Property Development

[Pager]

I know this is a stock forum, but looking for any recommendations of forums/sites/links were I can get info on property development.

I know there are a few property investors/developers posting here, any info etc would be great.

I actually own the property im looking to develop but im completely green at this though and not a builder, the council approval and getting plans drawn up is not my major concern it’s the building of the property!, do you developers hand over all building work to one builder with cost and completion times in a contract?, or is it more common to project manage yourself using several builders, plumbers, bricklayers etc?.

Cheers

Pager

 

[explod]

I know this is a stock forum, but looking for any recommendations of forums/sites/links were I can get info on property development.

I know there are a few property investors/developers posting here, any info etc would be great.

I actually own the property im looking to develop but im completely green at this though and not a builder, the council approval and getting plans drawn up is not my major concern it’s the building of the property!, do you developers hand over all building work to one builder with cost and completion times in a contract?, or is it more common to project manage yourself using several builders, plumbers, bricklayers etc?.

Cheers



Pager

If you live in Victoria, go along to the Master Builders Association in East Melbourne and they can guide you in Owner Builder approach.

Or find a reputable architect who can supervise project for you and finish with full builders certificate under his umbrella.

There are a lot of options, start with Master Builders and within a month or two you will know what to do.

At the end of the day you make seek out a few builders and obtain full quotations to you criteria. But dont' go near a builder to you have done a few seminars at Master Builders.

I would sell my block while prices are still good and put it into BHP

 

[numbercruncher]

Heya Pager,


Unless you have extensive contacts in the Industry managing the project yourself could easily turn into a massive cost blowout imho.

As an example I built a house in Qld in 05/06 using a builder and my neighbour went owner builder he told me his savings of doing it himself where virtually all consumed by the bureaucracy and exhorborant tradesmen prices.

I think the best way to save money on residental type projects is to just get in there and do some yourself, one of the things I did was the flooring in my joint, that was quoted at $60sqm but after buying the material direct from the Importer and installing myself made it $20sqm. Painting is another area to save good $.

So im just suggesting get a Builder and a fixed price contract to avoid any nasty surprises is the best route.

Cheers.

 

[Flying Fish]

Heya Pager,


Unless you have extensive contacts in the Industry managing the project yourself could easily turn into a massive cost blowout imho.

As an example I built a house in Qld in 05/06 using a builder and my neighbour went owner builder he told me his savings of doing it himself where virtually all consumed by the bureaucracy and exhorborant tradesmen prices.

I think the best way to save money on residental type projects is to just get in there and do some yourself, one of the things I did was the flooring in my joint, that was quoted at $60sqm but after buying the material direct from the Importer and installing myself made it $20sqm. Painting is another area to save good $.

So im just suggesting get a Builder and a fixed price contract to avoid any nasty surprises is the best route.

Cheers.

Or better still have some good mates

 

[tech/a]

I would sell my block while prices are still good and put it into BHP

Not silly.

But this is my slant.

A great developement returns 30%+ on your production figures.
The average is 20-25%.
Any less and you should SERIOUSLY consider your position.

(1) Leave architects and designers out of it.
(2) Find out the average price for the sale of a developement of similar type to your own. Its unlikely that you'll make a single developement work.
IE one dwelling on a block.Two can work but above 2 is preferable to distribute land costs.
(3) Work out how many on the block.
(4) From here work out the cost you'll have to build at to make it work.

Example.
1000 square meter block.
Council (check with yours) will allow 3 town houses.
Average price for a townhouse of similar type your thinking of building is say $350,000.
Block value $250,000/3=$83,333.
Size of each townhouse 160 square meters.

You want 30% or $300,000.
So you have.
End sale price $1,050,000
Less land value $250,000.
Less Profit $300,000.
So you have $500,000 to cover EVERYTHING.
Thats 480 square meters of building for $500,000
Or $1050 / square meter.
Not impossible.
The average in SA is $1000 for a low class developement
$1200 for most average developements
$1500/1800 For high class Esplanade type developements.

