Developing ourselves instead of developers.

Morning all, just after a few opinions on our current situation.

We own a 1012sqm block in Quakers Hill (Near Blacktown in Sydneys West). It is near the station and is quite a built up area now. Our neighbour has got us and 3 off our neighbours together and started talking to developers to sell all 4 blocks together.

So far they have offered $810,000 per block which is a very good price (considering we paid $390,000 only 5 years ago). My question is how hard do you think it would be to do the development our selves? Considering construction costs would be in the 4 to 5 million dollar range.

Do you think it would be beneficial to spend the money on getting the DA and then trying to get finance for someone to build? It would be somewhere in the range of 24 - 30 units/town houses.

One of the neighbours have no money and make very little, but they own the land outright. Another neighbour makes good money and owns the land outright. We owe $300,000 and are both on high income. The 4th neighbour still owes about $250,000 and has ok income.

Pocket the easy money or take the hard route and try and make more? All opinions welcome.

Thanks, Daniel
 
Morning all, just after a few opinions on our current situation.

We own a 1012sqm block in Quakers Hill (Near Blacktown in Sydneys West). It is near the station and is quite a built up area now. Our neighbour has got us and 3 off our neighbours together and started talking to developers to sell all 4 blocks together.

So far they have offered $810,000 per block which is a very good price (considering we paid $390,000 only 5 years ago). My question is how hard do you think it would be to do the development our selves? Considering construction costs would be in the 4 to 5 million dollar range.

Do you think it would be beneficial to spend the money on getting the DA and then trying to get finance for someone to build? It would be somewhere in the range of 24 - 30 units/town houses.

One of the neighbours have no money and make very little, but they own the land outright. Another neighbour makes good money and owns the land outright. We owe $300,000 and are both on high income. The 4th neighbour still owes about $250,000 and has ok income.

Pocket the easy money or take the hard route and try and make more? All opinions welcome.

Thanks, Daniel

Thats a pretty good return taking the money the developer is offering, thats 420k gross in just 5 years for a 390k investment.

Consider all the things that could go wrong going down the path of developing yourself.
-No experience
-Joint venture with 3 others that have no experience
-Financing the project, even though some of you are on good incomes 25-30 townhouses is going to require a lot of capital.
-Unforseen expenses during development
-The Mental stress of taking on such a large project without experience

Thats just to name a few.

If you are interested in developing why not sell your block to the developers and take on a project of a smaller scale, where you don't have to go joint venture and there is less risk?

cheers
 
There are so many complications and so many options in a set up like that!
Development of that magnitude is not for the faint hearted.

If you developed it would be a VERY complicated set up, IMO, looking at the financial situation of the individuals involved, who would be servicing the loans, those that can, how to set that up fairly given those shouldering the risk etc lawyers and issues working all that out.

Are there buildings that can be demolished, if there are:

If two of the blocks are beside each other and belong to parties that can get finance and have capability of servicing commercial loans you could look at a smaller dev. And get Demo for the other 2 (if demo involved) which will increase the value of the land for resale. For eg. I bought a block in brissy, for $705 in DCP area, got DEmo app. and agent who sold it to me wants to buy it back for a client for 1.1m ...it cost 30k to get DEmo but that involved, lawyers for appeal etc. 2 of the parties might be happy to end it there OR

If there are no buildings to demo. And $810 is a. Fair price, you could join together, sell 2 develop other 2 and split appropriately between all 4 as funds from sale of 2 get injected into development of other 2. This would make the project more manageable, and all 4 parties are invested and everyone benefits.

Or you could develop all 4 blocks using a really great team of people if you haven't developed before. It always comes back to finance though! It sounds complicated, challenging and exciting!

Just to add, this is all just my own opinion and I am very new to this game so no doubt you get some very experienced opinions from others on here... ;)
 
Are you even capable of financing such a huge venture? In addition to the obvious building costs, there are:
Holding costs
Council contributions
Land taxes etc etc

Not to mention that you are doing it with 3 other parties who you aren't really related to in any way.
 
Do it! Developing is very easy. :p

Take the money and run. If you want to develop tackle something smaller and do it on your own. You said you're on a high income which will make borrowing a non issue too.

Oscar
 
How much is your block worth without the group deal?

If it's not that much less you could consider developing your own block and putting 5 or so townhouses on it.

I would really advise against taking on a massive complex with neighbours.
 
For eg. I bought a block in brissy, for $705 in DCP area, got DEmo app. and agent who sold it to me wants to buy it back for a client for 1.1m ...it cost 30k to get DEmo but that involved, lawyers for appeal etc. 2 of the parties might be happy to end it there OR

Hi Mitch. I'm keen to know how you got through a demo in a DCP area. We have been told one (or both) of our houses could probably be taken off the block by the "right" developer. I know one house in our DCP street and one in the DCP street of the IPs have been removed. I know it is possible, but how hard was it?

What was the reason it was allowed? The town planner we initially saw told us that if a house has been substantially altered and "lost" its character, approval could be sought and it had a fair chance of being approved to be removed.
 
Take the cash and run! A large apartment complex is not for the faint hearted/first time developer. Use the money to buy a smaller dev site,build some townhouses/villas, get used to the process.Do this a few more times, reinvest the profits then start serious stuff like apartment blocks or industrial units
 
I had the feeling taking the money would be the popular response.

The other thing is we have approval for a battle-axe sub-division and the combined value is pretty much equal to what they are offering at the moment.
 
The subdivision is of no value to a developer - they're not going to use it.

For those who buy your vacant battle axe block - they aren't going to pay the same amount as street frontage, so how do you determine the value of your block?

Take the money and run.
 
Accept less for your block but negotiate one of the units as a trade.
The developer depending on how you arrange might classify
as a pre-sale. The developers end product will of course determine both yours and their feasibility.
Otherwise take the cash while all involved share the same vision..
 
If you have the means, I suggest develop.

Equity gain is exponential and if you sell your property, you will lose your existing equity and all of the potential equity it could have ever grown into. Each to their own but the people who are saying to take the easy ones out are the people who will be still working and talking at parties about their little bit of fortune while your churning out duckets and forgetting how to empathise with people who still work.

Depending on how much money you can access, you could develop your own block, two of the blocks, three of the blocks or all four. Or you could by as many as you like and start with a small development - saving the others to undertake afterwards. Take an hour, if it takes you that long, and run the numbers on equity and cashflow for the next 30 years and see where each option will land you. For me, developing is by far the best option every time.

If a person can develop, and developers do exist, well you're a person just like them. Why can't you do it too?

So much monies.


Jeremy
 
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