Thanks for the video links. I'll check them out.
Small Subdivision Opportunity
- Thread starter AndrewScottMusi
- Start date
I have an significant amount of cash. Just enough to pay solicitors and a bit of advertising.
Serviceability ? if you mean my ability to repay debt, I don't want to go there.
easy, never underestimate us on the re.com.au
Totally agree here!
so you dont want to deal with the stress of waiting for things to happen, you dont have experience in this area, please genuinely ask yourself what are you bringing to the table?
except you arent listening to a word we're saying. Matt, OC1 and myself are all developers and all of us are telling you not to do your first development using someone elses money.
you honestly do not know what you dont know and i think it would be grossly negligent for you to convince someone to part with their money on this basis. the fact that you have to ask what a contingency is and did not account for GST says enough. im not saying any of this to be antagonistic btw, i just cant see how this wont end in tears.
To me, this would be the starting point. Get these 2 sorted, then do a small development like those in the videos.
I think you will find it really hard to find someone willing to invest $500k with someone who hasn't done a similar project before. For my JVs I could demonstrate a similar project in the same area and provide costings based on that project, which allowed a 30%+ profit margin on costs. This made it much easier to attract capital.
I also wasn't expecting the equity provider to pay cash for the whole project, just the minimum required to get the project completed with bank finance. This represents a much better return on capital invested (well over 100% on each project for the investor plus their capital back) and a smaller investment commitment required.
This has had over 4400 hits and, that doesn't include previous listings. Apologies for the formatting below, however this has had numerous price reductions from 2008 (550 K) to current day (370 K).
On the Market Price History
Final Sale Price History
Advertised Asking Price Property Type Type of Sale Selling Agent
6-Jun-2013 $369,950 House Private Treaty FN Real Estate Pope Nitschke 30-May-2013 $395,000 House Private Treaty FN Real Estate Pope Nitschke 30-May-2013 $369,950 House Private Treaty FN Real Estate Pope Nitschke 16-Apr-2013 $395,000 House Private Treaty FN Real Estate Pope Nitschke 5-Mar-2013 $425,000 House Private Treaty FN Real Estate Pope Nitschke 4-Apr-2009 $550,000 House Private Treaty FN Real Estate Pope Nitschke 9-Apr-2008 $550,000 House Private Treaty FN Real Estate Pope Nitschke 19-Nov-2007 Not Disclosed House Private Treaty FN Real Estate Pope Nitschke
Either it's a lot of trouble or perhaps approaching an opportunity level for those who are able to pull off the subdivision. Is there demand for such smaller blocks there or are circa acre blocks the norm?
I think it's good you are sharing this ASM as the responses you will receive may help you narrow down what you are looking for and able to successfully accomplish. I echo others sentiments also and do not believe that your investors (JV partner) should pay for your learning curve especially when contingencies are lacking.
I envisage you have learnt plenty from this thread already. As you have come to appreciate this forum is a great resource to learn from.
Good luck.
On the Market Price History
Final Sale Price History
Advertised Asking Price Property Type Type of Sale Selling Agent
6-Jun-2013 $369,950 House Private Treaty FN Real Estate Pope Nitschke 30-May-2013 $395,000 House Private Treaty FN Real Estate Pope Nitschke 30-May-2013 $369,950 House Private Treaty FN Real Estate Pope Nitschke 16-Apr-2013 $395,000 House Private Treaty FN Real Estate Pope Nitschke 5-Mar-2013 $425,000 House Private Treaty FN Real Estate Pope Nitschke 4-Apr-2009 $550,000 House Private Treaty FN Real Estate Pope Nitschke 9-Apr-2008 $550,000 House Private Treaty FN Real Estate Pope Nitschke 19-Nov-2007 Not Disclosed House Private Treaty FN Real Estate Pope Nitschke
Either it's a lot of trouble or perhaps approaching an opportunity level for those who are able to pull off the subdivision. Is there demand for such smaller blocks there or are circa acre blocks the norm?
I think it's good you are sharing this ASM as the responses you will receive may help you narrow down what you are looking for and able to successfully accomplish. I echo others sentiments also and do not believe that your investors (JV partner) should pay for your learning curve especially when contingencies are lacking.
I envisage you have learnt plenty from this thread already. As you have come to appreciate this forum is a great resource to learn from.
Good luck.
The publicly offered property at 16 Adelaide Rd is a dry run of my appraisal and analysis skills. If someone beats me to it I won't have lost anything because this process of discussion is teaching me skills that i can apply to my next project, which will probably be a property that is not yet on the market. What I am bringing to the table is an opportunity for profitable investment that would not be available without my presentation of it.
Just because I continue to be enthusiastic about my plans doesn't mean I haven't listened. I acknowledge my prior ignorance about GST. I will account for it after I've spoken with the ATO, then present a revised analysis.
As for contingencies - it's a vague term. I just needed clarification.
not really as i have presented the actual property
Maybe Sanj will JV with you?
Andrew, after our responses I'm sure you're better equipt moving forward. Good luck.
Oscar
no thanks.
Id rather use my own cash and keep 100% of the upside, and downside
Id rather use my own cash and keep 100% of the upside, and downside
OK
A cost blowout - Written quotes tend to reduce the likelihood of this
Unexpected expense - you and other forum members are alerting me to these.
Sales values drop during the project - who can control this? Besides, my sales values are very conservative.
Timeframes blowout - This would add to interest cost.
Point taken - No-one can forsee everything.
I'll add 10 % to the budget when I'm done picking the brains of the ATO re GST.
This property yes, but I'm only just beginning the game, and will apply what you people are teaching me to future opportunities.
fyi, I have had all 4 of these occur on a project (wasn't my first).
Ouch.
Is that when you felt uncomfortable?
"When things go wrong or are delayed, it is harder to advise someone else, than it would be to simply deal with it yourself.
Would you like to share details?
Is that when you felt uncomfortable?
"When things go wrong or are delayed, it is harder to advise someone else, than it would be to simply deal with it yourself.
Would you like to share details?
There can be little things that all add up. For example today oc1 mentioned that due to rock on his site it has taken 3 days to dig trenches for storm water when normally it would take 1 - and this was in a brand new subdivision where you wouldn't expect the land to be so rocky as usually nice new subdivision have a lot of clean fill in them. These rocks have caused him extra time for other items too. Once you find the rock though it's too late - this may add 7 or more days of labour to his plan and take from the bottom line. As a builder he has access to trades so pays 'wholesale' rates for trades - you may have to pay 'retail' and my bobcat drivers etc charge $80-110 an hour. 7 days of a labourer like that and that's $5000 - this is what we have contingencies for.
Today's bill that I have paid today is for water connections to a 4 plot subdivison - a nice $21k.
Today's bill that I have paid today is for water connections to a 4 plot subdivison - a nice $21k.
The most difficult conversation I have had with a JV partner was advising an unexpected $200k blowout in build costs. This was based on the estimate that came back from the builder I had used in my previous project. I later managed to find another builder that could come in at the price point I expected. Trust me when I say that having to advise a JV partner that is trusting you to manage the project for them, a $200k blowout isn't fun.
Also if you do end up in a JV, your selection of who you partner with shouldn't just be based on the money. Think through what other qualities you would like them to have in case things don't go as planned.
