Any big city like Brisbane, Melbourne, Sydney (I live in Brisbane) has milion of old ugly houses you drive every day by thinking:
* This should never be allowed – developers of 20-30 years ago to build houses like this
* I would never live in house like that
* It would be best to demolish it and replace it with nice quality new one
* THERE IS PLENTY OF LAND AVAILABLE. IT IS HOWEVER OCCUPIED BY PROPERTIES THAT SHOULD SIMPLY BE DEMOLISHED LONG TIME AGO OR NEVER BEING BUILT.
* etc.The minimum quality set by AS and regulations are utilised by developers with master skills. That is why we see cities being poluted by houses that have 3m x 3m rooms, aluminium cheap windows, dark, unhealthy …… etc.
So. Lets say there is $1milion AUD available cash money (yes. no interest, no banks, pure cash) and lets say that person who has the cash has strong opinions on above and would like to utilise the cash in starting to:
* Buy old/ugly houses
* Demolish them
* Build new houses instead quality of which are above those set by regulations and standards. For instance 8-9 star rated, no room smaller than 20m2, 4 rooms as minimum, 3m high cielings (yes 3m not 2.7m), double glaze windows, 10kW solar system fully covered roofs, centra vacuum system, latest in data/IT,electrical internet etc,…Before I pop the question to all of you one more thing about spending money on quality.
You can spend money on VALUE ADDING QUALITY that adds value and hence you can sell for more but you can also spend money on QUALITY that is not adding value. In above example spending extra money to buy land at old house + demolishing cost is extra cost that would set you typicaly back by around $100-200k. Almost like a good depth bad depth…
QUESTION 1:
Have you heard of anyone who was able to at least break even or end up with positive cash after buing old house, demolishing it and building new instead? Without need for too much time to pass to fix the negative position?
How many of you do believe that it is possible to establish and run sustainable property house building venture by buying old/ugly houses, demolishing them, building decent quality above regulations/standards and not to loose money but at least break even so you can keep doing it indefinitely?
We do live in the world where everything must fit 2+2=5 formula (1 being profit) otherwise things no matter how good and well meant never take place.
I am interested to hear positively thinking ideas. I know it is hard and I know we may well loose "opportunity" to make more $$ if we would not stick to our"principals" but lets say we have other source of income and we want to utilise $1milion for this in our opinion well meant purpose. It has to be however sustainable business meaning – making some money not loosing money…
QUESTION 2:
Can you share your opinions and list 10 in your opinion top rated residential house quality you as a potential buyer would appreciate most:* 3m tall cieling hights
* Rooms 20m2 as minimum
* 4 rooms, double garage as minimum
* 10kW solar power
* Double glazed windows
etc. up to youAwaiting in anticipation
Cintaku
I am wondering why you want to reinvent the wheel? Ceiling heights are standard at 2.4 metres so 2.7 is higher but 3 metres – WHY? Also my experience is that a good size bedroom is considered ,3 by 3 metres – Some project homes rooms are even smaller – my opinion is the master bedroom needs to be a bit bigger by the other rooms are fine even 3.3 x 3.3 is considered large. And would you get your money back You need to build to the area thats been my experience – not too small or too large do your homework. Many people make money from the knockdown/rebuild strategy
Cheers and all the best
Attempted a construction job and spent money on designing a place that was sustainable both economically and I guess health/socially?.
Hallways 1m as opposed to 0.8 or 0.9m provides a feeling of space and openness, bedrooms 3*4m or 4*5m provides privacy as opposed to 2.7m wide, two living areas (seperate dining and living room) to give social environment, higher cielings etc. All gives a feeling of openness that facilitates mental wellbeing.
Long story short, too expensive using any sort of material, would have sent me broke, could barely make the figures stack up using smaller rooms etc.
It is hard, if anyone has a way please let me know. Started researching organisations like Habitat for Humanity to see how they build so cheaply… free labour was the only way they pulled it off from what I could tell.
