My "Armchair Development" Experience

[MTR]

Hi MTR,

If you see the figures above (from the EOS website), you'll see that each investor had to invest an initial deposit of $100K+.



Yes, I agree, however a valuation and rental appraisal is somewhat arbitrary at this stage, as we're in this till the end anyway.

We are hoping that both the value and rental return hasn't softened from the original figures quoted by EOS using the commercial valuations we received (from Hegney's, iirc) before we threw our hats in the ring (some 2.5+ years ago by the time we put a tenant in there!).

EOS has been saying all along that we shouldn't worry about the delays to the project, because we are still effectively enjoying any growth in the market, as we had a fixed purhase price from the start.

I believe this is somewhat eroded now though, as that fixed price as gone up by around 5% for each investor!

I wonder if the cost and associated dramas with the organisation of furniture (as I'm in another State) to make it a furnished unit, would be worth it in terms of an increase in rental returns?

Anyway, thanks for your tips!

Cheers,
Crido

Crido
Call me a control freak, family does but I just like to keep tabs on values at any given time especially if I have $ invested
Mtr

 

[Crido]

Not a problem, let me know if ever needed.

Re furniture - at the moment it isn't wise to furnish apartments imo as there is a surplus of them, especially in east perth and rents have really dropped for them.

In some cases furnished apartments with nice furniture (say 20-25k worth) are renting for the same price as unfurnished.

I've seen 2 particular apartment go from asking 1500 a week in December 2013, getting 1200 a week and now being renewed recently at 950 a Week. Th3 executive market is dead

Hi sanj, MTR and all following,

In terms of rental returns on my one bedder in this development, how do I go about establishing what a realistic figure will be? I've looked through the RE websites at similar properties, but it's so hard to ensure I'm comparing apples with apples, as there will never be anything that is EXACTLY the same!

Do RE agents / property managers mind if someone in my shoes calls and enquires about what a realistic return would be? Or will that just annoy them?

Are there other strategies to estimate returns that you could suggest please?

Furthermore, I remember reading about some good property managers in the inner-Perth area (maybe on this forum), but can't remember who they were. I will search the forum database, but can anyone suggest a property manager for me on this post? A manager that is primarily focused on rentals and who goes above and beyond?

Cheers,
Crido

 

[MTR]

I would expect if you try this group they should be able to give you a fairly accurate idea/range on what you can expect to achieve, I know they also did fully furnished rentals to executives, not sure if they still do??

Of course you will need to provide location, size of apartments, specifications/extras etc.

http://www.equinoxrealty.com.au/

MTR

 

[Crido]

I would expect if you try this group they should be able to give you a fairly accurate idea/range on what you can expect to achieve, I know they also did fully furnished rentals to executives, not sure if they still do??

Of course you will need to provide location, size of apartments, specifications/extras etc.

http://www.equinoxrealty.com.au/

MTR

Thanks MTR.

I got on to the mob you suggested and they were very professional and obliging, but didn't give me any figures - telling me to get back to them when the project is completed so they could see the finished product before giving valuations and/or rental estimates.

Unfortunately, that doesn't help me much at the moment.

Not much to report on ... building is plodding-along. Based on the history of the project so far, we're anticipating further delays (and costs!)!

Crido

 

[MTR]

Thanks MTR.

I got on to the mob you suggested and they were very professional and obliging, but didn't give me any figures - telling me to get back to them when the project is completed so they could see the finished product before giving valuations and/or rental estimates.

Unfortunately, that doesn't help me much at the moment.

Not much to report on ... building is plodding-along. Based on the history of the project so far, we're anticipating further delays (and costs!)!

Crido

Sorry to hear this, frustrating I am sure

 

[wrexy]

Hopefully some better news from an online news article on apartment trends and future predictions.

https://au.news.yahoo.com/thewest/business/wa/a/26883726/apartment-demand-set-to-spike/

Cheers,

Wrexy...

