A bit lost and overwhelmed - could use some advice please

[L and P]

My partner and I are looking at buying a commercial zoned block of land. It seems after doing all my research and knowing the area, to be a good buy. ( Marriage breakup apparently)

Our confusion starts with what order we should be doing things. Could someone please be kind enough to offer an opinion.
Basically we want to build a storage type / warehouse structure to lease out.

These are the things we need

* Sign contract subject to .... (waiting for solicitor to call me back in the morning)

* soil test the block. It is an area that only has septic systems so obviously we need to check how many bathrooms is possible to go on the block to know how many "sheds" we can have. ( allowing for 1 toilet and sink per shed)

* Plans for what we would like to build according to soil test. If the soil test comes back saying we could only have for example 1 bathroom then it's not worth it.

* do we get someone to do some plans to see what configuration we could fit on the block ?

What else should we be thinking of ?

I am so confused

Thanks in advance for your help

 

[Ausprop]

well first question is, how will you pay for the block and building? if financed, have you talked to the bank?

 

[Perp]

Word of mouth is always the way to answer questions like these, IMHO. Start somewhere - even the agent, if you can't think of anywhere else to start - and follow the leads they give you. I find this method unearths some real gems - and often quite quickly.

I'd start with a surveyor who's experienced in warehousing. He or she will have contacts who can advise you on all these things, which may be a combination of building designer/architect, town planner, another investor who's willing to give advice, etc.

 

[L and P]

Thankyou both so much for answering.

It isn't a big development by any means.
We can and most probably will pay cash for the land. ( From LOC) The bank will only lend 50% anyway so that makes it a very small loan. We are talking less than $100 000 total for the land only. We wouldn't build till next year and would again use LOC / cash.

The idea in our mind was to start early next year with the plans to council and building BUT if what we envisage won't work on this block then I would rather just move on and keep an eye out for some other real estate.

We actually were with the agent looking at residential when he just happened to mention while driving past this block if we had ever thought of commercial because they had this land for sale. He then went on to say what they desperately needed in the town which could be built on the block. The more we thought about it and looked around the more sense it made. He hasn't pushed the block by any means. I mean he will get less commission selling it than he would have from the house we were looking at.

I spoke to the council yesterday afternoon and they were quite helpful. Most of the info is on the net at the council website. It is just wading through all the mumbo jumbo !

So with a clear head this morning I am thinking when we arrange the soil testing we will tell them what we want to achieve and test accordingly. Do councils ever recommend surveyers ?

I also think that maybe at least a 45 day, as opposed to 30 day contract, might be the way to go - if the seller is in agreeance.

Thanks again

 

[Dazz]

Developing industrial warehouses or storage units from scratch seems like a hell of a leap, especially given you were initially looking with the REA to buy an established residential property.

If you are correct, and the land is zoned commercial, I would be highly surprised if the Council allowed you to build a warehouse. If it's a "warehousey" type area, then I suspect the land is not zoned commercial.

If I could use an analogy here, the operation you are conceiving here is similar to landing a man on the moon in July 1969 in terms of the complexity - especially in these current lending conditions.....LOC or no LOC. By your questions however, you seem to be about half way through Kennedy's speech back in 1963.

Not saying it can't be done - because it can - but you have a hell of a road in front of you.

Can I ask - why didn't you pursue your intention of purchasing the established house with the agent ??

 

[L and P]

Can I ask - why didn't you pursue your intention of purchasing the established house with the agent ??

Ahh because we got carried away in the moment and it was potentially much more affordable and with a greater gain.

It won't be a big complex. A building that will give 2 areas of approx 12m x 14m. I have spoken to the council and it is possible to build this type of structure on this block. It is the type of thing that is needed in the area and I believe ( have to do a bit more research yet) that it would be rented very quickly.

Over the past 10 years or so my husband and I have been presented with some good opportunitys. Problem is we have always been scared to take the leap forward and take a risk. Those opportunitys have always gone on to line other peoples pockets.
I guess this time we thought what the hell, lets take the risk. If the worst comes to the worst we will just resell the land down the track. The figures all seem to be adding up so far though.

Thankyou so much for the advice so far I really do appreciate it.

 

[Dazz]

The figures all seem to be adding up so far though.

