It is frustrating finding a (profitable) development site

This is my rant...

It is been really difficult to secure a good development site (a profitable one) for long time now.

I see 3 types of buyers..

1. Average mum and dad wanna be developers targeting dual occ sites
2. your local Small medium builders targeting Multi unit, townhouses sites
3 Overseas developers/investors targeting apartment sites.

option 1.

Those developers are paying way too much, underestimating build cost and soft cost associated with small development. i seen some of them are calculating future capital growth and adding that to acquire sites.

Good luck! if they can make money out of deals..

i stopped looking at dual occ sites. period.


Option2.

Being builders they have advantage on cheaper construction cost. so they are paying a tiny bit of premium to get small project.

still can compete in this market. but it is getting really hard as interest rate keep dropping.

option 3.

Not my cup of tea...

but still had a shot at it last weekend. confirmed by agent that i have the deal.. sent signed contract... to be told after few hours that someone else offered more money then what i offered.


ps. this is based on eastern seaboard states, especially NSW, VIC


what are your experiences securing deve sites in last 6 months?
 
First world problems surely.

But yes, I agree with you kind of. The big easy blocks are hard to get a good deal on, to get something to work in your favour you have to take on something a bit risky or think outside the box.
 
I think the Mum and Dad investors are the toughest competitor. Usually competing for the cheaper sites and not always educated, ie happy to 'enjoy' negative gearing 'benefits' until they choose to develop which means they can buy at prices which allow for no immediate development profit.

If you cant win with one strategy, find another.
 
The problem is the vendor too. They want the profit of building a duplex without actually doing anything. :confused::confused:
 
The problem is the vendor too. They want the profit of building a duplex without actually doing anything. :confused::confused:

Agree! and some credit goes to Real estate agents as well.. they sort of educate vendors. (some i have seen it)

risk of getting a DA .. headache with builders , tax and all not worth tiny profits on dual occ now (unless it is high end $1m plus each)
 
I have thought for a long time that is where the market to make money developing is 1m+

Every vendor and real estate also thinks anything with side access and a bit of a yard has......GRANNY FLAT POTENTIAL STCA hahah
 
plenty in sydney metro area

Sansouci, caringbah, oatly to name few (Sorry dont cross bridge that often)

In Mel

Bentleigh etc.
 
mflying
Any chance of finding blocks that you can just cut up and on sell, rather than build, shorter timeframe?? Are there possibilities with this in areas you have identified.

Also, what margins are you looking at?? What was the last % profit you made on your recent project?

MTR:)
 
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I like to develop properties.....(it is a part time thing now) Reno and splitter block doesn't excite me as much.

I guess it is my expectation of buyprice+purchase cost+build+hold+soft cost+ 30% margin makes it difficult.

If I lower down that expectation of 30% margin to say 20 to 15%..there are lot of properties on market.

Last deve worked out to be 32% margin -whatever ATO wants.
 
mflying
Any chance of finding blocks that you can just cut up and on sell, rather than build, shorter timeframe?? Are there possibilities with this in areas you have identified.

Many councils require that you connect services (drainage/stormwater) and driveway/crossing/fencing before granting the subdivision.
 
Many councils require that you connect services (drainage/stormwater) and driveway/crossing/fencing before granting the subdivision.

OK, it cost me around $46,000 to cut up a block to make 2 blocks, this included all government charges, demolishing house, this was in Perth.

At the end of the day comes down to the deal and whether using this strategy would make money after all costs are considered.
 
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