A Desire to Develop - Newcastle NSW

No expert myself but these are some of the questions I would ask myself.

1. Does undertaking a development as a strategy to creating wealth fit into my overall investment strategy and current risk profile.

Assuming it does,

2. What finance will I actually have access to for land and build . This will determine the size, scope and location of development you will be limited to.

3. Do I also have my own money for soft costs which aren't covered in finance. This includes costs for plans, engineering, approvals , usually demo , finance costs etc.

4. Assuming you know the max size deal you can do, do I know how to do a BOE feaso to determine if it's something to explore further or not.

5. If yes, then do I know how to do a more detailed feasibility on a site and feasibility on the numbers ( costs and end sales). Hands down this is the#1 factor that will make most deals in trouble - doing a very poor feaso and then jumping in with the wrong info.





If you can get a decent grip ( learn from others and on line materials etc) on those questions then imo you will be well on your way.

Me 2 cents only.

 

Have you factored in tax and gst into your profit calculations ?

 

@Sackie - Thanks for the response boss. Some basic answers below;
- Yes. I know property isn't bullet proof but I have an aggressive investment mindset, a development of this nature in the location nearly seems tame....
- Finance, fortunately I have partners which enables such a transaction rather comfortably. I have run worse case everywhere I can think of and made additional allowances, No issues here. Don't get me wrong, alot of cash but many hands make light work right.
- BOE figures were originally quoted. I have since refined these in more detail and the profit margin has reduced but this is running what I believe are super conservative figures. Undoubtedly a few more phone calls required before I can refine and finalize the figures (if at all possible) but I believe I am pretty close.

@Mike A - I have factored them into a few scenarios but the leading contender at the moment would see us holding the development for 5-10 years, minimum. I expect the capital growth in the region will justify this and generate enough equity to undertake 2.0. None the less, yes it must be considered and thank you for asking the question.

 

Sounds like you have it under control. Only thing I'd be weary of is going ahead with a Dev that doesn't currently stack up but planning to use future growth as the ' reward'. I'm not saying you're doing this but it's just something I'd be weary of.

Best of luck.