Being a Developer
- Thread starter JoannaK
- Start date
fist time ive seen this post MOST interesting!
Hi Guys,
thanks for the interest.
Project is completed, only this week! Just cleaning it all up now and doing defects.
So, we're 3 months behind schedule!!
We've gone over budget, by a considerable amount. But on the upside we just had a valuation done on the whole building and the valuation came out much much higher than we anticipated, so we're very happy about that and have generated considerable equity in the project (much more than anticipated), some of which will be realised as profit as we sell down.
We've leased out 2 of the 5 ground floor retail tenancies, and we've leased out the whole of the office space to a bank on incredibly good terms. That lease alone caused the valuation of that space to increase by $1m.
Marketing just started for the resi part of the development and the official opening date has been set at 17th August for a private opening, and 18 August for the public. The building is still being kept under wraps until that time.
thanks for the interest.
Project is completed, only this week! Just cleaning it all up now and doing defects.
So, we're 3 months behind schedule!!
We've gone over budget, by a considerable amount. But on the upside we just had a valuation done on the whole building and the valuation came out much much higher than we anticipated, so we're very happy about that and have generated considerable equity in the project (much more than anticipated), some of which will be realised as profit as we sell down.
We've leased out 2 of the 5 ground floor retail tenancies, and we've leased out the whole of the office space to a bank on incredibly good terms. That lease alone caused the valuation of that space to increase by $1m.
Marketing just started for the resi part of the development and the official opening date has been set at 17th August for a private opening, and 18 August for the public. The building is still being kept under wraps until that time.
Well done Joanna!
As always, you're an inspiration. I've written the 18th August in to my diary so I can come and check it out in person.
That's a fantastic outcome, and you deserve all the rewards it brings based on your extremely hard work in getting it across the line.
Cheers,
Michael.
As always, you're an inspiration. I've written the 18th August in to my diary so I can come and check it out in person.
That's a fantastic outcome, and you deserve all the rewards it brings based on your extremely hard work in getting it across the line.
Cheers,
Michael.
Hi CashflowPlus,
originally our financier required us to presell 30% of the development, but once the DA was finally approved and we were ready to commence marketing the market had dived, so we renegotiated with our financiers and avoided having to presell anything.
In this regard it has worked out very well for us. The whole project was controversial at the start, so we've been very diligent in not doing any marketing or exposing the building to anyone during the whole construction period. So now people are walking past and very very curious about what is behind the fencing. People in town are talking, and approaching agents who are not even associated with the building, asking questions....so from a marketing point of view it has been quite beneficial to us to have not had any media exposure till now.
originally our financier required us to presell 30% of the development, but once the DA was finally approved and we were ready to commence marketing the market had dived, so we renegotiated with our financiers and avoided having to presell anything.
In this regard it has worked out very well for us. The whole project was controversial at the start, so we've been very diligent in not doing any marketing or exposing the building to anyone during the whole construction period. So now people are walking past and very very curious about what is behind the fencing. People in town are talking, and approaching agents who are not even associated with the building, asking questions....so from a marketing point of view it has been quite beneficial to us to have not had any media exposure till now.
Probably worked to your favour not selling OTP. Now you can get a higher selling price. Just one last question. In hind sight it would appear that the "anti-development brigade" were the most hindrance to your project - adding substantial time and extra costs to the project. What did you learn/what advice could you give to help mitigate such events from happening?
hi guys,
relieved? yes
proud? not yet
tired? very!
What have I learned dealing with the anti-development brigade? Not too much to be totally honest, except that councillors just care about their re-election prospects. We were just dealing with human nature.
No-one at all anticipated the uprising that occurred.
You see, the problem is if you talk to people before you start doing anything, you're giving them the opportunity to tell you how THEY want things, which may not necessarily align with your objectives, and then there is an obligation to keep the communication ongoing, and on top of that you'll give them more time to get themselves organised if they want to object.
If you don't talk to them, then they'll get their backs up and who knows what they will do, or why they'll do it.
It is a bit of a catch 22.
I guess the most important thing is to ascertain at the outset the potential reasons why someone may object...and this includes researching the position of the current occupants of the properties you're purchasing.
We knew they were all on expired leases when we agreed to purchase the properties. What we didn't know at the time was the rentals they were paying.
When they started their little bruhaha they masked it behind a heritage argument. This stunned us as we knew the properties held no heritage significance.
