Hi Guys,
I am completely new to property development. I know the general concepts and idea behind it as I have been reading up a far bit and talking to people. The only property I have purchased to date is my existing home (6 months ago!!).So, you see, I am really green.
My Wife's family has a 2 acre piece of empty land in Cornubia (Logan area) in Queensland. I thought of doing something with it (inspired after reading Steve's book). Any ideas, tips, suggestion, thoughts how to go about doing property development. We have no idea. I though of subdividing it and building townhouses with a child care center. I do know the current zoning is commercial, so I guess i need it to be re-zoned to residential. Or is it better to build commercial property – e.g storage facilities, office buildings, etc. How do i do the maths. Where do i start to see if it is even feasible.
Any advice would be greatly appreciated and highly welcomed.
thanks
Za
Property development is a tough game from what I have heard, have you invested enough time to build up your knowledge to see what it takes to be good at property development?
If its a great opportunity why not sell it as a great opportunity on the condition that the person who purchases it from you shows you what they do with the property as an exchange of services.
If you want to press ahead with the deal, use a quantity surveyor to assess the site and use the professionals to tell you what you can do and how much it costs.
Make sure the figures add up man.
Even though I have no actually property investment experience I hope this helps. One day I will get into property development but my skills are numbers I would just hire people who are experts to tell me what I can or cant do and then if its right do it!
Take your time mate and assess the deal thoroughly,
Sean
Ps: i have msn so if you wish you can add me and we could have a chat. [email protected]
Hi Za,
Rezoning is often a long and difficult process. Often, the better approach would be to subdivide within the existing zoning rather than seeking to have it changed.
I don't know the area you speak of very well, but step one would be to call or visit the local council and ask what is involved in subdividing the site. Subdivisions in Qld are, for some unknown reason, quite expensive compared to other states (due to the utility service costs). Still, if there is money to be made then this shouldn't put you off.
Another source of knowledge would be town planners.
If you become more serious about doing the sub-division or development, then make sure you are at the 3 day conference in April (https://www.propertyinvesting.com/seminars/2008conference) as property development is one of the key topics.
All the best,
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Steve & red123nz
Ok, I am pretty serious about going into real estate so I’ve booked the three day seminar (hope to give up my day job soon – even though it pays me extremely well!!! J). In the meantime, anything else I could research investigate before attending the seminar? I am not sure what level of experience/knowledge I am suppose to have to fully benefit from this sort of seminar. I have never been to one before.
red123nz – Thanks for you tips. I will take up your offer and might get in touch with you on MSN sometime soon – thanks mate
Over and out
Hi Murtuza
I'm not sure exactly how the Logan City Council works but to be honest it is harder to get a commercial zoned parcel of land than standard res. So you would be better off leaving it commercial and find out what commercial facilities are lacking in the immediate area. A good way to start would be to employ the services of a good town planner that knows that area and ask his advice and maybe get him to see the Council on your behalf to find out what they would be keen to see in the area. Depending on what is already there, a small shopping centre, childcare centre, motel or tavern are all good money spinners. Once you have an approval in place for one of these Developers will pay good money for it.
Being commercial you can build with the highest density possible and usually building heights are greater as well. Or you could look at doing as you said town houses, which with commercial zoning you would have a density of the max possible. I'm going on my local area in Central Qld but R3 zoning is 350 persons per hectare so your parcel of 8000m2 would give you 280 persons. The density of a 2 bedroom townhouse is 3 persons, so you could build 93 townhouses. Or quite easily sell the approval for between $40,000 and $50,000 per approved site again depending on the area. We are getting upto $80,000 a site where I live for non seaview approved sites and upto $140,000 for seaview approved sites.
The first thing to do though would be to talk to a good town planner in the area.
I hope this helps.
CheersHi Za,
I'm in your backyard and should be able to set you on the right path with development advice and what your options are. I suggest you have a browse of my website and make contact.
check out http://www.smartpropertydevelopment.com/checklist as well, though If Bobs willing to lend an ear i'd take up that offer ;o)
Hi again,
Well done on booking your place at the conference. You're going to have a wonderful time. See you there!
