I have wondered about how advantageous this type of buy > build > sell would be realistically. Obviously the attractiveness of cheap large land is one of the biggest eye catchers. Particularly in brisbanes bay side these estates are allways releasing land and new ones are constantly popping up. My question is this…. how do you make these a profitable development. The thing that I cant seem to wrap my head around is why someone would pay more for my development when they know they could build it right next door for cheaper. How do you go about deciding what to build and when to build. Do you wait untill there a only several blocks left over? Design a house from the ground up that is unique?
I know some people dont like having the trouble of building a home but how much is that really worth to them?
Cheers
You're right, people won't pay more for your place when in 6-8 months time, they can build the same thing for less on the block next door. All you're really offering them is time: time saved by not having to build.
Because of the general constant supply of available land in these areas, you really won't be offering anything that someone can't build or buy from someone else, so it makes it tough. The reason you see builders doing it though, is the GST margin scheme benefits (or adjustments/calculations I should say), and the fact they get builders terms when purchasing land from developers; meaning they don't pay the full price of the land once titles are released, so their interest payments and holding costs would be no-where near what yours or mine may be. Depending on the developer and builder negotiations, they may have 3, 6, 12 months or some other length of time after titles are released in which they build the house, then sell it, upon which time they pay the purchase price of the land to the developer. Unless you can structure your purchases in the same way, I can't see a way that you could make a consistently decent profit from such a proposition.
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