It is not all in size. Good design is what matters, a good colour scheme and nice site layout. Too many developers use draftsmen with sub or no design qualifications, as a cost saving (though minimal, when we look at overall development cost!). Then they end up with really horribly looking developments. Plus cheap finishes… I regulary get bad design, already DA approved, for a ''repair'', when developers can not make a presales because of the ugliness of the design. (I am architect/developer)
Thank you all for so far submitted comments. If any common ground can be stated I think most people would agree that there is a general public frustration with quality of housing people are forced (economicaly) to buy but at the same time it is hard to break out.
However the good news is that there are Aston Martins, Audi's and they are sold and are desired. Making and creating Aston Martin or Audi in property and trying to sell it to a group that can only look at it would break the bank. Selling it to people who can buy property of Audi quality of at least Subaru is part of the answer.
Increasing quality and trying to sell it the same group of people is unfortunately dramnaticaly hard. Inovation is one way…possibly in finance world because what people do not realise is that by buying properties they can "afford" the final figure they pay is large. If there is invention in how finance is provided to people than higher quality would be accesible to same group of people.
For instance I have seen Wolksvagen Tiguan being now sold to public at 2.8% interest by SKOADA finance group. . . It must be an outside box thinking solution as there is none within conventional range of thinking…
Cintaku
There is a place for everything in the market just that I think you need to understand the market you are in. I have a builder friend that was building Mansions on the Gold Coast a few years ago – the wiring and cabling for one house was $250K alone – He is not building them at present as the market is not there. A big house with Big rooms will sell in the right area. And if you get it wrong then you run the risk of losing money. Check out the example
cheers
Here is an idea from US economical collapse.
If this chateau costed $44mil AUD to build and was sold for $10mil I would happily pay $1mil AUD to share luxury appartment of similar style (in same building and great facilities) with others in such a building. The question than would be if it is possible to fit 44 luxury penthouse appartments in building like this. Or maybe $2milion and 22 portions. Or 88 portions for $550k each?
On the other hand I wonder if there are any building companies in OZ that would in actual fact know how to build such a building
or they would have to invite overseas expertise… If you are buying properties to demolish you need to be buying at almost land value only. – probably. Demolishing a house can cost up to $30k plus when you remove the house the big drop in value.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
From my experience I think it is very unlikely to be able to make money building a 'dream home'
That being said, I do have a plan one day to purchase a large acreage out in the country, and build my perfect home just as I want it, I am not doing this to make money however, I am doing this to enjoy my life and live in the exact home that I want to. I believe if you want to build yourself a perfect house, then you will not be doing it to make money, rather just for the love of being able to create yourself your own unique piece of art so to speak.
The most common way to make money from an old home on a big block of land is to knock it down, put up a block of units or townhouses, cheap and nasty kind that take a couple months to build, and them sell them all off and hopefully able to make a profit. Not exactly the most inspiring work of course, but at least it puts food on the table.
Terryw wrote:If you are buying properties to demolish you need to be buying at almost land value only. – probably. Demolishing a house can cost up to $30k plus when you remove the house the big drop in value.Terry
i can't completely agree with your statement – Sometimes removing a House can actually increase the value of a property. A recent example was of a friend that bought a property in Brisbane on two titles – had the house removed and then sold the 2 vacant blocks for a nice profit. Or in some cases knockdown rebuilds can make a great profit but its finding the Right property, in the right area at the right price AND Knowing your market and that only comes from research and experience (just my opinion)
Cheers
Yes, good points.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Won’t work in the market you’re looking at unfortunately. Not consistently anyway. High risk low return is the usual order of the day.
The Candy brothers are an example of what you’re trying to achieve but in a market that:
1. has the money and wants to buy quality; and
2. is in the very rich to super rich end of the market.
I’m afraid your average aussie home purchaser wouldn’t know quality if you hit him round the ears with it.
The Freckle
Very good point Freckle,
Thanks for sharing. I have had a look the Candy Candy. Interestigly it is not my personal taste but from my personal experience it is somewhat interesting to see that people with plenty (I mean realy plenty) of money often do not have a taste in beauty and you end up with weard creations that lacks what I call practical quality. But this is only my personal feeling and therefore creating "luxury" for others often goes against your personal wish/views. High end market is less dependant of ups and downs. Rich buy in flat market, downside markets and even up markets for sligtly different reasons. It is the other side that sells that is making more or less.
