Inherited potential commercial development?

[hnl]

Hello SS'ers

I am new to the forum and love how much knowledge and wealth there is in here. I have learned alot which has boosted my confidence in furthering my property portfolio.

I have inherited a 1500m2 block of land a city in Indonesia. The block of land is in prime city location with the land being on a street with cafes restaurants banks hotels that are 6 storeys high. My neighbor is a Honda Dealership 5 storeys and on the same street 50meters away a 14 level Ibis Hotel is developing.

I am seeking advice on how to fund such a development if I were to looking into highrise apartment, mixed use, condotel.

Thank you all

 

[sanj]

It sounds like you might not have developed before, imo your 2 options are to sell the property or hold on to it.

Trying to develop a highrise in Indonesia while living in Australia and having not done in before is a good way to lose your inherited block.

 

[knightm]

now that is a steep learning curve! Don't let me be the one to say impossible, its not. Personally I would need access to some very trustworthy individuals with direct experience in developing/building in that city to even consider doing the work though.

Selling the land is a way to realise the profit with minimal risk, though your profit will be smaller.

 

[Macca]

I have never done business in Indonesia but I have seen numerous horror stories in the media. I have read some shockers while doing research on stocks so I would be very careful.

There seems to be a big problem with outsiders doing business in Indonesia and the outsider is very badly treated until they have no money left then discarded and the next outsider invited in.

Even a joint venture is likely to see all the profit stay in Indonesia, only in the event of failure would you be involved

I might add that for any newbie investor, anywhere, trying to do their first development is generally a steep learning curve and rarely profitable.

 

[mumbai]

Hello SS'ers

I am new to the forum and love how much knowledge and wealth there is in here. I have learned alot which has boosted my confidence in furthering my property portfolio.

I have inherited a 1500m2 block of land a city in Indonesia. The block of land is in prime city location with the land being on a street with cafes restaurants banks hotels that are 6 storeys high. My neighbor is a Honda Dealership 5 storeys and on the same street 50meters away a 14 level Ibis Hotel is developing.

I am seeking advice on how to fund such a development if I were to looking into highrise apartment, mixed use, condotel.

Thank you all

Can you not get commercial loan from Indonesia, assuming that you are eligible? Partner up with a local, get a loan from there itself and do the development.
If that is not a possibility then as advised by others, sell the land.

 

[superAndrew]

I have never done business in Indonesia but I have seen numerous horror stories in the media. I have read some shockers while doing research on stocks so I would be very careful.

There seems to be a big problem with outsiders doing business in Indonesia and the outsider is very badly treated until they have no money left then discarded and the next outsider invited in.

Even a joint venture is likely to see all the profit stay in Indonesia, only in the event of failure would you be involved

I might add that for any newbie investor, anywhere, trying to do their first development is generally a steep learning curve and rarely profitable.

Agree with Macca.

 

[Terry_w]

Sell it and run...

 

[EN710]

Sell it and run...

+1

I'm assuming you're an Indonesian citizen as usually expats can't own any property there?
Unless you know the market and how their society work and know people who can help you with the dev, sell and run

 

[hnl]

Thanks for the info! Yes I am a citizen there holding a PR Residency here in Australia.

I have a look into this company to partner up
http://www.wikarealty.com/

the other options is to sell up! I know the easier option is to sell up but I just see alot of potential in maximising the land. Doesnt hurt to hold the land, I guess.

Thanks for the posts guys =)

 

[Paul@PFI]

Of course Australia considers any income / profits to be taxed HERE. If the land is worth more than $50K AUD you better declare it correctly in your tax return Ther is a question "Do you own assets of $50k or more outside of Australia". Failure to disclose can trigger suspiscion of evasion. declaring it poses no tax issue in itself. Keep proof of the inheritance.....You wouldnt the first asked to explain a transfer of money.

 

[wobblysquare]

Get it valued

1) Get it valued as is
2) Figure out local zoning laws, and what you could build on it
3) Figure out what it would cost to build said property on it
4) Ask the valuer (or a financier) what the end value would be

Q. Would the figure in line 1 be enough for you to invest at 7% return and live off? Or would it be enough?

I am with Terry_W. Sell and run....If you have gone through the other steps you now know how much you would be potentially passing up.

Reality is though you would most likely go into a lot of debt, lose your inheritance etc if you tried to develop a multi-storey building, from afar, with no local knowledge or experience.

By knowing the difference between 4 and (1 + 3) above you might be able to figure out how much "potential profit" you would need to share. 50% of something is better than 100% of nothing !!

Not sure how you could share this with a multi-national hotel chain, as most big players you approached to JV with would all most likely prefer to buy the land from you.

Who would lend to you? What is the demand for what you might build? If you could build it who would buy it? Or rent it?Can you really build a multi-storey (i.e. multi-million) dollar building and keep it?

Value it, explore options, then be happy with a fair priced sale for value as is.