property developing and NO previous experience.

You may find 4 units is a bit too big for your first venture – make sure the banks will lend you money.

They like to see some experience – for 4 units, they’ll probably only lend you 70% LVR.

If you don’t have a builder – how do you know the cost for your estimates. I’m not trying to be negative – just give a few things to think about.

You better learn a bit about development – probably can’t do it from a book or articles but you may get something out of this series of articles – has some good stuff on property development:

http://www.propertyupdate.com.au/categories/property-development.html

Good luck with your project

Love the enthusiasm but must say Interesting market  to go into a build with no experience. I wouldn't leave a lot of room for error in this market.

You have $500k to buy the property or  is that $500k to put towards the build?

Talk to your bank/broker and find out what you can and cant do before venturing in.. Don't want to buy a DA site and find you maybe cant finance the build

Some other things  to look into
B.A costs ( assuming you only have DA)
House removal costs (assuming something is on the block at the moment)
GST considerations on the build ( also look into the margin scheme)
Real estate costs on selling the end project

Good luck it is exciting and keep asking questions

Go afghangirl, you are enthusiastic!

Here is the Ron Forlee book again (!) residential development guide, the API small development guide. Have a squiz at Rookie Developers website as well.

Now 4 TH's on the site means you need to have your finance sorted now, rather than leaving it to chance. So if you do get this site when do you plan on building? Most builders won't start over xmas break etc. Call some builders get some quotes and ask them when they could start building. You might find there is a delay of 3 -4 mths meaning you want a longer settlement.

Why is the vendor selling this site? Is there no money in it? Has the market moved and the resale price has changed? Could they not get finance, why not? Be very careful.

Do your sums, get every figure you can before you start.

Eg. (VERY ROUGH FIGURES)

Land $500k (inc stamp duty, etc)
Building $900
Drawings and extra costs such as holding costs demolition etc $70k-$200k depending on how long it takes what else you need to pay for.
Agent to sell the units 15k on each one

Resale so say they will each sell for $500k (be careful this is the figure that counts) 2,000,000 = ok profit give or take. (not including tax here)

These figures are really, really, rough ok everyone

If any of these figures are lower or higher the money you make will change.

I wouldn't get out of bed for less than 20% margin (on a bad day) IF you are doing heaps of deals then 15% is doable, but everything, everything will eat into a healthy profit.

Developing is very cash hungry, so try to borrow as much as you can (within reason) and keep your cash to pay your consultants.

Good luck, feel free to PM me if you get stuck with anything.

D

DA is called a Planning Permit in Victoria.

Finance for 4 units, if there are decent margins is easy. I would disagree with the people who have said it is too big for a first timer, i think its about right. The margins and actual cash profit, for the time and risk required, are generally too small on smaller developments. I've been in this game for some time, as both developer myself and broking finance for developers and I have seen very few smaller developments that have been successful without help from a rising market.

Without knowing anything about the project I would expect a 4 unit developpment near Dandenong would not have great margins and you would probably be better off either going for 3 or 4 units in a more expensive area or going for a larger development. As a rule you are going to be ablke to borrow 80% of costs, so $500K will get you a project costing around $2mill.

Regards
Alistair