Landbanking Perth @ 50% Discount

Discussion in 'Caveat Emptor (Buyer Beware)' started by Rixter, 5th Jul, 2013.

  1. Rixter

    Rixter $uper Investor (Retired)

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    For anyone who is interested...

    There is 3 opportunities left in this Landbanking deal at Southbank Estate in Southern River, Perth.

    Prices at 50% discount from the developer.

    We purchased inside our SMSF for $100k.
     
    Last edited: 5th Jul, 2013
  2. Ausprop

    Ausprop Member

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    why would anyone sell at half price? unless they were using your money... in which case you aren't buying a block at half price, you are a developer with all the risk associated
     
  3. starter

    starter Member

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    That appears to be the way it works, from their site the developments have not been approved yet and if it is it's about 3 years away.
     
  4. one world

    one world Banned

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    The price you paid does not seem too demanding. Well done! A rare bargain in Perth's overheated market.

    Do you have to pay more for sewer connections, roadworks etc? Elsewhere, in Beckenham, if I recall correctly, the Water Authority was not keen to bring in the sewer lines, they preferred the developers and owners to pay for that.
     
  5. see_change

    see_change Apprentice Timing Lord

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    Hi rix

    Interesting concept . How is your money being held . is it in a trust or is it funding their developement . If there were problems with the development do you have security over any thing or only the land once the development is completed ?

    Have they changed the number available since you bought?

    I'd probably be more reassured if there was a list of " about us " with bio's of the principles .

    Cliff
     
  6. evan1875

    evan1875 Member

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    part of the land parcel being sold as individual lots is classified currently as wetland of mixed use, therefore subject to environmental protection. there is a chance this can be reclassified. That is what the developer is seeking.
    there is an ODP with WAPC but it is not yet approved for advertising, but it could be close.
    not saying that it cannot be developed, but the only certainty at the moment is that it is a long way away at best.
    there is also a primary mortgage on the land and the security for your investment is an unregistered mortgage on the land parcel which was purchased a few years back for $3.6M. it is likely that the money will be spent in the mean time.

    that is why it is 50%.
    is there a chance you can double your money in X years, yes
    is there a chance you could be chasing your money back in X years, yes

    Ausprop is right.
     
  7. Rixter

    Rixter $uper Investor (Retired)

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    Correct you are landbanking with the developer who is raising capital. In return for your capital risk you are purchasing a lot within the parcel of land at 50% discount of advertised rate based around current CMA values in adjacent estates. The time frame for development is 3-5 years.
     
  8. Kent Cliffe

    Kent Cliffe Momentum Wealth

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    Assuming no debt funding, duties @ $100K, the IRR is around 12.5% - higher if the project is finished earlier than 5 years. A little on the lower side for the the risk associated with land subdivision. Mind you, this investor isn't doing anything for the money.

    If I'm providing funding for someone up to 5 years I would want to do a lot of DD on who's behind it and the previous projects.
     
    Andrew_A likes this.
  9. Andrew_A

    Andrew_A Buyers Agent

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    The reward seems easy to quantify, doubling of your investment within 3-5 years, should be a lot more if leverage is involved. Quantifying the risk would be the question however and having clear exit strategies. Is there some indication the risk is being mispriced at the developers 50% discount?
     
  10. Rixter

    Rixter $uper Investor (Retired)

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    CMA values at the moment are around $220-$230k.
     
  11. redwing

    redwing Progress Not Perfection

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    Do you know who's behind it Kent :rolleyes:
     
  12. jbeena81

    jbeena81 Member

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    good investment

    hi All looking for some more details is it safe investment ?

    and also do u have more details who develop this ...

    is any developer discount deal coming on somewhere in perth...
     
  13. Ausprop

    Ausprop Member

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    safest investment is a govt backed bank account. Development is never "safe" so I think you are barking up the wrong tree if that's what you are after - but have a flutter by all means. fortune favours the brave and all that.
     
  14. jbeena81

    jbeena81 Member

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    good investment

    Safe means can i trust devloper and do investment ...
    i know about risk and all factor if u need money double after 5 yrs.

    I just want to know is anyone already inquire about this developer and its ok to investment...

    Do i hire property solicitor to check property before buy ?
    If yes who is good property solicitor in perth ....
     
  15. jbeena81

    jbeena81 Member

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    good investment

    Safe means can i trust devloper and do investment ...
    i know about risk and all factor if u need money double after 5 yrs.

    I just want to know is anyone already inquire about this developer and its ok to investment...

    Do i hire property solicitor to check property before buy ?
    If yes who is good property solicitor in perth ....




     
  16. see_change

    see_change Apprentice Timing Lord

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    If you want to double your money in five years, buy an ip in sydney.

    IMHO you'll do a lot better than that in the next five years. :) with a lot less risk

    That an alternative . Obviously if you want that block of land , then it's a different matter ..

    Cliff
     
  17. hobo-jo

    hobo-jo Not a bear just a realist

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    I was lookin through some of the previous sales figures for properties with auction results this last weekend in Sydney:

    1/3 ELIZABETH ST, ARTARMON. Sold $495k in '07, $612k today.
    201/222 WYNDHAM ST, ALEXANDRIA. Sold $435k in '09, $520k today.
    7/21 TRAFALGAR ST, BRIGHTON-LE-SANDS. Sold $313k in '02, $455k today.

    These were just the first few I searched (that came up with recorded previous sale), no doubt there are properties in the list that performed better or worse.

    When you say "double your money" are you talking about putting down a 10-20% deposit and doubling that or current prices doubling?
     
  18. jbeena81

    jbeena81 Member

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    My planning to build house on this land after 5 yrs. and planning to move perth so i am looking this property....

    do u think so it worth to buy ?

    ip in sydney ? can you send link for this i have a look ...


     
  19. jbeena81

    jbeena81 Member

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    I just want to know is anyone already inquire about this developer and its ok to investment...

    Do i hire property solicitor to check property before buy ?
    If yes who is good property solicitor in perth ....
     
  20. MRO

    MRO Member

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    From all the questions you are asking you are probably not the right kind of person to be buying into this one. It certainly is high risk.

    At the moment it is a swamp and you are basically providing a loan to an early stage developer who will provide you with a picture of a block of land that you may or may not own sometime in the future.

    I would rather put my money on black or red at the casino roulette table.