I am considering buying another investment property. I am looking for a brand new home and in the area I am looking, the majority of new homes are House and Land packages.
How do you research the Developer?
In this case, they are called LOFTY BUILDING GROUP PTY LTD (http://www.loftybuildinggroup.com.au/)
They currently have about 290 Land and Home packages available but they do not seem big enough to carry that many properties.They seem so have only been registered using this name since June 2012 (registered for GST since Oct 2014), before that they were KGP Group Pty Ltd.
The principal looks to be someone called Gary Patel. Looking at their facebook page, they have been developing a number of properties here in Adelaide, but all the likes seem to be from family.
Does anyone have any experience with this developer?
How do you protect yourself from developer insolvency risk?
What sources do you use to check a developers ability to build?And for my education – How can they hold this many properties? – From more investigation, about 10 developers are all listing the same property. Still for my education – How do they do this?
Thanks
Brett-
This topic was modified 7 years, 6 months ago by
brettc4. Reason: additional infomation
Hi Brett,
I am considering buying another investment property.
Good to hear – have you always bought new? Or OTP? And always in Adelaide? Just wondering…..
I am a bit interested as I hear some saying “Buy new for max depreciation deductions” and it always just seemed to me to be a strange reason to buy new. And if you HAVE always bought new, were they always bought complete rather than OTP?
Anyway – sorry but I can’t help with your primary questions, though one of your comments did have me think things seemed strange – this comment:-
about 10 developers are all listing the same property.
My immediate reaction was to query whether the same company has ten different names – and alarm bells went off immediately.
But, I don’t know if there might be legit reasons for this to occur, so I will step back to see if others can come up with answers for you.
Benny
Hi Brett,
I am considering buying another investment property.
Good to hear – have you always bought new? Or OTP? And always in Adelaide? Just wondering…..
I am a bit interested as I hear some saying “Buy new for max depreciation deductions” and it always just seemed to me to be a strange reason to buy new. And if you HAVE always bought new, were they always bought complete rather than OTP?
Anyway – sorry but I can’t help with your primary questions, though one of your comments did have me think things seemed strange – this comment:-
about 10 developers are all listing the same property.
My immediate reaction was to query whether the same company has ten different names – and alarm bells went off immediately.
But, I don’t know if there might be legit reasons for this to occur, so I will step back to see if others can come up with answers for you.
Benny
Hi Benny,
have you always bought new? Or OTP? And always in Adelaide? Just wondering…..
I am a bit interested as I hear some saying “Buy new for max depreciation deductions” and it always just seemed to me to be a strange reason to buy new. And if you HAVE always bought new, were they always bought complete rather than OTP?
This would only be IP number 2. The previous one was new and it was complete. I was hoping to buy complete again.
Yes, this one would also be in Adelaide – primary rational is to have a property for each of the kids. Diversify later.
As for new, part of it is depreciation, the other primary reasons are:
– I think it is easier to find a tenant for a newer house
– Less maintenanceI think the 10 different developers for the same property must be something like – the block of land is for sale, whomever owns it had said to a number of House & land developers, whomever can sell a package first, gets the land. I can’t see how else it can be done.
Cheers,
BrettThe previous one was new and it was complete. I was hoping to buy complete again.
Good idea – we get to hear too many bad stories of OTP sales where the final reality is far from what was expected by the purchaser. By buying complete, you eliminate that large area of doubt.
Can I say, ONLY buy complete – and if someone is ever enticing you to purchase an OTP property, check out this article first (it could save you HEAPS!)
https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/page/2/#post-5027703That thread has some seriously good input on the subject of OTP. Buying that way is not an investor’s friend (see Jason’s link right near the end). New and complete – yeah, that can work, so long as your builder is of good quality (and known to you from past history would also be good).
Benny
Does anyone have any experience with this developer?
No, sorry.
How do you protect yourself from developer insolvency risk?
Not really any risk of that, There is actually greater risk with the builder (unless you are calling the developer the builder in this post). If you are buying a house and land package then you are settling and purchasing the block of land (usually owned by the developer), having a typical 80% finance of the value of the land with a bank and entering into a building contract.
Is there risk of the builder dies, goes broke or disappears, Yes. Are you covered under Home Warranty Policy, Yes you are. Do you want that to happen, No. If it does happen though you will lose time but your home will still get built.What sources do you use to check a developers ability to build?
– Ask for list of previously completed projects addresses, then go knock on those purchasers doors to see if they were happy with the completed product.
– A good referral or twoAs you have already stated, It would be a open agency for the land sale, whichever builder can get a contract to build a house on it first. Will have the new owner buy the land.
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This topic was modified 7 years, 6 months ago by
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