Then when we dug a little deeper (and sent spies into their Save East Crown Street Collective meetings) we discovered that they were all paying very little rents on very easy terms with the landlords, and that was the reason they were really objecting.
And to top it off, they didn't want to engage in discussion with us at all, so that was difficult for us to manage. Unfortunately, because they came from left field we were being re-active rather than pro-active.
So, I guess to overcome what we did, you need to study the art of human nature, and take preventative measures at the outset, whatever that may mean.
relieved? yes
proud? not yet
tired? very!
What have I learned dealing with the anti-development brigade? Not too much to be totally honest, except that councillors just care about their re-election prospects. We were just dealing with human nature.
No-one at all anticipated the uprising that occurred.
You see, the problem is if you talk to people before you start doing anything, you're giving them the opportunity to tell you how THEY want things, which may not necessarily align with your objectives, and then there is an obligation to keep the communication ongoing, and on top of that you'll give them more time to get themselves organised if they want to object.
If you don't talk to them, then they'll get their backs up and who knows what they will do, or why they'll do it.
It is a bit of a catch 22.
I guess the most important thing is to ascertain at the outset the potential reasons why someone may object...and this includes researching the position of the current occupants of the properties you're purchasing.
We knew they were all on expired leases when we agreed to purchase the properties. What we didn't know at the time was the rentals they were paying.
When they started their little bruhaha they masked it behind a heritage argument. This stunned us as we knew the properties held no heritage significance.
Then when we dug a little deeper (and sent spies into their Save East Crown Street Collective meetings) we discovered that they were all paying very little rents on very easy terms with the landlords, and that was the reason they were really objecting.
And to top it off, they didn't want to engage in discussion with us at all, so that was difficult for us to manage. Unfortunately, because they came from left field we were being re-active rather than pro-active.
So, I guess to overcome what we did, you need to study the art of human nature, and take preventative measures at the outset, whatever that may mean.
Great stuff Joanna.
That should keep you nicely as you move forward.
Looking back, how does natural CG compared with the manufactured equity ?? It seems you have more control over the developing than sitting back and letting it just do its thing.
Once again, great stuff - you should be proud and relieved by the sounds of it.
In terms of the brouhaha, I don't think you could have done anything differently. When you confront people who want the status quo to remain so they can enjoy super low rents and easy terms....then there is going to be a clash. I don't think there is a middle ground.
That should keep you nicely as you move forward.
Looking back, how does natural CG compared with the manufactured equity ?? It seems you have more control over the developing than sitting back and letting it just do its thing.
Once again, great stuff - you should be proud and relieved by the sounds of it.
In terms of the brouhaha, I don't think you could have done anything differently. When you confront people who want the status quo to remain so they can enjoy super low rents and easy terms....then there is going to be a clash. I don't think there is a middle ground.
That's an interesting question...and I don't know that I can answer it with any degree of certainty.
It would appear to me that with regard to this particular project the manufactured equity far exceeds any cyclical equity generated, but funnily enough, the cyclical nature of the market has contributed, but I doubt to the same extent as the manufactured equity.
Before we started we obtained a valuation on the end value of the project. It was so low that it totally floored us. Mind you, the valuer had every bit of information about finishes and fixtures etc.
About 6 months ago the market started really firing up again.
Three months ago we went to our marketing agents to set prices for the finished products. Their prices were so high it was crazy, and we had to cut them back no matter how confident the agents were in obtaining the prices they'd recommended. That, to me, reflects part manufactured and part cyclical equity.
About a month ago, we got another valuation done on the completed building and it was lower than the agents original pricing and more inline with my expectations of reasonable selling prices. To me, this reflects the manufactured equity.
I would love to elaborate further but my accountant would kill me if I posted actual numbers on the forum.
"Before we started we obtained a valuation on the end value of the project."
This is a consistent problem for me. the valuers have nothing to lose by being ultra conservative and when you rule out any sales over 6 motnhs old and take the worst case example since then as your sales evidence it can really muck your numbers around. I did a small resi dev recently with a major bank and by the time they had trimmed back their contribution and punsihed me for the valuers lunacy I may as well have stuck the borrowings on my amex.
This is a consistent problem for me. the valuers have nothing to lose by being ultra conservative and when you rule out any sales over 6 motnhs old and take the worst case example since then as your sales evidence it can really muck your numbers around. I did a small resi dev recently with a major bank and by the time they had trimmed back their contribution and punsihed me for the valuers lunacy I may as well have stuck the borrowings on my amex.
