MichaelW...the big dreams of the little guy coming to fruition

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Our own somersoftarian, MichaelW, is feature in this month's (Feb 2009) API :)


I was just reading thru Feb API and the case study on p 36 rang some bells and I figured it was about Michael's Mona Vale site.

Michael, you've been patient for long enough so now it's you making lemonade from lemons mate....I particularly like the closing remark ...."Who knew the global financial crisis would have an upside"

Yep so true and in another vain "straw hats in winter".

Good luck with it mate and congrats on the write-up.

PS: make sure you inculde a development diary so we can all follow.
 
Thanks mate.

Yeah, that's little old me, and thankfully no ugly mug shot this time to scare off the readers... ;)

Its all shaping up very nicely. If tender prices come down as anticipated in the next few months then we'll be off and running. Who knows, there might even be an interest rate cut or two in the wings as well! :D

Can't go too far wrong now with a conservative yield on costs of 6.8%. My current mortgage rate is 6.1% and this is set to fall further. If I develop it and hold all three I'll be holding a $3.5M property portfolio on the Northern Beaches (including PPOR) and be CF+ and rent free. Very happy days!

Cheers,
Michael
 
Good on ya Michael, you've dragged the chain on this project for about as long as I have on the boat.

I'll have to check the article out, well done

Dave
 
My god, just when I logged off this site so I would never again have to read the words "Monavale Development" ever again, look what I run in to :mad::(
 
Good for you Michael I don't have the edition yet but will grab it soon.

Just a thought too about how soon you plan on getting started and interest rates, they won't let you fix a construction loan so it would be good to get things moving whilst the variables are doing the right thing as it would be awful to get caught out if they move the other way before you get finished.

How long will the project take once the builders kick off?
 
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MichaelW said:
Can't go too far wrong now with a conservative yield on costs of 6.8%. My current mortgage rate is 6.1% and this is set to fall further. If I develop it and hold all three I'll be holding a $3.5M property portfolio on the Northern Beaches (including PPOR) and be CF+ and rent free. Very happy days!

Cheers,
Michael
Click to expand...

Well done mate...you are such an inspiration.:)
 
You celebrity you :D
CF sounds ideal. But then again it's been a lot of hard work, as with most dvpts and developers I know. Keep it cracking!!
 
THEHEATH said:
My god, just when I logged off this site so I would never again have to read the words "Monavale Development" ever again, look what I run in to :mad::(
Click to expand...

Ha Ha :D

No Way !!

I'm looking forward to pictures and a story as it all unfolds ;)

Read the magazine the other day, congrats Michael, all looks good going fwd
 
Well done Michael. Things start turning rosy now!

Here's a question.. how does one actually get to be in an article in API?

-- MJ.
 
MichaelW said:
If tender prices come down as anticipated in the next few months then we'll be off and running. Who knows, there might even be an interest rate cut or two in the wings as well! :D
Cheers,
Michael
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Michael

You're a star :D
Why do you think prices will come down in this environment?
Are you still going ahead even if they don't come down?

cheers
 
Well done Michael - I read your API story a couple of weeks ago.

Things are looking pretty good for the Northern Beaches.
 
G'Day Bill,

Firstly, thanks to everyone for the positive support. I really do appreciate all the encouragement from this excellent community. You got me started and kept me going. I've gained far more from Somersoft than I could ever hope to repay.

Bill, good questions...

BV said:
Why do you think prices will come down in this environment?
Click to expand...

Not prices per se but costs. By that I mean, construction costs or how much I will need to pay to develop my site. I work in the steel industry and we've seen demand volumes drop by over 50%, i.e. more than halve since about October last year. To date we've been holding the line on price in the face of dramatically falling volumes but eventually one of the competitors will blink and it will be a race to pricing equilibrium. And that's some 20-30% lower than where they are today. I expect a similar situation is transpiring at Boral and all the other suppliers to the building industry. Significantly reduced demand for construction materials equals greater competition from suppliers equals price cuts.

BV said:
Are you still going ahead even if they don't come down?
Click to expand...

You bet. With my variable rate now at 5.1% I'd be comfortably CF+ upon completion even if I subsidise the rent rate to get three tennants in quickly. In time I can then move the rents back to market, but a 5.5% yield on costs would make it comfortably CF+ and be only $690pw rent. I rent the old shack on the site at the moment for $650pw and anticipate the completed high end townhouses would fetch $750pw without too much hassle.

Cheers,
Michael

PS Kissfan was right, was approached after reading posts on this forum by a good guy at API who I've dealt with in the past.
 
Congratulations Michael, I've been following your progress too and it's great to see you kicking some goals!

If you don't mind me asking your int rate is 5.1% you said. Who is that through and is that through business banking or personal?

I've got a site in Melbourne that i'm looking to put 6 apartments on. I own it through a company and westpac business banking have got me on 8.49%! I'm thinking with rates dropping so much surely there's a cheaper alternative!

Cheers mate
Morty
 
Hi Morty,

To date its all been personal loans in my name but guaranteed by the company which buys the asset. I haven't locked down finance for the construction yet as I haven't tendered it, but I've had preliminary confirmation that I should be able to do it in a similar vein and pick up the same rate.

I'm in the WBC pro pack and get 80bp off their standard variable so 5.11% from Monday.

Cheers,
Michael
 
Thanks mate,
I think i need to speak to my banker!!

Do you intend to take your proposal to a number of banks and see who give you the best deal when you build?

Morty
 
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