Subdividing 23 ha into 1 ha blocks with other inve

Sounds like a fantastic idea. I could think of heaps of areas to do similar deals, it could be a great money spinner for you. You need to do a lot of work for your $$ but I asume it will be very worth while.

you will need to contact surveyers to survey the bock and give you the subdivision map on paper to take to counsil(and many other people). Then extensions of electricity and sewage and water to the blocks, fencing the blocks.

once you have your subdivision approved, see a lawyer to help you draw up the contracts if you are selling them your self, or just go straight to a real estate agent and let them sell the properties and they can find the right contracts sutable for you if they have done similare deals with other clients. They could advertise to a much bigger market like nearest city areas, and on the internet.

See an accountant about your company structure. if you go for certain structures you will have to pay gst on all that you sell then subtract the gst aquired during the subdivision then take away 30% company tax on your profits. you could decrease your tax maybe by increasing your expences (make improvements to some blocks, maybe including the one you are keeping if you are keeping one). pain in the arse but it beats paying 48% on all your capital gains

so see a surveyer, council, accountant and then lawyer or real estate agent and then sell away.

I hope I was some help for you, at least you got a reply hey.

Seano

Hi Greg

You might want to look at http://www.chrisbatten.com.au as there is some information there on best structures for doing developments etc. You may have to may for the good info, but I am sure it will be worth it.

Terryw
Discover Home Loans
North Sydney
[email protected]

Try http://www.smartpropertydevelopment.com.au
I’m not sure if it will help, but it can’t hurt.

Put an ad in the paper, asking for expressions of interest in blocks in your new subdivision, with written replies only.
This will give you a good indication of the level of demand for your size blocks, and when you have a good number of replies, you can take it to the bank, as proof of demand and you should have no trouble getting the funds, without having too many partners.

also be careful with those deposits on the blocks – in a normal 3rd party sale it would be illegal for the developer to just go off and spend the deposit money willy nilly. If they are relatives though you could obviously swing a deal of some sort.

John – 0419 198 856

Nice to see your enthousiasm Greg, but I think you may need to tone down your comments regarding the amount of help you feel as though you are receiving. My understanding is that moderators are mainly here to stop the arguments and flaming, and perhaps offer some guidance, but not to answer all of our questions. The info which we seek is scattered around, there are few people who know it, and it is a bit like putting a jigsaw puzzle together. Each piece fills in the picture just that little bit more, but you still need more, more, more, more, and even more info after the last piece you found. Ill give you a few starters, to bring you up to about where I am, which will really reduce the amount of time you need in your search

I am also searching for almost exactly the same info as yourself, as I intend to do almost the same in the near future. Unfortunately, Mr and Mrs Wrappack are having a trial seperation, so that my property plans are somewhat on ice at the moment. I think that if this proceeds, I may have to just try and get ds’s and then sell with approvals in place for a profit, as opposed to doing the development myself, which is what I really want to do. Again, think of contingencies.

Regarding trust structure, check out Chris Battens web site- I havent subscribed, but I certainly will, prior to starting. You must have the correct structure in place, prior to putting your offer in writing. Why? well you dont want a contract for sale in Chris R’s name, then be up for double stamp duty when putting it into your trust/unit trust. As for questions regarding finance, you can put them into the finance section here, or, go to the acounting and tax subsection in somersoft.com.au, which has a HUGE information database. Getting your structure right is probably the number one thing you need to do yesterday, because then you can start making offers- either by a subject to da approval for subdivision, or by an option agreement.

Buy the book ‘Clauses made simple’ by Robert Balanda- the ad for it is in the back of the api mag. There is heaps in here, and you will probably save more than the eighty bucks in simplifying your legal costs.

Get on the net and jump onto the moderators web site, smartpropertydevelopment.com.au There is about five pages of free downloads, that you will be continually rereading in the months to come.

Then, go to yourproject.com.au and buy the downloadable ebook – about $20 if I remember correctly. This has heaps of info, that is not found elsewhere, and is one of the few sources of good information regarding some specifics of financing. Do not even bother buying the ‘developers toolbox’ for $20- it is not really property related, and is total junk.

Ron Forlee’s book ‘An intelligent guide to australian property investment’ is also a good read.

Another web ebook by Colm Dillon is under A$100. Another great thing about this is that you can email the author! I wouldn’t hound him with too many questions, but again, sometimes that little piece of information may complete the picture about something that you have been unable to find elsewhere.

Regarding selling, I would complety forget about wrapping it. I do not think that anyone will enter a wrap agreement on a vacant, unlivable block, while needing drawdowns to cover building costs, while paying rent.

I would sell this way- approach all of the home builders in your area, with detailed maps of your block. Why? Well, if you are going to build a house, you will check out all the display homes, and the builders themselves may just end up promoting your blocks, so that they get the building contract! A true win/win from different businesses in the same industry.