There is a lot of truth in your statement that average aussie would struggle to grasp quality. But I see 2 main dimensions in here. One is the culture driven and in my opinion there is nothing that you can do with it. It is impossible to sell quality to those. This group is typicaly going to shop and buy cheapest no matter what thinking it is a good bargain. The second goup are those who do desire quality, they admire it and wish they could afford it but they are limited with funds. That said this group goes shoping seeking value for money. They do not buy cheapest or most expensive but they think twice what they buy. If you produce product of quality that resonates to them and you laydown precise logic as why it is better for them to buy more expensive property (it must be honest and true however) than you can sell to them as well. But yes. Not in current flat market though. Good time to prepare and research.
Cintaku i like your taste.
However that taste is very risky in Australia, and you wouldn't be able to do that in any street, i have done some research over the years and this would only work in rising market and in the best streets in the city, ocean fronts and such, if you do that in ordinary street you would most likely overcapitalise your house and loose money. Property valuer will slash down your value if he cant find similar sale in the area.
I sell fully renovated houses, and i find that its harder to sell fully renovated house like brand new, then old fibro cottage.
Expensive and big houses are hard to build, hard to get it approved, costly to build and very often you will blow the budget, hard to sell with very limited market, Economy and market risks, finance risks, will take much longer to build, too many risks.
Every project would need some solid research.
I love big houses, i always lived in a big house, my house has 6 bedrooms and we only use 2 of them
I really admire your thinking Cintaku, but do agree with the above comments and will summarise to… Your thinking is ahead of the times.
Correct me if I'm wrong, but it seems your idea would be for high quality properties for owners to occupy. In Melbourne there just aren't enough in the market at the moment to drive prices with emotional buying. Right now in Melbourne we're seeing mainly investors in the market – not interested in quality as much as a low price and high returns.
Believe me, I sometimes want to scream walking into these new townhouses and apartments that can be best described as 'dog boxes' as they're so tiny. But they're profitable.
We have turned down management of some of these 'ugly' Melbourne houses you refer to because they're essentially money pits in terms of maintenance for the owner and utility bills for the tenants. It would be lovely some were knocked down and replaced with quality housing… but would it be affordable to attract tenants? Or profitable for the owners?
If you could find a viable market for these types of properties, have a cost effective build that won't compromise quality and be able to pick up a property that is being sold on land value only (due to the house being dilapidated) you might see a profit. But you'd have to be lucky… and luck is not something to sink $1M into.
I do hope you keep us posted on your findings!
Hi Kristin,
Just came back from overseas trip 2 weeks ago so appology for lateness.
I think I should define precisely what is definition of profit and profitable and if it is short and long term and why I think this is all it counts. How many people asked question why people are not rich when in actual fact vaste of people should inherit properties from their previous generations. At least land. So why it is not happening? Many reasons come to mind but one of them is because people want to make quick bug overnight. Long term they loose. I mean 100-200 years long term. Would you build your house out of soft wood sticks if you want to keep it for generations? My father always thought me and told me: "You are never rich enough to buy cheap/low quality stuff my son". I am glad he followed this rule and his father too. I am trying to pass it onto my kids.
So what is better. 2 story house with 10 bedrooms build to last 30 years max or 4 bedroom very high quality place that can last for 200 years (structuraly). Same cost. I would take the second. I went to a coffee shop last week and the owner had T-shirt that said: "Life is too short for a bad coffee". I loved it and convinced him to sell me one.I have just done a deal. I have purchased cheap property for $307k. The house is very old and it was listed at $347k. Owner paid $270k in 2005. 695m2 (Brisbane). It is very old and neglected but it is rented at $340/week but most importantly it sits on top of the hill at corner between 2 streets that are culdesac. Low set. The view is stunning alredy from the car and from 2 story house properly designed house it will be fantastic. So yes. I am now going to keep renting while custom design takes place and valuation and clever choices comes to play. Once happy I will say good buy to the house, demolish it and build new instead. Double story 6 bed + 2-3 bathrooms + 2 cars + lap pool + 5kW solar and full of data comunication gadgets etc. When finished cost close to $800k.
And the figures? I will Email you 2 calculators each for each property. Cash out of pocket is not of much different to $307k house only.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