 

[FIDO]

Quote:
Originally Posted by westminster View Post
I believe the site that Fido was talking about was another, I think Vincent or Loftus St. It wasn't the one that Crido is in.
Fido may also be scaremongering offering enough fact (like the interest rate) but not the full story that it's only for the last 2mths.
Ok really, strang Fido has not posted again

Hi MTR and others

Havent replied as I only just realised there was still activity on this thread.

I wasn't in EOS Perth developments.

Definitely no scaremongering. My experience is factual and specific to EOS armchair developer Pilbara projects.

They used a second tier lender to provide funds at 12.95%. The builder went broke - needed to find a new builder, and find another lender to cover the shortfall and new costs. The first loan expired and the new loan was at 17.95%. They used another two lenders to cover the new build cost. The two lenders apparently charged an interest rate of 15% and 17.95 respectively.

 

[MTR]

Who was the builder that went belly up??

 

[FIDO]

Blue Gecko

 

[sanj]

Wow. That's yet another example of their "expertise", those interest rates are shocking

 

[westminster]

Hi MTR and others

Havent replied as I only just realised there was still activity on this thread.

I wasn't in EOS Perth developments.

Definitely no scaremongering. My experience is factual and specific to EOS armchair developer Pilbara projects.

They used a second tier lender to provide funds at 12.95%. The builder went broke - needed to find a new builder, and find another lender to cover the shortfall and new costs. The first loan expired and the new loan was at 17.95%. They used another two lenders to cover the new build cost. The two lenders apparently charged an interest rate of 15% and 17.95 respectively.

Sorry to hear it was true. That is well and truly ouchie. Even second tier lenders CAN do much better than that but the rate that they charge is all around risk, the higher they perceive the risk, the higher the interest rate is.

 

[MTR]

this is their latest offer to investors.....

"As many of you may be aware the land price for Perth development sites has been very high for the last 12 months making it difficult for us to find a site that offers a potential profit for investors. Over the last few weeks however we have had some success in finding sites that meet our feasibility. Yesterday we found an excellent block offering outstanding potential. The site is an 8 unit site on Odin Rd in Innaloo. We could build a two storey dwelling with 7, two bedroom, two bathroom units and one single bedroom unit.

Recent valuations and sales evidence show similar apartments in the same area selling for around $500K. We believe we can build ours for between $420K to $450K with an added saving in stamp duty of $18K".


https://www.google.com.au/maps/plac...2!3m1!1s0x2a32af01860d65c5:0x5a3625b05446207e

If they could not make money in a rising market I can assure it wont get any easier.

 

[westminster]

So 50-80k is approx 10-20%, I can't work out if they mean inc stamp duty of plus $18k stamp duty.

They must be targeting PPOR people now not investors as you wouldn't go in with those figures

 

[MTR]

That if you can believe these figures which are lean and a flat market, I don't for one minute.

Anyone who jumps into these investments need to see a shrink, these guys have a track record of losing money.

I am surprised they are even promoting new projects

 

[HD_ACE]

If they could not make money in a rising market I can assure it wont get any easier.

Lol, too true.

 

[MTR]

Silly thing is they will probably have people lined up to jump into this product, quite bizarre, no one will be asking for the returns on previous projects

My guestimate is that all their projects have been duds, timing wrong in Karratha and the others well nothing has been completed and investors are surely looking at loses on today's figures.

 

[FIDO]

Add to that one-sided contracts, GST implications and cost blowouts. Some ordinary build quality, oh and they also select strata managers....

Has set me back 10 years...I am such an idiot.

 

[MTR]

Add to that one-sided contracts, GST implications and cost blowouts. Some ordinary build quality, oh and they also select strata managers....

Has set me back 10 years...I am such an idiot.

Lesson learnt, so why did you jump in???

 

[FIDO]

Major health scare, had procrastinated for a long time, (almost) blind faith.

Seemed trustworthy.....

 

[MTR]

Major health scare, had procrastinated for a long time, (almost) blind faith.

Seemed trustworthy.....

Really sorry to hear this and other investors that got hurt.

I can understand this, I believe the Directors also have their money injected in these projects?? This gives confidence to prospective clients, but these guys must be hurting too.

My gut tells me they are continuing with the hope to make up their losses from future projects, this is scary stuff, a train wreck IMO.