WinstonWolf...
Are you sure you're not my father in law!!
Cheers
Boods
Probably as wrinkly as your FIL Boods...
The best time to do your DD and explore all the options is now, not later. The diff between success and failure is often having the humbleness to accept you're new to the game.
Some further bases to cover and occasion for humility.
Ask the vendor why they want to sell.
Find out his timeline, how old he is, whether he has kids having kids, what they do for a living, whether he or his wife is sick, etc etc...the more you find out, the more you can get creative with a win/win deal.
Of course, you need to go straight to him. Don't do this through an agent. And there's no rule saying you can't talk to him directly. It is your money and risk after all, not the REA's.
Depending on his circumstances, see if he is open to being an equity partner. If he is, don't skimp on your lawyer when doing the contract.
If after doing your dd, you can't minimize the risk, tell the vendor you're passing on it until you can reduce risk. Let him hold it. If you can't make the numbers work, it is likely more experienced guys would leave it alone as well. And that's another advantage of talking to the other developers and builders in the area. If you get inside their heads, you'll know whether their likely to sniff out the site after you pause.
Make sure you let the vendor know you would still be interested if his circumstances change. If he is playing it cool, but gets cold feet on another interest rate announcement from the RBA or similar, you want to be the first guy he calls.
Apart from that, I'd suggest you get out there and start looking for other sites within the same LGA. Will help you stop obsessing about this one, and expose you to some fresh ideas.
A good idea to get to know the town planners n the one LGA and suck their brains dry. If you become specialists in that area, you'll be able to repeat and scale off what you are learning.
Depending on your location, keep in mind that people over 55 tend to steer away from multilevel townhouses (stairs, underground garages). Lots of them have dickie knees and hips...
Though if you are a first in the burb with minimal maintenance dwellings, could be a nice selling point.
Pays to remember that developing at this level requires a professional and disciplined mindset. Better to realize you are building a skill set and systems to reproduce multiple projects. The deals should get easier as you get older. If you cover all the permutations and talk to as many people as possible now, you'll be setting yourself up to be a better developer on your subsequent projects.
Some things to mull over:
- I presume you are building for owner occupiers. Remember you have to WOW the wife....do that and she'll sell to the husband...
- never accept the zoning and regs the town planner gives you. Use an architect or builder who knows the TPs and can sell them on relaxing the code for a bit of eco or otherwise innovative design.....
- get inside the code yourself....study it...find out about where they're likely to relax it, where they might change it in the future, what politics the council have....a lot of these guys have a green bias at the moment....something you can exploit in seeking code relaxation. i.e. discrete solar roof top panels and water tanks under the driveways for extra internal m2's. maybe you can haggle another level, and do single level apartments with a central lift well..better for the oldies and noise abatement and internal light, and gives more green space around the perimeter.
- don't overengineer....negotiate something with the TPs that's novel and catches the imagination of the market...
Finally, re the macroeconomic outlook. my 2 cents worth (and that's all it's worth) I expect another rate rise or two. But not more than 3 all up in the next 3 years. I think they'll bring rates down in 2-3 years. Rationale? foreign credit will continue to tighten. Local banks will be doin the work for the RBA anyways. House approvals are dropping. Domestic economy is slowing in rate of growth. Previous rate rises are starting to feed inflation now....
Perth pros and cons: continued migration from UKers wanting to escape half the Asian sub continent moving over there. and Pom BBs and Gen Xs wanting the good life in the sunshine. OTOH, a flattenng of growth in mining sector.
So the way I read it, a bit of a plateau in growth due to everyone freaking about cost of credit, then demand gradually climbing again within 18-24 mths.....but keepyoureyesopen for how much new stock others are bringing onto the market. If anyone starts discounting heavily, that's bad....