Also, send out something to all of the mortgage brokers, as they too, will want your business.

Regarding wrapping, why not just offer to vendor finance say a 10% deposit? This will really tip the scales in your favour, compared to the block down the road. I am sure that all mortgage brokers and builders would be aware of the ease of which a loan would be approved (and thus their business would increase), simply due to you leaving some money in the deal.

A good idea would be to heavily advertise and stress the delayed settlement idea, that they can get all of their building permits, council approvals, etc, done on your time and interest bill, and not theirs. They will love this idea!

When talking to council, the first question to ask is ‘are you a town planner’, otherwise you wind up talking to a receptionist, or the work experience kid. Ask regarding the new planning scheme, and when it may be implemented.

Simply dividing your size, minus roads by the allowable minimum will give you your maximum lottage, but the real amount will always be less, due to access roads, frontage required, easements, drainage problems, funny allotment shapes, etc. Also, if you can get some different sizes in, it would be good, as then purchases could have the ‘minimum’ of 6/10 000 metres, or a bit more.

You would really need 12 month settlement, as you wish to get something through council, that may not yet be implemented. Even if your da is passed, then the new draft plan is implemented after, you could probably get boundary realignments easily. After da, you would want to be marketing like mad.

Why give your financiers the land at cost? Why not at market value, and reward them by a profit sharing? My understanding is that if you put up 30% of the developments final cost, so that it can be fully financed easily by the banks, then you get half of the total profit. ie if you put up 15%,you get 1/4, put up 10%, get 1/6th, etc. You, as the brains behind it all, get 1/2, plus a percentage of money as above. An advantage of this, would be, after da is approved, you may be able to get three or four contracts drawn up, conditional upon the buying of the land, and putting services and roads in. The bank will then have a da approved site (which will value at more than the original), and the valuer will be able to give a good value, based on pre sales.

Another way of raising finance through mezzanine lenders- I have no experience of this, and know of only two companies. Co-develop are often in the papers wanting investors, and one would assume that they would want to help you too. The other is macquarie bank, but I suppose there are a heap out there. If you have a da approved, with some investors, I would assume, (if the numbers and valuations stack up) that it would be very easy to get the rest of the deposit needed through mezzanine finance. This is one reason alone why you really need to get your info on your structure yesterday. After all, the banks will want to see a certain structure that limits their problems with your development.

Unfortunatly, you cannot advertise your wares on pi, but there is a caveat emptor group on somersoft you may like to try.

Let me know how it all goes- particularly regarding the Chris battens site- he seems to say a unit trust is needed, but you need to subscribe for the specific structure!

Regarding the cost of the road, I too tried to find that out, the best info I got was to ask a civil engineer! It is the epitome of the how long is a piece of string question. Just because you dont NEED kerb and guttering, or a rolled kerb, doesn’t mean that I would not be doing it! I would find out the cost with crappy gravel sides, then the cost with a decent kerb, and compare that with the total cost of the development. I would think that the final selling price would be higher with nice black bitumin and a proper edge. When you get the quote for the road in square metres, would you please post it, along with your structure?

You can always open the yellow pages, look under ‘property development’ and see who is there. I found a lady who is helping me, and really knows her stuff regarding zoning, what is a good idea to pursue, and what to forget about, and what order to do things.

I have personally found that the best way is to read, read, and read the stuff I have suggested, then, if you have ten questions, to break them up into five lots of two questions and direct them to the appropriate forum. This seems to have had good results for me. Also, spend a few days and look at ALL of the posts in the past-yes it will take ages (part. without broadband, and especially if telstrawankers have put a pair gain on your line), but it will repay you tenfold, and save you heaps by needing less (but not none) proffessional information while the clock is ticking.

If you want everything answered, a quick way would be to do Peter Combens course- about 8-900 if I remember correctly. This includes 1 hour of one on one. I personally intend to do it, but I have found that books, and the net can be a huge source of information, then I will use Peter to fill in the gaps, before proceeding

The last bit of information that I would suggest is something that I have heard from a number of people in the game, and that it will ALWAYS take longer than you planned for, cost more, and NEVER GO INTO A PROJECT UNDERFUNDED. Contingencies, remember.

I personally look for sites, then take them apart , studying the council dcp’s and how they may apply- setbacks, min sizes, max slopes, etc. Of course they are all sold to someone else, but I find that it is much easier to learn about a specific site, as the info seems to stick longer, easier than just trying to remember the dcps. Then onto the next site, the next, and you will be amazed at your encyclopaedic knowledge.

That is one reason why you shouldnt think that this is your one killer deal, and must be done at all costs. There will be plenty around the corner, and sometimes the best deal is the one in which you walk away from, or cannot partake in. Get your knowledge, structure, legals right, and then get your contractual rights to buy the land (option or subject to da approval within a time frame)

All the best, and let me know about Chris’s structure, and the cost of the road when you find out please.

Hope this is of help to you.