Forums / Property Investing / Help Needed! / developing land

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  • Profile photo of blockablocka
    Participant
    @blocka
    Join Date: 2010
    Post Count: 38

    hi guys
    a friend of mine has  50 acers in yarramolong nsw with her ex husband witch is for sale because he is defaulting on the loan.           (its a long story)  the land has no access of its own BUT  her mother owns the land infront of it and would give her the land required to put an access road through.

    MY QUESTION IS
     does anyone think it would be worthwhile looking for an investor to fund and subdevide it and maybe go   50/50 in the end result ?

    thanks………
    jas

    Profile photo of Matt007Matt007
    Member
    @matt007
    Join Date: 2008
    Post Count: 259

    depends on what zoning the land has, what the demand for land in the area is, or whether its for developed land and houses, depends on what council wants, etc etc etc. All this is info you'd have to take to any potential investors. I'd suggest 50/50 would be about right for someone funding it all, depending on if its through to DA or further for actual flat land development etc. Be aware thats all time consuming, it will not be a quick settlement or payout. There's many ways of putting it together too. If you can put together the above information, send it through, I may know a few people depending on end vals etc.

    Profile photo of blockablocka
    Participant
    @blocka
    Join Date: 2010
    Post Count: 38

    Well my friend tells me she believes it to be subdevidable and once her mother gifts her land for accsess road, I’m guessing it would be very attractive ?? Yes ? And the next step would be to contact council. Yes?

    Profile photo of blockablocka
    Participant
    @blocka
    Join Date: 2010
    Post Count: 38

    Oh and similar land of approximate 2.5 ac in next suberb is approximate $300000

    Profile photo of Matt007Matt007
    Member
    @matt007
    Join Date: 2008
    Post Count: 259

    What you need is email or information from real estate agents saying "yes there is demand in the area for this type of product" whether that's land, houses or whatever. You then need to speak to Council about what can and can't be done with the land. I've spoken to so many vendors out there who say "oh yes this can be done" but Council says "no it can't".

    It'll be attractive if:
    * there's demand in the area greater than supply. If it's not surrounded already by development, or has it going on nearby, then it may not be so attractive.
    * once there's a DA attached to the land. Without that, its just land.
    * the agreement you make (if you make it) has enough time for people to pre-sell land (banks won't fund unless you do these days so you need to expect to be waiting 18-24 months under some form of development agreement or option)
    * you'll also need to look at surrounding infrastructure, roads, schools, transport, so on and so on, if its in the middle of nowhere, not so attractive as it'll cost millions to get services to the land.

    Don't have the expectation for big money up front. Won't happen. This is a long process dependent on council approvals, demand, funding, pre sales, so on and so on. I'm quite happy to look at it and pass it on to people I know once you have the above information.

    Hope that helps..

    Profile photo of blockablocka
    Participant
    @blocka
    Join Date: 2010
    Post Count: 38

    Do you have any idea of costs to her to get it to an investors help stage ?
    Thanks JAS

    Profile photo of Matt007Matt007
    Member
    @matt007
    Join Date: 2008
    Post Count: 259

    Sorry, not sure I understand what you're asking. An Investors help stage?

    If your'e asking what can she do to attract an investor etc I'd suggest doing the research I've suggested above First and foremost. Without knowing that, an investor won't have anything to work from. And to be honest, if the land is in the middle of nowhere, with no demand for the subdivided product either as land or fully constructed, why spend the money on it? The time simply may not be right to do anything with it. Sure its a big block but then so are half the farms around the place, and you can't do anything with them.  

    Thats why I say, do the research first, see what you can and can't do, talk to council and real estate agents, whether it will be worthwhile anyway, THEN you can start to worry about finding an investor etc. A DA cost is a 'how long is a piece of string' question, dependent on all that above information, plus a whole lot more. It could be $100K it could be $500K. The research I've suggested above is free other than the cost of a few phone calls.

    If there's no demand, the yield of subdividable lots is low due to the zoning restrictions, then there's too much risk involved from a) selling it, b) funding it, and c) paying for a DA. Investors simply won't want a piece of it if those three things are present. There is so much stock on the market right now in good areas with lots of demand, investors can be very choosy about what they put money into. Believe me, I've put some projects in front of investors with over a million bucks in holding income, and they STILL baulk at it based on bad experiences years ago. It is not an easy game believe me.

    Do the research, then if you like, come back to me with the answers and I can give you some more clear information on what may or may not be able to be done.

    Profile photo of LinarLinar
    Member
    @linar
    Join Date: 2004
    Post Count: 567

    I am a developer and even though I am not interested in this proposed deal, these are the sort of questions I would want answers to before I even considered looking at a deal

    1.  What would be the financial contribution from me for the land
    2.  Can the land be subdivided
    3.  If so, what size blocks would be most saleable in the area
    4.  What would the total value of the development be once complete
    5.  How much vacant land is in the area
    6.  How much demand is there for vacant land in the area
    7.  Basic costs for subdivision (you would need to go to the local Council and to a surveyor for these costs)
    8.  What sort of amenities are around that location

    Basically I would want to know exactly what I was getting into.  How much money will it cost me and how much will I make from the deal?  How saleable is the property?  What sort of timeframe will my money be tied up for? etc etc.

    I suggest that first off, you approach the Council to find out whether the property is even subdividable and then go to a local real estate agent to find out demand and values once complete.

    I hope that helps you start off.

    Cheers

    K

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