Gday peoples,
Just wondering if there’s any developers out there that are making money from building new single houses on single blocks of land in new land estates?
I was thinking something along the lines of buying a block in the first stage of a popular estate, holding on to it for 12 months, then building a new house to completion (with everything finished) then selling it as a completed home and land package?
I guess builders have been doing this for quite a while – eg, building their display homes then selling them off down the track…
Cheers
Wayne
Unless you are a largish project builder it is not cost effective to purchase land in new sub-divisions. The developers want profit which leaves too small a profit margin to make the exercise worth it. Far better to find a large block with an existing house and subdivide that yourself. If you consider purchasing a block, calculate your interest payments and the end price you would need to sell for. I think you will be discouraged.
If I knew then what I know now……….you know how it goes
thanks ActToday…
Though if you purchased the block for cash and you didn’t have to pay interest on it, then would this make a difference?
Reason being that it seems that you can pretty much guarentee Capital Growth from the first stage in an estate development…as this is what the developers always do – eg release the first stage land cheaper to get people interest…then as they release more stages, the block prices go up.
Wayne Leech
*Below are links to my websites – any feedback, comments would be appreciated:)
http://www.landsearcher.com.au – List your land for FREE (Private sellers only)
http://www.homesearcher.com.au – List your property for FREE (Private sellers only)You are correct builders do it but not on the same terms you would be up against.
Most builders get builders terms, that is they pay a deposit and get permission via the contract to build a home on the land and settlement terms usually are 6 – 12mths or sale which ever the shorter. So they get to build a new home without outlaying the money to purchase the block.
This is done to “get the estate going” and is also used to set the level of construction for the estate, a benchmark so to speak.
You can make a profit yourself if you get in early, lets say at expression of interest stage (sign an expression of interest in a estate not yet started, where you agree to purchase a particular lot at a certain price. This can at times increase in price when ready and you have first right of refusal or your $1,000 deposit refunded if you decide not to move forward with purchase)
David J
Licenced Agent/Sales ManagerWayne, I happened to work for a few weeks in a new estate that was developed by Devine homes, these were smallish houses backing onto a train line aimed at first home buyers. I met a couple on the day of handover and where told they were offered 270k by a RE agent for the home they paid 200K for. They wern’t selling as they had tenants lined up paying 270 a week rent. I dont know if this is an isolated case or these deals happen regularly. This was about 4 months ago in an average location in Brisbane.
Cheers
HaggetFrom the brief posts I have read I gather you are from WA, 18 months ago I was going to build at the Anchorage, I ended up buy established still a good move for the time however if you look at back 18 months ago to earlier stages Anchorage, Thompson Lake it is easy to see that on average block prices are up 20 – 30k from early 2003 prices. I think it a good idea I am hoping to use the equity from my first place to do this most likely single story, build live in while finishing off and fiding the next block and then moving on. If you can do some of the work yourself, including the selling I think would be well worth it.
Hi guys,
Yes, I’m from WA:) Live up near Quinns Rock.
David, that’s interesting what you said about “expression of interest”. I’ll look into this further.
Another good point about purchasing land in a new estate is that some estates do pre-releases of land, by where you can put a depoist on a block prior to it being released, then you don’t get the titles for another 6-12 months.
I recently did this on a block in the northern suburbs and I made $30k plus on the block before I even got the titles!
Is there any one out there that is doing this for a living? Eg, buying blocks in new estates, building a single house, finishing it off – then selling it??
Wayne Leech
*Below are links to my websites – any feedback, comments would be appreciated:)
http://www.landsearcher.com.au – List your land for FREE (Private sellers only)
http://www.homesearcher.com.au – List your property for FREE (Private sellers only)Hi Wayne
18 months ago I brought a block of land in a new estate where you could buy a block of land for 75000. Built a house on it and sold it 18 months later. In that area blocks of land are around 150 000. That was in Canning Vale
I am now doing the same thing again in Port Kennedy. Signed up for the block of land during prerelease in November. Didn’t have to start paying mortgage until June. In that time there is no supply of land left so the property price seems to of risen heaps.