I personally look for 3 or more to a block CORNER blocks are my targets.

Dont forget holding costs (finance whilst building allow 18 mths.)
I would try to sell atleast 1 off plan BEFORE signing and construction contract and definately have a construction completion time clause.
You can sell the land component in the off plan sale to help cashflow.
Engage an aggressive reputable agent to handle developement sales.
I deally all will be sold before completion.

Then go to known high volume builders and be straight with them as to your developement. See what you can get for what price / square meter.
include ALL council fees and approvals which you get THEM to do.

Its all in the maths.
Be patient finding your developement and making the maths work.
If it doesnt work step aside and keep looking.

 

[numbercruncher]

Or better still have some good mates

Yes absolutely, this is what im getting at if you choose to do it yourself, but they need to have the tickets for councils to pass the work, so if your mates arnt tradesmen your going to get nailed with retail prices. And certain trades are now in such short supply cost blowouts are frequent or virtually unavoidable without the contacts.

 

[Flying Fish]

Yes absolutely, this is what im getting at if you choose to do it yourself, but they need to have the tickets for councils to pass the work, so if your mates arnt tradesmen your going to get nailed with retail prices. And certain trades are now in such short supply cost blowouts are frequent or virtually unavoidable without the contacts.

What tradies? Sparkies and plumbers?

 

[tech/a]

Yes absolutely, this is what im getting at if you choose to do it yourself, but they need to have the tickets for councils to pass the work, so if your mates arnt tradesmen your going to get nailed with retail prices. And certain trades are now in such short supply cost blowouts are frequent or virtually unavoidable without the contacts.

This really only applies if your doing a reno on your own home to sell for profit.
While a practical way to make a quid you really dont keep ahead of replacement costs unless you have 2 or more developements.

If you are doing a developement as I described above you either need a builders licience or employ a licienced builder as banks wont release funds until signed off.In other words you have to fully cover building costs with your own funds or have a licienced builder certify works for funds release.

 

[numbercruncher]

What tradies? Sparkies and plumbers?

Yes and others - Just listen to Tech/a he knows what he is talking about, a reno doesnt matter but a project from slab to handover is a massive mission if you do it yourself.

 

[Pager]

Thanks for the replies .

The property I want to develop is actually the family home, we have tentatively been wanting to upgrade but from looking at the local market noticed many homes in the area are being bought by developers as its an older suburb of Sydney with many homes on big blocks,

The idea is to look into getting approval, plans drawn, find a builder etc, but still living in the property which is due a Reno anyway right up until demolition, then either rent for 6+ months until the building is complete and move into 1 home and sell the other or sell both if we find another property we like or even living in one and renting the other.

Similar properties in the area have had 2 x 4 bedroom homes put on them, my property is a corner block so would give both homes seperate street frontage were as standard blocks are 1 behind the other on next to each other.

I’m in no hurry, so at this stage its very much investigating the possibilities and sourcing information.

Cheers

Pager

 

[Ageo]

Just a quick reminder that if you own the land then you will have no problems with getting finance for your development. As tech has mentioned you need to factor everything in plus a buffer for any unexpected costs that come with it. Too me i would also look at what the type of building you want to build are selling for and see if you sell just under market price and still make a profit then its worthwhile as you wont be stuck holding onto it (interest eats up the profit). I have seen too many people get greedy and breakeven (sometimes lose money) so be smart take your time and im sure you will be fine.

 

[tech/a]

Thanks for the replies .

The property I want to develop is actually the family home, we have tentatively been wanting to upgrade but from looking at the local market noticed many homes in the area are being bought by developers as its an older suburb of Sydney with many homes on big blocks,

The idea is to look into getting approval, plans drawn, find a builder etc, but still living in the property which is due a Reno anyway right up until demolition, then either rent for 6+ months until the building is complete and move into 1 home and sell the other or sell both if we find another property we like or even living in one and renting the other.

Similar properties in the area have had 2 x 4 bedroom homes put on them, my property is a corner block so would give both homes seperate street frontage were as standard blocks are 1 behind the other on next to each other.

