Property Developers Vs Average Investors - Why they do what they do?

[MichaelW]

Property developers vs average investors?: I'm neither really at the moment. With only one IP I don't even fit the average investor category, more like the novice investor. And having not turned a sod of dirt, I'm definately not a developer. But I can say that the reason I selected my IP as one with development potential, was to maximise the future value of my property and minimise its cash flow impact. Once I do the value add and turn my site into three units, then it will be virtually cash flow neutral even at today's interest rates and rent levels. Give it a little time and it will be CF+. That, and I will also have built in quite a lot of equity instantly which allows me to go again without having to wait for the market to do too much of the heavy lifting.

I intend to be a small time developer and a build-and-hold one at that. I like Michael Yardney's definition of "paying wholesale" for my buy-and-hold residential property portfolio. And it helps with my cash flow / servicability so I can keep repeating it. Otherwise I'd hit the servicability / LVR wall a lot quicker.

Cheers,
Michael.

 

[oc1]

TI also question the title of the thread: property developers vs average investors. Do you make a distinction between 'average' developers (just a small development of a couple of townhouses, as opposed to Meriton) and 'extraordinary' investors (buying a whole office building, whatever)?
Alex

You can safely generalise, in this case, and say the property develop does it full-time/main source of income and a property investor parks his money in an investment and is not necessarily seeking to move his money out asap into another transaction. The point was not to look at the extremes.

 

[grossreal]

hi wasp
I think you need to re read those posts with the $1.00 thingy's if its one of mine I am the giver of the $1.00 option not the receiver.
and you can try to low ball but I think that deloittes may already understand them and would accept the $1.00 if the purchase contract showed how you were going to pay for it.
but thats up to them.
I like the $1.00 option and I am all heart so I give them 301.00 for the last one.
thats 1 dollar for the option and 300.00 to cover there legals as I am all heart.
may change my name to all heart gross

 

[Francesca C]

I know nothing about commercial property, holding or developing.

Can anyone recommend a good place to start learning with books/seminars????

 

[keithj]

I know nothing about commercial property, holding or developing.

Can anyone recommend a good place to start learning with books/seminars????

Hi Francesca,

Have a look at this - it's a 20yr overview of the market with a their view of the ucrrent state of the market. They reckon we're close to the top of the commercial cycle with low yields (ie expensive). There's a small possibility of rerun of 1990's with commercial vals falling by 15%ish for a few yrs. It's interesting reading for both market timers and those hoping to repeat the fortunes of a well known poster here, and also for those planning to use LOE with comm IP.

Cheers Keith

 

[Francesca C]

Thanks Keith, there is not much out there.

Who here buys the land and builds warehouses ect? what experiences have you had.

Is it best to go for office or warehouse/factory?