WARNING! LONG POST! POSSIBILITY OF BOREDOM!
Hey Guys,
Very determined to undertake a small scale development in Brisbane this year. Basically find a 600sqm site, LMR zoned, flood free, with or without a house for demolition that is not within a Demo control precinct or any other notable constraints. Ideally the purchase price for the site will be in the range of 475-525k and the cost for construction for three turnkey 3bed 2 bath townhouses around 475-525k. Overall I am looking for a 25-35%+ return. So hopefully costs of around 1 million with end products worth 1.4 mil+ with rent from each around $450-550. Options could be to sell one and keep 2 or even keep all three. Does anybody think it is a safer option to sell one to pay down debt and keep two and therefore not as much exposure in 1 place? I have read/heard before that developing is a great way to create cash flow neutral or positive so therefore the best option might be to hold all and let the rent make bank repayments and accrue in an IO offset account so that I can use this cash again to repeat.
I really want to start an property investing strategy where small developments become my forte. Basically duplex and townhouse projects at an affordable level. Being a town planner and just starting to study a cert IV in residential drafting online at nights and spare time I feel I could be well suited to this as effectively I could see the development process through and save a lot of fees by doing myself. So far I have outlined Brisbane as the area for my first project as this is where I currently feel most comfortable and understand the best due to living there for a number of years. I feel that brisbane is still relatively affordable for every day people and although not at the standard as melbourne and sydney I feel there is definetly room for prices to increase once it picks up. I also feel with the flat market now could be a good time to buy, develop and hold for better times to come.
I want to make duplex's/townhouses my own strength because I find them to most attractive from other developments because:
- townhouses still have significant land component and still feel like "houses" compared to apartments/units as they can have courtyards, etc.
- smaller complexes without pools/common areas and therefore lower body corporate fees
- increasing number of retirees downsizing for future demand
- increasing number of smaller households for future demand
- opportunities in good locations close to CBDs
- less risk and money output than large scale developments
- much simpler development process and conditions
- affordable and diverse housing choice for community creating demand
Although I am only 21 and this will be the first project - I have a real desire to learn as much as I can and become my own expert on these small scale developments and maybe one day be able to mentor others into the process. I understand that the only way for this to happen is to get experience. So hopefully my first works out and approximately every 2 years I can start a new one. This may be a bit ambitious but this is my goal!
As mentioned above here are a few dot points that I am considering for a suitable site:
- 600 sqm site minimum
- LMR zoning for 3 townhouses with all 100-110 GFA approx
- House/vacant land - with no DCP
- no major constraints
- flood free
- as close to Brisbane CBD as possible 4-7km radius = ideal
- not directly adjacent to train line to improve desirability and avoid any special acoustic requirements, etc.
- access to public transport (400-1000m walk able catchment to train station ideal)
- close to restaurants/shops/parks and other facilities
- close to schools
- similar small scale developments in the area - however no oversupply
- 15m+ frontage
- relatively flat land
- outstanding design of floorplans incorporating many of the minor changes that can really make a difference to rental return, eg. interal laundry cupboards.
- no large obstructing trees where there may be issues with removing (contact aborist beforehand - conditions to sale)
The goal is to buy to develop - not to buy and hold and develop some time in the future. I want to manufacture the capital now. Having a house can be useful for holding costs during process however if left vacant there will be no need for a demolition (10k or so).
There is also the issue of a body corporate - I have absolutely no idea how these are set up when you develop your own site and what are the key things to consider, I will look into this shortly, if anybody has any advice it would be greatly appreciated.
Here are 5 sites that I have narrowed down and think show potential (in order of most potential) with a few dot points on each. If anybody has any comments on these, the area, anything else in the post or any other tips/criticisms/etc. then please let me know.
1. http://www.realestate.com.au/property-house-qld-morningside-107681926
- this by far is the choice with most potential
- listing price already what I would consider below market value (479k)
- DA already in place - saves risk of not receiving DA + interest during DA process
- clever design
- within walking distance to train station
- 5km from CBD
- rough estimations of 1 mill with 1.4mil product returning $1450 rent per week
- slight slope to street - which I heard is desirable for drainage etc.
- fair bit of supply of new townhouses in the morningside area listed atm... however all listed for high values 500-650k
2. http://www.realestate.com.au/property-residential+land-qld-greenslopes-200140521
- land already vacant
- flat land
- mature/attractive trees along boundaries (check if any issues)
- slightly longer walk to train station around 1km
- close to woollongabba and surrounding facilities
- site price unknown? offer 450-500k?
- no need for demolition
3. http://www.realestate.com.au/property-house-qld-windsor-108324851
- slightly larger block 678m therefore allowing slightly larger town houses 115sqm compared to 100.
- house for holidng costs during DA process (5 bed 2 bath is pretty rare)
- wide frontage
- walking distance to train station
4. http://www.realestate.com.au/property-house-qld-newmarket-109181326
- listed too expensive as is - would need a significant discount.
- don't know much about newmarket however it has access to the train station and is within 5km of city. I think I read in API sometime that one of the experts picked newmarket as a good area for development? maybe feb issue? not sure
- slight slope to road - drainage?
- odd shape of block - possible issues with designing for 3 townhouse
-
5. http://www.realestate.com.au/property-house-qld-newmarket-109400306
- same comments above about newmarket
- would also need significant discount on asking price 510-530k down from 550.
- flat block
- located close to shops
- slightly further distance to train
I appreciate the time you have spent to read such a long and roughly structured post.
