owners Group.
There are plenty of good deals around its just a matter of forging relationships with a few of the agents in Brisbane or your area who specialise in development. Get a copy of your town plan and look for opportunity. Most Councils offer it on CD these days.
Any problems email me.
Cheers Richard
richard at fhog.com.au
http://www.fhog.com.auThere is no such thing as a problem.
Just a solution waiting to be foundRichard Taylor | Australia's leading private lender
Tony, I would be very interested to hear of your plan B’s and your exit strategies on your properties. Do you usually tie up the properties with an option while taking the da through council? Or just make sure that you wont drown in neg gearing if you own it?
I too came across yourproject, and bought the toolbox and ebook (brilliant). Did you find the subscription worthwhile? What extra stuff does it cover?
Bruce
I’ve been project managing for 26 yrs, and doing the odd development on the side, and your always learning, there is no knowing in property development there are only expectable margins that you are willing to live, or expectable margins when you take a hit, all are expectable, those that think they will never take a hit or a loss are simply delusional – normally an area received for bankers and lenders, that like our projects to fall within there air conditioned worlds. unfortunately i can not put a big tent over my building site and air condition, neither keep it dry, neither bleat to much when the blockie down the road nocks off a pallet of my blocks, or a subbie stuffs up because it is my responsibility to look after all that and if the bankers had their way you have to control the weather as well.Well said barnard888
Bruce, living on the sunny coast myself i know your pain with Sunshine Coast Regional Council. Get acquainted and very comfortable with PD Online http://www.sunshinecoast.qld.gov.au/sitePage.cfm?code=pd-online this is a tool you need to know how to use backwards, some of the council staff are really helpful also!
You really need to set a strategy/plan for yourself as to where you want to start, what area, how big, why etc etc. Expect Sunshine coast council to take between 3 – 6 months for a code assessable application, 6 – 12 months for an impact assessable application and up to 2 years for anything way outside the box… Also expect to pay handsomely on the S94 Council Contributions of between 18 – 30k per unit!
Personal experience has taught me that you have to give the council a reason/benefit as to why your project is worthwhile approving! Also staying just within the boundaries (grey area) negates the need to advertise thus no objections.
If you would like to have a chat or coffee, feel free to give me a call.
Hi Folks,
I am very new to this. I am just starting my learning and am feeling exceptionally scared but excited at the same time. Is there anyone out there who has any top tips for someone just looking to start in investing in property. Mistakes you’ve made or successes you’ve had…any advice would be gratefully received.
Cheers
JayneI’m currently building 2 executive homes and doing one subdivision 1-into2 lots.
Did 2 major renos and 1 development last year…I’ll aim to do a larger scale development next – up to 10 apartments.
But have to finish my villas first!
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