I’m in no hurry, so at this stage its very much investigating the possibilities and sourcing information.

Cheers

Pager

Sounds do able.

Remember.
(1) Check council will allow subdivision and what the minimum square meterage can be.
(2) See if you can fit 3 and not 2 on the one block seeing its a corner.
(3) Then go to a builder with your NUMBERS.See what he can come up with design and all.

Goodluck,while its is a daunting prospect it can also be exciting.
You'll learn heaps for the NEXT one!

 

[adobee]

Have you considered getting the developement approval and then flicking the site on, this can be profitable and save you alot of headache..

however really building two or three houses / villas is not that big a deal if you get a good reputable builder. Dependent on suburb and what the market wants you can probably get a reasonable builder to knock two or three up cheaper than trying to do get all the tradies yourself..

My tips would be one find out what you can do first before wasting time thinking about it -

1. Go to council web site look at the LEP and zoning maps find out what your house is zoned look at the LEP and see what this zoning means re subdivision sizes, strata, etc - see if anything is viable at all ? (cause people near buy have done it doesnt mean you can check the zonings carefully) Have a quick browse of the DCP relating to what you want to build -

2. Have a look round the area at what large blocks are selling for compared to small homes / villas etc some areas are better as a single block.. Look only at sold prices not at the asking prices.

3. Get a copy of the 2007 Rawlinsons which will tell you accurate costs for anything you plan to do

4. Once you have checked the LEP etc post us what you think you can build.. I will have a look for a sample spreadsheet which will list all costs you need to factor in..

 

[jersey10]

I bought my house 4 years ago with the idea of the land being rezoned in the future as it is near a shopping centre, main road and proposed public transport hubs. The time has come where the land has been rezoned. If my land and that of 4 neighbours was combined we would have over 2000m2 and would be able to build 50 units. Assuming all neighbours are on board (not all are yet), how do we go about getting a developer to do everything and make the most money for ourselves?

PS would love a response from Tech/A on this.

 

[medicowallet]

I bought my house 4 years ago with the idea of the land being rezoned in the future as it is near a shopping centre, main road and proposed public transport hubs. The time has come where the land has been rezoned. If my land and that of 4 neighbours was combined we would have over 2000m2 and would be able to build 50 units. Assuming all neighbours are on board (not all are yet), how do we go about getting a developer to do everything and make the most money for ourselves?

PS would love a response from Tech/A on this.

I am a psychic.

At least ONE of you will pull an act and claim that your property is worth 2 million, when all the others are happy with one million.

Solution?

Build 35 units around their house and laugh all the way to the bank Their house is now worth 300k

I have seen this happen a few times with friends. Quite amusing actually.

 

[jersey10]

of the 5 owners the two in the middle (of which i am one) are on the same wavelength. I get the sense the guy on the end is one of those people who would be that pigheaded about the whole thing he could be offered millions and would be too stupid to realise the possibilities the situation may provide him with

 

[tech/a]

I think you mean 20000 sq mtrs.

If so then your first problem is going to be your neighbours.
You need to appoint a project management company
/ a solicitor who's conversant with syndicated property developement.

But before you do anything- with a project of that size you need to do feasability study.

But before that if you and your neighbors have never developed before ---- there a minefield of problems that await-- not the least being capital.
Whatever your estimate is allow + 20 % and when your accepting tenders push them down 12% from tendered price. It could be worth engaging a professional negotiator for this. Your project management team would be able to help.

Then before you start a thing start selling off plan and get 60 % sold before starting.
Engage a gun real-estate agent.

Learn to become th hardest nosed negotiator on th planet.
When you have a reputation for just that then your doing ok.

Finally
Think long and hard about involving others--- it can be done but not all is equal in the world of fear and greed.

I have a hard rule
If I can't control it then I won't do it.
I hav had partners in some Developements but they were silent--- like church mice.
I let them get noisy when the celebrations started or many years ago--- when the liquidator took control.(1985/6) they were the days!