Cheers, YPG
Hey Guys,
Very determined to undertake a small scale development in Brisbane this year. Basically find a 600sqm site, LMR zoned, flood free, with or without a house for demolition that is not within a Demo control precinct or any other notable constraints. Ideally the purchase price for the site will be in the range of 475-525k and the cost for construction for three turnkey 3bed 2 bath townhouses around 475-525k. Overall I am looking for a 25-35%+ return. So hopefully costs of around 1 million with end products worth 1.4 mil+ with rent from each around $450-550. Options could be to sell one and keep 2 or even keep all three. Does anybody think it is a safer option to sell one to pay down debt and keep two and therefore not as much exposure in 1 place? I have read/heard before that developing is a great way to create cash flow neutral or positive so therefore the best option might be to hold all and let the rent make bank repayments and accrue in an IO offset account so that I can use this cash again to repeat.
I really want to start an property investing strategy where small developments become my forte. Basically duplex and townhouse projects at an affordable level. Being a town planner and just starting to study a cert IV in residential drafting online at nights and spare time I feel I could be well suited to this as effectively I could see the development process through and save a lot of fees by doing myself. So far I have outlined Brisbane as the area for my first project as this is where I currently feel most comfortable and understand the best due to living there for a number of years. I feel that brisbane is still relatively affordable for every day people and although not at the standard as melbourne and sydney I feel there is definetly room for prices to increase once it picks up. I also feel with the flat market now could be a good time to buy, develop and hold for better times to come.
I want to make duplex's/townhouses my own strength because I find them to most attractive from other developments because:
- townhouses still have significant land component and still feel like "houses" compared to apartments/units as they can have courtyards, etc.
- smaller complexes without pools/common areas and therefore lower body corporate fees
- increasing number of retirees downsizing for future demand
- increasing number of smaller households for future demand
- opportunities in good locations close to CBDs
- less risk and money output than large scale developments
- much simpler development process and conditions
- affordable and diverse housing choice for community creating demand
Although I am only 21 and this will be the first project - I have a real desire to learn as much as I can and become my own expert on these small scale developments and maybe one day be able to mentor others into the process. I understand that the only way for this to happen is to get experience. So hopefully my first works out and approximately every 2 years I can start a new one. This may be a bit ambitious but this is my goal!
As mentioned above here are a few dot points that I am considering for a suitable site:
- 600 sqm site minimum
- LMR zoning for 3 townhouses with all 100-110 GFA approx
- House/vacant land - with no DCP
- no major constraints
- flood free
- as close to Brisbane CBD as possible 4-7km radius = ideal
- not directly adjacent to train line to improve desirability and avoid any special acoustic requirements, etc.
- access to public transport (400-1000m walk able catchment to train station ideal)
- close to restaurants/shops/parks and other facilities
- close to schools
- similar small scale developments in the area - however no oversupply
- 15m+ frontage
- relatively flat land
- outstanding design of floorplans incorporating many of the minor changes that can really make a difference to rental return, eg. interal laundry cupboards.
- no large obstructing trees where there may be issues with removing (contact aborist beforehand - conditions to sale)
The goal is to buy to develop - not to buy and hold and develop some time in the future. I want to manufacture the capital now. Having a house can be useful for holding costs during process however if left vacant there will be no need for a demolition (10k or so).
There is also the issue of a body corporate - I have absolutely no idea how these are set up when you develop your own site and what are the key things to consider, I will look into this shortly, if anybody has any advice it would be greatly appreciated.
Here are 5 sites that I have narrowed down and think show potential (in order of most potential) with a few dot points on each. If anybody has any comments on these, the area, anything else in the post or any other tips/criticisms/etc. then please let me know.
1. http://www.realestate.com.au/property-house-qld-morningside-107681926
- this by far is the choice with most potential
- listing price already what I would consider below market value (479k)
- DA already in place - saves risk of not receiving DA + interest during DA process
- clever design
- within walking distance to train station
- 5km from CBD
- rough estimations of 1 mill with 1.4mil product returning $1450 rent per week
- slight slope to street - which I heard is desirable for drainage etc.
- fair bit of supply of new townhouses in the morningside area listed atm... however all listed for high values 500-650k
2. http://www.realestate.com.au/property-residential+land-qld-greenslopes-200140521
- land already vacant
- flat land
- mature/attractive trees along boundaries (check if any issues)
- slightly longer walk to train station around 1km
- close to woollongabba and surrounding facilities
- site price unknown? offer 450-500k?
- no need for demolition
3. http://www.realestate.com.au/property-house-qld-windsor-108324851
- slightly larger block 678m therefore allowing slightly larger town houses 115sqm compared to 100.
- house for holidng costs during DA process (5 bed 2 bath is pretty rare)
- wide frontage
- walking distance to train station
4. http://www.realestate.com.au/property-house-qld-newmarket-109181326
- listed too expensive as is - would need a significant discount.
- don't know much about newmarket however it has access to the train station and is within 5km of city. I think I read in API sometime that one of the experts picked newmarket as a good area for development? maybe feb issue? not sure
- slight slope to road - drainage?
- odd shape of block - possible issues with designing for 3 townhouse
-
5. http://www.realestate.com.au/property-house-qld-newmarket-109400306
- same comments above about newmarket
- would also need significant discount on asking price 510-530k down from 550.
- flat block
- located close to shops
- slightly further distance to train
I appreciate the time you have spent to read such a long and roughly structured post.
Cheers, YPG