That sounds good then. I have never developed anything, let alone a new warehouse without tenants signed up. I don't think many people on here have developed warehouses......you'd be trail-blazing a bit on here, and hence your project would be a good learning opportunity for all concerned.

Seeing as this is a real estate forum, and the game played involves numbers, I for one would be interested in your prelim. study numbers.

 

[Aaron Sice]

you'll need to organise a draftsman who specialises in commercial.

you MAY have to lodge a DA depending on TPS etc.

off those plans you'll need to organise working drawings and an engineer and have the plans chaged to reflect their requirements.

lodge both to the local council for a building license.

tender the job.

then get construction out of the way.

i see 12-18 months process here.

 

[L and P]

Just a quick reply till later ( I am supposed to be cleaning )

The block is $60 000. The block beside sold for $170 000 12 months ago. Same size etc etc.
It is apparently a marriage breakdown and just needs to be gone. It has been dropping in price for months. "I" think we just happened to be in the right place at the right time.

Costs-
Council fees
Surveyer
Shed materials
Builder costs
Rates, solicitor insurance.

As I said we have never considered anything like this before so maybe I am looking at it too simplistically.

 

[Ridin-High]

lets look honestly

60k is nothing really in terms of realestate.... go for it mate, i for one would watch with interest and cheer you on.

Kind Regs,

RH

 

[wylie]

I second that. I would buy it and think about it later..... but then I always am a bit of a risk taker. But if the price for the next door block is kosher, and wasn't inflated, and assuming they are of equal value, I would just "do it".

Don't take this as advice. I once took the dog for a walk and brought home a house .

 

[Nathan]

Think of LVR's for comm, diff then the 95% on resi.

If it 60k and next door is 170k then good buy.

However also need to consider the need to resell the property and what the market is.

 

[Aaron Sice]

even if you allowed for a "40% steven keen price correction" off 170k, that's still only $102K, and you're getting a further 40% steven keen price reduction" down to 60k.

why are you sitting at your computer? GOGOGOGOGOGO!!!!!

 

[silversands]

If the one next door was genuinely 3x the price, are you sure that your bargain is not sitting on toxic waste or something?!!!
Please forgive the skeptic in me, it's just that it sounds to good to be true! (and you know what they say about deals that sound to good to be true)
If DD all stacks up, go for it, before someone on here beats you to it!

 

[weg]

If the one next door was genuinely 3x the price, are you sure that your bargain is not sitting on toxic waste or something?!!!
Please forgive the skeptic in me, it's just that it sounds to good to be true! (and you know what they say about deals that sound to good to be true)
If DD all stacks up, go for it, before someone on here beats you to it!

You can ring the council and find out if there's one of those contamination order thingy's (can't remember what they're called) on the property.

Try to also

#1 find out what it was previously used for (shouldn't be too hard and would give you an idea about contaminants)

#2 check out the rest of the area carefully to see if there are any/many unoccupied buildings/sites around

#3 go to as many neigbouring properties and ask a lot of questions about the area and specifically about your block (it's amazing how much people will tell you).

All up this takes very little time and gives you a clearer picture of what you may be buying.

 

[Perp]

#3 go to as many neigbouring properties and ask a lot of questions about the area and specifically about your block (it's amazing how much people will tell you).

I think this is a top tip and I think I've done this for all my PPOR purchases, and most IP purchases. And yes, you find out all sorts of things - the real reason for the sale, the dodgy repairs that were done, what the tenants are like, how long it's been on the market for, etc. You will be amazed what you'll find out if you just ask.

 

[L and P]

Well we went on a day trip today and spoke to quite a few people, not just real estates We also walked the streets around and had a good look.

I have also found so much information on the internet it's not funny. I am amazed at what you can access if you just know where.

After todays trip we are much more excited and are definetly going to do it !!

How exciting.

We will buy the land and then start building planning towards the end of this year.

 

[Aaron Sice]

i thought contaminants meant nothing to an industrial site....?

 

[L and P]

Just thought I'd update. Can't find a way to change the thread title though, sorry.

Well we didn't go ahead. Very disapointing but I did quite a bit more research and found that it would be next to impossible to do what we had planned - thanks to the council

 

[james_w]

i thought contaminants meant nothing to an industrial site....?

does to lenders tried buying a servo awhile ago and banks arent to keen becuase of contamanation even with a 20yr lease to caltex all up.