1st Development in Brisbane

Hi all, pretty new here, and also to the Property Development game. We are a young couple recently engaged and wanting to start a development journey. Was wondering if I could pick a few well established brains on the forum regarding our 1st development project, which we are looking into Brisbane currently to do.

We are hoping to start off with a purchase of a site, sub-divide splitter and build 2 x lux houses on. I will be hunting for a house over 2 lots which would make the project a bit easier, but obviously hard to find/well sought after. If the site allows, would love to fit a dual occ property if possible, but a lux build it might be depending on location. I have a couple of questions if anybody has the time to help out please.

1. Any particular locations that would be a good target? Anywhere within 7-8kms of CBD would be ideal, but may be hard to find price wise to make it all stack up feasibility wise.

2. Any other Bris/GC/Logan/Ipswich corridor areas where this strategy might work?

3. Any building companies that you have used that can produce a nice modern product at a fair price?

Thanks in advance. Hopefully there are some Sth East QLD snobs in here that can share!

 

Hi
Welcome to the forum.

1. Just about anywhere that there is no flooding or main roads/trainline issue

2. Not sure outside of BNE

3. Richard Fung does a great product 0414 815 491. Can't recall his company name but they build their own on splitters as well as 4 others or so a year.

 

The flooding is the big one. I've recently found a good, flat splitter site with strong sales int he area (1.2mill+), but the area is a big flood area and will have to build up, and even then I've searched PD online docs for similar projects and they have been knocked back due to build height restrictions, restrictions to floor design, neighbours complaining, etc. Have you, or anyone you know built in the big flood area and been successful? Don't want to waste my time if it's a tall order for a 1st development.

Thank you for the contact. Might have to call 1st as I can't seem to find any website for him, just a business name of "Ditec" that also has no website either. Cheers.

 

Your big challenge is going to be the cost of the land component now. I have a few splitters to develop in higher spec areas and they stack up becssue I bought the sites 2-3 years ago. One was bought last year 5km from the cbd with city views and at a good price but was very lucky with the negotiations with the vendor.

Any surburb that has new higher spec homes on 405sqm blocks, the land component will be at least 1mil for a plain site and add a few hundred thousand depending how close you go to the cbd and with any views or not. So making the numbers work at today's site prices will be the big challenge.

 

Very true. The other factor being the build cost to get to the standard needed to fetch the high price. As I'm new to the game, do you think buying in around the 800k mark would stack up, if everything else remains equal? If the build for both houses came in at 1 mil, both sold for 1.2-1.3ish? Obviously very rough, but could be 20% in that?

 

Sites are dear and can be hard to make stack up.

A client of mine has an option on a site at the moment with a strike price of $1.3m. You will get $1.3m for each of the finished houses with pools etc but not sure this option will be exercised unless there is price movement in the next 10 months.

 

Imho It will be very unlikely for it to stack up with the 1.3m site price.

 

More of a chance to stack with up those figures, even better chance if the lot is on 2 titles but I don't think you will be able to get a site for 800k with an end value of finished stock of 2.4-2.6m. I'd buy it right now if it existed.

 

Correct. Already 2 titles but would really need significant price appreciation to work.

I won't say never though.

I once pulled out of developing 6 units in Coorparoo because I was positive that there was no way that anyone would pay $200k for a unit in Coorparoo, regardless of the great city views.

 

Welcome to the forum, you will receive a wealth of knowledge in this community

 

There are many resources in Brisbane regarding property development especially for splitters and subdivisions. Highly recommend you attend the Brisbane Property Networking Group, it is on meet-up, and is run by Matt Jones.
Brisbane Property Networking Group

The best part are the "real deals" where people present deals they have done, a lot of people attend, and supported by a lot of industry specialists like Town Planners. Your first time attendance is free, and about $30 thereafter. This is a very low cost and real experience to learn about development in a "safe" environment. There are no gurus but people doing it.

Please note that I am a member and learned how to do my first subdivision by attending the group and also purchasing Matt's subdivision kit.

I also agree with the other commentators here, finding a splitter block deal that stacks up at the moment is challenging. There are several strategies to consider, eg:
I. Trying to build two houses at once is a big drain on financial resources, an easier exit strategy could be to sell one lot land and build on the other.
II. Find a property that needs a renovation and/or a house slide.
III. Find a lot that another developer is selling who may want to off load quickly if they consider the market slowing (they may have bought the property earlier and have more room to manoeuvre in their margin), and build a house.
IV. Use a buyers agent to find off market deals.
Etc.

 

Yeah makes you wonder what advice they are getting from their agent listing a site for that price, especially if it isn't LMR. You're hoping a rich person comes along that just wants to build their lux forever home on the site, cause you're pricing out everyone else.

 

I have a site that could be had for around this price, however I'm trying to find out why currently. I think it has some major pitfalls, major flood zone to start with.

 

Thanks, hope I can contribute a lot here whilst I'm learning as well.

 

Great advice, thank you.

I'll be attending the Gold Coast Property Networking group next week actually, so really looking forward to it. I might see if I can make it to the Brisbane one as well, the real world stories of deals is extremely valuable. It's exactly the way I learn best.

I. Trying to build two houses at once is a big drain on financial resources, an easier exit strategy could be to sell one lot land and build on the other. - I think I'll be going into each deal with site max in mind, but this sort of strategy is definitely a backup as well. Just not sure if this would stack up margin wise right now though.
II. Find a property that needs a renovation and/or a house slide. - Yeah looking for this as well.
III. Find a lot that another developer is selling who may want to off load quickly if they consider the market slowing (they may have bought the property earlier and have more room to manoeuvre in their margin), and build a house. - I almost took on a site this way on the Gold Coast recently, but the developer was still asking for too much. I think it had more of a builders margin in it, more than a developers margin.
IV. Use a buyers agent to find off market deals. - This I will definitely be doing.

Thanks again, great advice. What was you're 1st development deal hat you did? Some mates in the market have suggested I target a simple subdivision deal for my 1st (Sub, reno, sell all type deal), in an easier market to target like Ipswich/Logan area.

 

Agent will do whatever the seller wants usually. They know it wont sell at that price, they wait for disillusionment to set in for the seller and then recommend a price reduction after the seller's emotions have taken a hit. Its often a waiting game for agents for sellers emotions to take a walloping and then the agents step in.

 

Our developer toolkit explains many of the key tax concepts you WILL encounter if you undertake a dev. Even good record keeping.

It will assist you to know what numbers to use and calculate for budgets so your actually make a profit. A good start point when you seek personal tax advice so you know some basics

 

That's great Paul, thank you. That working sheet looks like a good tool to add to the toolkit.