In the meantime, here's a little synopsis of property development.
To begin with, property development is profitable two ways:
1. Better Land Use
While land has perceived value when being used as a backyard (i.e. lifestyle), land becomes income producing when people can use it as a home (at least when it comes to residential blocks). Therefore, when the property development consists of a land subdivision, the sum of what's created needs to be worth more than the block as a whole.Remember this rule and you should be starting on the right foot: the greater the potential density of the development, the more valuable the land.
2. Value Adding via Building
The building side of developing is much trickier, and has many pitfalls. For instance, many people get caught up in what they build rather than looking at what housing product best suits the target market for the area. To borrow a fishing analogy, you will always come home with a great catch if you find out what bait the fish are hungry for and give it to them. So too in developing, if you do the research to find out what type of housing is most popular (# bedrooms, # bathrooms, size of living rooms etc), then provided you can built it and add to your project profit, you'll be looking good.Remember that you must always add more in perceived value than actual cost. If you forget this, you'll be eating into your profits.
Some of the risks of developing that people often forget include:
A) Your costs are now but your income is between 12 and 24 months into the future. Therefore, you need deep pockets to fund the cash shortfall.
Banks may lend 80% of the cost of construction, but in the majority of cases, this will be the last 80%, not 80% of ever dollar spent. For example, if your cost to build is $200,000, then you will need to come up with the first $40,000 yourself, and then bank will provide the last $160,000.C) Just because you think you can do it does not mean that you can. Property is sold on the basis of STCA (subject to council approval), which is a massive disclaimer! You must always do your own research, because although most things can be done or built, you will only want to proceed if you make at least your minimum profit.
D) Selling with plans and permits and banking a profit sooner rather than later can sometimes be better than going on and building. Remembering that a bird in the hand is worth two in the bush, a smaller profit that can be banked today without the risk of building may be juicier than holding on for top dollar.
E) Cost overruns are common. Unless you have experience, fixed price building contracts mean you may seem to pay a little more, but they are safer for new investors as the risk of overruns is borne by the builder.
Well, that's a start for you. Have a wonderful day.
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Murtuza wrote:Hi, Za you metioned you read Steves book. What was the name of the book and Steve who? Thanks for your time, Jason,Hi Guys,
I am completely new to property development. I know the general concepts and idea behind it as I have been reading up a far bit and talking to people. The only property I have purchased to date is my existing home (6 months ago!!).So, you see, I am really green.
My Wife's family has a 2 acre piece of empty land in Cornubia (Logan area) in Queensland. I thought of doing something with it (inspired after reading Steve's book). Any ideas, tips, suggestion, thoughts how to go about doing property development. We have no idea. I though of subdividing it and building townhouses with a child care center. I do know the current zoning is commercial, so I guess i need it to be re-zoned to residential. Or is it better to build commercial property – e.g storage facilities, office buildings, etc. How do i do the maths. Where do i start to see if it is even feasible.
Any advice would be greatly appreciated and highly welcomed.
thanks
Za
Hi Jason
Steve as in Steve McKnight. The book I read is called From 0 to 130 Properties in 3.5 Year. You can check it out at this link https://www.propertyinvesting.com/resources/products/13 .I suggest getting his more recent book called titled '0 to 260+ Properties in 7 Years' as it is more recent (i have not read it though).
PS: The book does not discuss about property development per se but it is a good read if you are thinking of going into real estate and the different strategies available. The best think I liked about the book is a the honest and frank approach.
If you live in Brisbane, I am happy to lent you mine
cheers
Za
[email protected]
Banks may lend 80% of the cost of construction, but in the majority of cases, this will be the last 80%, not 80% of ever dollar spent. For example, if your cost to build is $200,000, then you will need to come up with the first $40,000 yourself, and then bank will provide the last $160,000.
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