Hi
I have a property that I own outright and hold the title and it is in a prime redevelopment area ( 10 minutes walk from Canberra city area) such that about 9 apartments or perhaps several townhouses can be built on it. It is 3 storey zoning. I can sell the property to a developer but I'm thinking about developing it myself (as I love living here and I am thinking about a townhouse for us). I do have substantial equity in other properties but I do not have much cash unless I sell these other properties. Perhaps I don't have to borrow very much as I'm thinking I can surely sell them all off the plan at an early stage. Does anyone have any ideas on what I'm thinking, who I should talk to or should I just sell it to the developer and be done with it.
Thanks
CarpeHi Carpe,
Have you considered a joint venture with a developer; i.e. you supply the land they build the units. Tender it out and pick your best application. cheers
Hi Carpe, I wouldn't sell your fantastic growth asset. I'm in a similar position and my bank suggested I should sell some off the plan. I did some spreadsheets and worked out if I sold 5/8 townhouses they would pay for all of my building costs and remaining mortgage on block. I'd then be left with 3 that I'd own outright. I'd suggest doing some spreadsheets and talk to some banks to start off with. I'm not planning on building for a couple of years so I haven't researched all of my options. Ron Forlee has 2 books about developing, they may help you consider your options. If you decide to develop let me know how you go. Good Luck! Linda
Thanks Peter…..something definitely to consider. Joint venture was not something I had even thought about. The developer just wants my property but is a meanie even though the $1m offer sounds good……he owns the two next door and really needs my corner block facing North/East and opposite the best apartment complex in Canberra.
Thanks Linda. I also put this question in the Help forum and got some good responses including a spreadsheet to put my figures into with excellent results…..that turns the property from a 1m sale to the developer to a potential 2m value if it is developed myself (as well as architect and builder I would probably have a project manager also). I can't imagine not being able to sell the properties off the plan as this land is in a hot demand area although based on the figures there is not going to be a problem for me to borrow the whole lot if necessary. Though like you I think I'd rather sell some off the plan so it is something that I will also be exploring. Thanks very much Linda for the tip on Ron Forlee also and I'll be pursuing this today.
Thanks again…..and all the best to both of you on your property journeys.
Regards CarpeHi Carpe,
Joint ventures are always an option when you have substantial equity and are short on experience but the best financial outcome is always derived when you develop the project yourself. Not only that, its downright challenging and satisfying.
Successful property development requires time, experience and money. When you are short of any of those commodities you can leverage off those who can supply you with the missing ingredient(s).
The fact that you hold the site unencumbered will supply sufficient equity to satisfy the financial requirement. Most people, even when holding down a full time job, can usually supply enough time to satisfy a single project. What you need is to leverage off someone's experience.
You then need to decide how passive or how active a developer you want to be. You might engage an experienced development manager to do everything with minimum input from you or if you want to get in 'boots and all' you could consider engaging a property development advisor / mentor where you do the leg work, the advisor supplies the experience and knowledge and you receive 'on the job training'. Either approach will give comfort to the financier who often rates the borrowers experience on par with the project itself – particularly on higher LVR funding.
To help with increasing your knowledge base I'd be remiss if I didn't also recommend my book "Residential Real Estate Development – A Practical Guide for Beginners to Experts". After 27 years in property development and with over 340 dwellings in the development process at present I have managed to pick up a few pointers. Further information about this and also about passive and active development, development advice / mentoring and other property development matters is available on the website below.
Bob Andersen
Positive Property Strategies
http://www.propertystrategies.net
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