My partner and i have been hunting for our first home for many years. Recently my partner suggested the idea that we build three townhouses/units. Live in one and rent out or sell the remaining. As first home buyers we have no experience in the industry and that bothers me. Modern townhouses in the area we are considering, are a rare find and the ones avaiable are currently selling /tenanted for decent money, so I think the area would be right. We are happy to continue renting for as long as it takes and I am confident we could get the additional finance for the project.
I guess we would start with finding a block and investigating the local regulations.
What do you all think…? Should we tackle this “townhouse” idea or should just buy first house and look at bigger plans like building townhouses later?Hi KB,
For me I would suggets that you start with something a little more standard as your entry into the housing market. This will give you a great opportunity to learn some of the ins and outs of property investment in the beginning. Issues such as tax, finance, structuring, property management, insurance, and so on are all learning experiences in themselves.
Developing is a niche strategy that has a number of other ins and outs to be learned along the way.
Like everything it has its own benefits but also its own unique pitfalls. Sure the ‘profits’ are attractive but many a would be developer has gone belly up due to a raft of reasons, largely due to inexperience.
Developing is a huge first step to take. But then others may well disagree.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958hi kb1975
Would start with smaller project like buy & small reno or touch up rent out get other people to help pay the mortage dont forget you have to wear all the costs on townhouse developments & it can be along drawn out process
Friends of mine have been doing two townhouses on the one block taken maybe three years to do finished in November
tried to auction one guess what not one bid & no offers since (still got huge interest bill to pay with no help)
In that time i have bought several houses all being rented except one which i am renovating & living in
Hope this helpsHi KB1975,
The strategy you are considering is sound, though a little higher risk than buying an existing house. As long as you reralise this and do your homework you will do fine.
If you would like any questions answered re planning regulations please post them on this thread and i will answer them for you. I would also be more than happy to recommend other prefessionals, such as architects, builders etc.
Regards
Alistair Perry
http://www.town-planning.com.auJohnno2 I would be very interested to know a bit more about your friends development. What suburb in Vic, how far from t/port, shops, is it two on a block or duplex, it is 2/3 bedrooms, singledouble storey. What price range was agent suggesting to buyers. Did you think friends expectations overpriced in existing market?
Fern
Property development can be lucrative, very very lucrative. Have a look at this article on the benefits of becoming a property developer….
http://www.propertyupdate.com.au/articles/19/1/The-Benefits-of-Becoming-a-Property-Developer
I spend a significant part of my time helping investors become property developers http://www.metropoleprojects.com.au, but it is not a strategy I would recommend to beginning investors.
With the higher reward comes significantly higher risk and you will probably need considerably more money than you thought you would.
There may be a reason why there are few new townhouses in the area you are considering. At this stage in the property cycle many projects are just not viable
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.PropertyUpdate.com.auKB
We recently built our PPOR and i was amazed at how much I learnt during this process. If you are new to real estate this may be a good way to learn the basics.
(note that i can’t speak of IPs as i don’t have any, yet ….. )
Michael
Due to the knowledge i have gained from building the PPOR i am interested in developing IPs – can you expand on why you wouldn’t recommend it for begining investors?
My main concerns so far are:
– initial costs due to not earning income from day one
– reliance on capital gains in todays market
– my level of (in)experience
– high impact of delaysAre there any other type of IPs that provide similar experience that would be a good starting point? renovations perhaps?
Cheers
BenKB1975
If your serious about this. GO AND SEE MARTIN AYLES IN MELB.
What you suggested is exactly what he does except he rents the third one out.
Ive met him twice. He appears to me to have acheived the same as STEVE and co. Using a differnet strategy DEVELOPING!!!!!MOre importantly he has some very simplistic approaches that anyone can use.
-Thomas
“More Time To Snowboard”
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