Hello
Hoped someone might shed some insight into situation I am in.
I purchased a 2000sq/m or 1/2 acre property in Baxter Vic 2 years ago with an old dump of a house in the middle for $162,000. I have recently (after 2 yrs) got plans and permits approved by council for 3 x 2 storey and 1 x 1 storey on a strata situation. Plans, fees and charges have been $20,000 plus interest for 2 years on $100,000 loan amount.
I have recently moved to Perth and I am unsure now what to do with it. The bank have just valued it at $240,000 and I have borrowed against it to buy an old house in Perth.I have some good aquaintances who are interested in a joint venture but I am unsure what to do.
Before we moved to Perth we lived in the old house on the block as our primary place of residance until it nearly fell down around us.
I suppose I am unsure if I should sell or develop with 3 other people and potentially walk out with similar amount of money I would right now.
Hope this makes sense
Congratulations, you have done well, increasing your property’s value by 60% or so in 2 years.
That’s the power of property development.
Why sell?
If you can afford to do it and the project is feasible, proceed with the development and retain all the units (if you can) as a long term invetsor.
I understand it’s hard to do from a distance but Metropole Projects http://www.metropoleprojects.com.au could act as your project manager. We are currently involved in over 90 residential development projects helping ordinary investors like you become property developers.
The only person who would buy your property now would be a developer and the reason he would buy it is to make a profit ( and possibly a substantial one) Why shouldn’t it be you?
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.PropertyUpdate.com.auHiu Simmo,
I have to agree with Michael. I am prety certain you will do well in that area over the medium and long term, maybe even short term as well. My company is involved in a number of very large projects that way at the moment, and i’m sure there are others spending money down there.
Using Metropole would also be a very good idea, especially if you are going to be interstate. I have seen many want to be developers do very badly because of inexperience, using a service such as Michaels would substantially reduce your risks.
Regards
Alistair PerryMy thinking is a little different.
I think you should take the money now and run.
You’ve learnt some good lesson in what you have done so far and you can find lots of opportunities in Peth.
With cash in your hand now you can divide and maybe buy two projects in WA – there is still growth there now if you are careful.
This is partly a timing issue. Is there still a potential upswing in parts of WA now apposed to when you may get your money back after the VIC project?
And if you are uncertain about joint venuring at this time then you are not ready – and from a distance it could be more difficult.
I’d sell- take the money and go again in WA. You might be surpriesd at the possibilities available.
All the best in whatever you do.[hair2]
hi simm02702
what to do? what to do?
well a good excell spreedsheet will usually put you in the picture…..
and don’t you love the “what if” formula…….as it currently stands……
looking up my excel spreedsheet,
after all the costs for buying
(Stamp duty on transfer of land,Stamp duty on mortgage,Registration of transfer of land,Registration of mortgage  Title search,Registration of mortgage dischargeLoan,application fee / package fee,Mortgage insurance,House insurance,Solicitor/Conveyancing fees)and then selling costs
(Real estate commission 3%(incl. 10% GST),Real estate agent’s advertising costs,Discharge of mortgage registration,Preparation of discharge of mortgage,Attending discharge of settlement,Solicitor/Conveyancing fees,Settling costs e.g. Outstanding billsLoan outstanding)and lets not forget those little extras
(Rates land over period,Rates Water over period)plus of course the plans $20,000
if you sold today
you’d make
$23,396
plus or minus a bit………close???????
now the next bit i don’t have on a spreedsheet…….
but lets assume it cost $1,000/sq metre to develop
you’ll develop 50% of the land area….1000 sq meters$1,000,000
that was easy…probably a lot more but at least a strarting pointnow currently in Baxter a 3 bedroom house on a 1/4 acre sell’s for $200k
worst case your units sell for only $800k
yes, i can hear you say….i’m not aiming for that market.
its the retired market i’m going for.
Hmmmm
2 story, Stairs, Old People……somethings not working.ok bugger that….i’ll rent them out
ok…current rental…3 bedroom house 1/4 acre $250/week
got 4 units $1,000/week (worst case)
thats $50,000 a year
wow
whats the repayments on $1m again?
$80k a year (for 30 years)
thats not working…..
up the rent….
baxter…..sureI love the worst case senario
because then there’s no surprises
There’s lots of spreedsheets throw at you when it comes to development….
the best one is the one you create…..
not may show you what happens when things go wrong…good luck
hb
Firstly, I would like to say thanks for your time and effort in replying to my position. Your opinions are very much appreciated.
If this was my wife talking , she would sell the Baxter block with plans and permits and take the money and renovate the old house we have here in Perth as we are only 8 km from CBD which has higher long term potential.
Me on the other hand wants to keep Baxter for a bit longer as I have been given a scenario where we could possibly own the single storey outright after completion and sale of other 3 and then put tenants in it. I am not sure how you come to this result but it sounds good to me.
I suppose I want my cake and eat it too.
I have trouble selling things once I have purchased something, so I guess it is no easy decision for me.
Thank you again for your reply.[biggrin]
Interestingly I met a developer today, in his 60’s and been doing it for 30 years.
Has renovated about 30 block of flats over the years. Sold all of them, never kept one.
Always wanted the “cash” to do another project and to live off.
His last project was in 2004, when he lost “a bit of money”
He is finding it difficult at present to find a viable project.
Anyway he has a nice house and car but litte else to show for it and regrets his decision to sell.
If only he had kept that first project and did nothing else, for what he paid for it 30 yeras ago.
He would now have 10 apartments in a prime area.
Lesson: you earn cash trading and pay tax. You can get filthy rich as a property dveloper holding onto your projects.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.PropertyUpdate.com.auhi micheal
your right,
“He would now have 10 apartments in a prime area.
Lesson: you earn cash trading and pay tax. You can get filthy rich as a property dveloper holding onto your projects.”but i reckon….he could have been really FILTHY FILTHY RICH….not just filthy rich.
show you what i mean
lets go back 12 years
Medium house price melbourne was $145,000 (1993)
today its $360,000 (2005)now going on your theory, if he had 10 houses today they’d be worth $3,600,000…..right
well….look
if he was really really clever and invested in Blue Chip Commonwealth Bank (safe as houses)….right
his $145,000 would be worth $779,375 today….and if you multiply by 10 ……close to $8 million dollarsyour right ……he’d be filthy filthy rich…..but better as a SHARE developer
isn’t hindsight a wonderful thing
but the real question you forgot to ask him was …..
“did you have fun?”
hb
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