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Will we see you as educators some time in the future?
Then it's a matter of know your zoning codes and knowing your basic construction to figure out what can go on the site.
3 of my finds have been long term listings that have gone very stale. 2 were bought before home opens could even happen so I swing from that spectrum.
All except 1 (my first) are now in middle to upper class suburbs because it's easier to get money out of people that have money and it only costs a small amount more to build to their specification. The base construction cost is the same for a villa in Boganville as it is in Snobsville. The difference is $20k or so of finishes. However the end results/profit is greater than that $20k. The downside to the approach is greater 'skin in the game' required but if you have good equity from your first project then use that.
Then it's a matter of know your zoning codes and knowing your basic construction to figure out what can go on the site.
Awesome west min et al
Congrats! Can i ask how old you are, you seem to have the energy of 20 and wisdom of 40
I too am looking for sites and its so damn hard when you've got so many buy and holds or buy+renos popping up
Amazing guys, i am impressed
Something to aspire to
Are you a crazy as well?
We knew it's listing history:
24/08/2012 From $565,000
04/05/2012 $585,000
21/02/2012* $625,000
28/09/2011* POA
09/11/2010* $695,000
07/07/2009* $850,000
Then we opened verbal discussions to see how firm they were on the 'from $565'. Turns out not firm at all and REA said they would probably accept $510. Small wahoo moment.
Then whilst we were faffing around setting up companies, trusts blah blah another block came on the market down the street, a bit smaller but 'from $499k'.
We didn't want the other block as it wasn't as wide and we needed the width for the garages. But we used it in negotiations, ie if you don't accept our offer we'll just go buy that one.
We were originally going to offer $480 and prepared to go up to $510k but after more verbal discussions we told them that we were offering $480 and they said they would accept.
Finally all our ducks were ready and we offered $480 and they accepted.
I'm pretty sure if they were prepared to accept that, they should have changed the price on the listing as it probably would have sold sooner but they didn't
I'm soon to be 40 but less mature than my 15yo
Blacky is a spring chicken.
Great post to read.
Can you confirm your margins so far in your feasibility. Worst case scenario $700k profit on $1.7m costs gives a whopping 41% return on costs. I didn't think that was possible on just 4 units. Obviously this excludes GST and possibly sales costs but still extraordinary good. Do you only consider developments above a certain margin say 20%?
Incredible, you must be drowning in paperwork but it's going to be worth it.
Can I ask where GST fits into this picture? No idea how this works, do you have to charge GST on the sale price and is it included already in the estimates you posted earlier?
Our net return wont be quite that high after all is said and done (GST, Tax, selling costs, etc etc etc). But yes, it will be a very healthy return, especially when looking at the return on investment (ie, what is the return on our own cash).
Prior to commencing we developed, for want of a better word, a business plan. It detailed basically what we were doing, how, who, when - it included what returns we were aiming for. We targeted anything over 25%, and would walk away if it was less than 20%.
The paper work side is made slightly more complicated due to me being overseas, however, my brother is helping out with that (he is actually buying into my 50% share in the project).
In reality Im not sure it would make a huge difference, as most documents are scanned and emailed nowdays anyway. About the only docs I will need to be present for are the mortgage docs, and I should be in Perth for signing those - otherwise DHL provides a great service.
Yes - we have registered for GST. We have adopted the margin scheme to the project (if your not sure what it is - look it up - as we had to). We sought advice from accountants (3). WM has her accountant, I have mine, plus we have a third firm for the project enitity (whom I have used previously for company setup/mgt). GST will be a bit of a pain, and adds to the paper work and cost. But with good record keeping shouldnt be too bad (I hope).
With us both being from Chevron we both seem to be fairly good with documentation. Meetings are minuted, documents are filed etc. The 'business' aspect is kept quite formal and is run as a business.
I think this is where many partnerships fail. People dont document what has been said/done/agreed. Documents can be shared much easier (than conversations), and they dont forget.
Although I am overseas 95% of the year - technology nowadays helps. We are in communication nearly everyday (if not everyday atm). I message WM more than I message my fiance . Skype meetings - well, you could be sitting next to each other.
Blacky
I think this really gives an idea of just what is required.
Very high returns, but a lot of effort and an extensive knowledge required.
This ain't no passive income
Blacky and Westminster have combined super powers and in depth knowledge in fork ups to do a project together.
Mission: get in, get out with minimal dramas (oh mwahahahaha)
Thank god it worked out.
Didnt you use Mel from divita and Dixon?
All I can manage to say FAAAARRRKKKK.
Truly epicly bad week but all good now. Almost lost the deal due to contractual mess.
Lessons
- do have a lawyer for Settlement. Our Lawyer sounded way scarier than their conveyancer
- do date EVERY change made on contracts
- do read how to do notifications, variations and waivers as per the contract and forms.
Good news is that we have finance, we are unconditional and settlement will be 21st July.
AND I'm dying to find out if someone from SS bought the block down the road.