First Development thoughts

Yep, know your overheads and carefully plan what sort of numbers you need to make this work.

By having your own tradies, you can save a sh*tload of cash rather than going the turnkey way, but if you don't know them, you can also get yourself a massive headache and even worse, cost you a lot of money or end up with a sub-par job.

I would always go it myself and have had a few developments but there are some key points to remember:

-Budget: Work it out and stick to it. I mean across everything from planning, to building to electrical. Then give yourself at least a 5% buffer

-Revenue: Once you finish this thing, how much will it cashflow? Is it going to be worth it if the market stays the same? Can you afford to finish it should the market change between now and completiion?

-Timeframe: If you don't have set targets, this thing will take forever. If you rely on the instant cashflow, maybe you should re-think. Just becasue these things tend to take much longer than expected…

I know this is a quick recap but I hope it helps!

-Mark

Hi Harry,

Just thought I would offer my opinion and tell you about my plans. Unfortunately it is not the advice you are looking for but you may be able to take something away from it.

A mate and I are also looking at doing a small development and we are in the very very early stages of planning, but we are going to look at trying to locate a block with a reasonable house on the front and subdivide the block and build something out the back. We have not dismissed the idea of buying something with an existing house and demolishing  the house but to start with we would just like to find something where we could keep the existing house and subdivide.

My mate works in the building industry, although he is not a builder, he deals with builders on a regular basis. We are going to employ a builder and the project manage the development ourselves. By doing it this way it will be the builders responsibility to organise the tradies. The key to success with this strategy is having a rock tight contract with your builder to provide a house and set mile stones for the construction process. Obviously penalties if these mile stones are not met. Also by doing it this way if there are any problems or faults with the final product it is the builders responsibility to rectify these faults. 

By the sounds of it you have more than enough capital and borrowing capacity to complete a project like this

Not sure how you are performing your feasibility studies but I have a feasibility calculator from a friend of mine who paid big money to complete a developers workshop. One of the things she got from this workshop was this feaso calculator so if you want a copy PM me and I will send it to you.

What areas are you looking at? We were considering around the clayton area purely because of monash uni and there is big demand for the smaller style homes. I think any area which has a large university nearby is a a good place to look.

Corie