This seem to be a good way of making money, no capital gains to pay, the only hassle is it takes so long to build a house at the moment so many delays.
Regards
Wayne
Waynel2,
There is lots of money building new houses in new estates, 12 months ago in WA you could have bought just about any block and just picked out a cheapish builder and made 30-50k easy. Land Prices have moved since then and house prices have not moved as much, so the land and construction costs have sorta caught up with the established house market.
If you want more info private message me and I can give you some contacts, I have builders, agents, estates, all lined up. I do lots of this stuff in WA.
Slumlord
And therein lay’s the problem’s also..
there are some great builders and some cr*p builders, even within companies..depends on which team you get.there are guy’s who were brickies labourers calling themselves brickies now and each occupation has it’s shoddy worker’s (even mine [biggrin])
Wayne, if someone like Slumlord has contacts or if you get a good team, ‘stick’ with them.
Remember though, it’s all easy in a ‘rising market’, though i expect WA still has potential [thumbsupanim]
Wish you all the best[thumbsup2]
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow Calculatorthis has been my specialty, depositing on land prior to it being registered, having 6 months to think about and organise the building, when the land settles plans go to council and 130 days later when the building is complete refinance to a seperate security, take out your initial funds and do it again, different marketplace now as thing have slowed down and brissy markey has had an approx 300% rise in land values over 3 years so caution needs to be taken however I am still finding good opportunities where on completion of lets say a 400k project the comparibles show around 500k value from recent sales.
FreedomFighter,
I PMéd you about a message you replied to me in a different thread on a different board, would enjoy talking to you about stuff similar to this tread type. Thanks.
Hi guys,
thanks all for your feedback! I’ve been up north of WA for the last couple of weeks so I haven’t had chance to checkout the forums rcently.
I won’t comment on it to much, though some of the developments happening up in north WA are pretty amazing – there seems to be alot of potential and demand! I was talking to one agent and 121 lots of land we’re sold within 3 days!!! Who said the boom was over??
freedomfinder, have u done much land purchasing in WA? Are u based in Brissy??
Cheers
Wayne
it gives me great pleasure indeed to see the stubborness of an incorrigible nonconformist warml;y acclaimed
wouldnt you say [buz2]
[cigar]
ps
ive found my feet
[cap]
Hi Gambini,
Don’t really see what your getting at?
can u explain further….??
Geez Wayne, a bit slow of the mark today?
Gambini means he’s found his forum feet cause once you get over 20 (or so) posts you message changes to Not too many posts … yet.
Thanks,
LuckyoneHi all,
further to your buying vacant lots, a friend of mine goes in as early as he can and buys the parking lot of a new development. He then rents it back to the Developer (minimal rent). The beauty is that these lots are generally with out requirements to build (ie: no time limit as to when he has to build) so he can do what some of you have also done, buy in early wait for apreciation and then sell or build and reap the rewards! Not only are the prices better than the rest of the properties but it has an income and the only down side is that he can’t use the equity straight up, it is more of a longer term investment plan. Heck, he’s been doing it since hes been 18 (now in his thirties)….Just thought I’d add another element!
Cheers
C@34
gday Wayne I am building 2 houses. I will move into the first and put it on the market to sell tax free imediatly. I will then move into the second for over a year before I can sell tax free.
here is how the deal stacks up. block=$60000, building house to completion=$$190000, total =$250000. house value= about$320000. Profit (before interest)=about$70000 (hopefully) They would rent for $450 per week if I wanted to rent them. There may be more profits by building in country areas, but geting in early in a new estates in the city does work vey well. buying land early has been profitable for me, my blocks went up $15000 in 2 months after I bought. keep up the good work.
Seano
Just remember: land appreciates, houses depreciate! If you want investment return – it may not be best to build but if you want tax advantages – it may be best to build.
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