All Topics / Help Needed! / Townhouse/Duplex Build

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  • Profile photo of Grant PGrant P
    Member
    @grant-p
    Join Date: 2011
    Post Count: 1
    October 18, 2011 - 9:24 am

    Hi guys new to the Forum, and the Prospect of investing.

    An area in sydney im looking at has several diffrent block for sale,
    Size’s in my price range are roughly 600m2 to 700m2

    I can get a
    660m2 block for 280k (approved for 3 townhouses, also has a house on the block in need of demolition)
    700m2 block for 210k (no approved for anything, looking into council regulations)
    600m2 block for 200k (not approved for anything, also looking into regulations)

    My idea is to buy either the 660 or 700 block for 3 2 story 2 bath 2 car garage town houses.
    Plans i have looked at are around 160m2 (includes garage)
    Similar 1 car garage townhouse in the area i am looking at are selling for $340,000 each, the market valuse has risen by 5.6% in the last year, and an average of 4.3% over the last 5 years, average time a house spends on the market before selling in area is also 76 days.

    I currently have 40k saved and can possibly have another 5 to 10 by the time ide be ready to invest (roughly 3 or so months depends on where im at with re-search)
    My salary this year is 90k

    Being such a big investment, where would i look to for finance? Being only 20 i think it will Have lower chances than others, what can i do to boost my chances.
    Would it be better to start a business and go about getting finace that way?

    And the build.
    Would it be reasonable to expect to pay 120k to 150k per house build cost?
    Will it bring my cost down if i suppy building materials? (as i can probably get the cheaper as i pay little more than cost due to family working for boral)
    If i was to paint, landscape and get the plumbing/electrical my self ( close friends being sparkys and plumbers and landscapers and after talking to them they’ve offer to beat quote from other, not do it for free as i don’t like hand outs)
    How long should i expect the build to take from start of construction to ready to move in

    What other cost may i encounter that i should factor for? And how much should i factor in for these misc things.

    Thanks in advance for any help you guys give
    Grant.

    Profile photo of Mick CMick C
    Participant
    @shape
    Join Date: 2010
    Post Count: 1,099
    October 18, 2011 - 1:00 pm

    Hi Grant and welcome to the forum.

    You sure have some big and well thought out plans!!
    It’s good to have big plans but you should take it slow and not jump stright into the deep end at first go…your only 20 you got plenty of time left up your sleeve to make money from property investing….

    Property development is a totally different ball game, you can;t just read about it and expect it to go smoothly! your relying on a number of factors, each with it’s own possible problems:

    1. Builders
    2. Time frame
    3. Council approval
    4. Engineers and design- water pipe etc
    5.Finance
    6. Cash flow
    7. Sales

    I think it’s a better idea to start off with standard property investing strategy for your first one anyway and do basic renovations + maybe build granny flat etc … and really understand how “property investing works, ” in terms of finance, negative gearing, deprecation, management, tax, interest , renovations etc…before jumping in with the big boys.

    How to finance such a deal?
    —-

    It’s good to know how a deal could be financed; so you have something to work towards.

    Firstly 40k deposit is DEF not enough! in fact your going to have to triple that!
    Land: 280k
    Build: Im guessing as a min $180 each — so 180 x 3 = $820k total outlay not including another associated cost yet ( stamp duty , council approval fee , DA, Soil test, Design ) thee cost are all state and council dependent– but as a MIN roughly $880k outlay.

    You will not find ANY lender that will do a construction for a block of 3 higher then 90% LVR ( getting 90% LVR is not easy as well) .

    YOu can either go via the commercial lenders who are slightly more flexible, but a lot more pricey or the residential lenders who have set “rules” but are cheaper.

    A bank looks at the following for larger construction ( 3-4 or more are considered “larger ” construction )
    1. Experience – so you may need to bring a more experience partner into the transaction…ie the builder
    2. LVR – Keep it under 80-90
    3. Plan
    4. Pre-sales– not required given the size…but is helpful

    P.s no you can’t supply your own material, everything needs to be included into the fix price contract; else the bank simply won’t lend on “anything you buy” ie you buy the material out of your own cost = less money for deposit.

    Regards
    Michael

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
    Email Me | Phone Me

    Same Banks. Better Rates. Served With a Passion.

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