Property Development
Profit from property by Philip Thomas
Thank you imbi3 for the praise Re
Profit from Property!!!
It's been some time since ive sent any posts as i've been so busy in the Sydney property market over the past few years. Entry level has been hot & it now appears to be spilling over into other parts of the market.
With low interest rates, stable inflation, stable employment, low vacancy rates the Australian residential property sector is looking the best it has in many years.
The key as we move forward will be finding properties in the right location at the right price.
Have seen some sites go for ridiculous prices lately, picked up by overseas buyers who have no requirement to turn a Profit on a development. They pay top dollar because they: 1) either don't sell them on completion (live in the units), 2) if they do sell, they sell them back overseas or 3) they have not done a full feasibility. probably a combination of 2 & 3 most of the time.
As always beware of property spruikers as they are out in force selling smoke & mirrors:
www.abc.net.au/news/2013-09-23/warnings-that-property-spruikers-returning-to-the-market/4974442
If you do your research, there should be no issues here & no need to deal with the spruikers.
Have also had issues with pest & building inspections. This is due the the unregulated nature of Private Building Inspectors. Any one can call them selves a building inspector, use a template & create a report. The last report i saw contained 2% fact & 98% fiction / opinion. There are some excellent qualified structural engineers out there that will do Structural Investigation on property purchases containing the facts.
The other item we have faced over the past few years has to do with builder selection for projects. Will the builder you select to do your development still be there at the end of the project??? Will they be there in 12 months time to address the defects??? How about in a few years from now??? Changing builders part way through a project because they have gone under is a difficult proposition.
Finally when doing a project, some of the building contractors want you to pay deposits. If you have a bank funded development, the bank will usually only pay for "work complete on site at a point in time". if you pay $90k deposit for a lift or windows or any other item & the supplier goes bust before anything is delivered to site, then you'll loose your deposit. And suppliers do go bust. If you pay deposits, ask for a bank guarantee for the amount you have paid. it may cost you an extra 5%, but thats a whole lot better than loosing your $90k deposit. You can often also do a deal with building contractor before you sign the contract to provide security for any deposits paid.
