Best areas for investment in Land and Duplex

Hello All,

I am new to investment and looking to buy land and build duplex to create good equity(And quick? ), eventually to buy more in future. I have a good income job and I am a first time buyer. I am still doing research and wondering if I can get any suggestions around:

1) What areas around Sydney like central coast, Newcastle, Wollongong, (Sydney will be too expensive for me I think, my budget will be 800k total) and Brisbane/GC/Sunshine coast will be best to grow? I am open to suggestions
2) What sort of duplex should I target, single storey or double, should I take corner block and how much land would be good to built duplexes, as minimum.
3) Is this a correct strategy (lot of people doing this I guess) to built good and quick equity, if I buy in right area, eventually I can build two houses and cumulative value of both will certainly be greater than one house(Duplex will have lower value than house but still 2 duplex houses would have greater value than one house, i think) and so is the rental yield.
4) Which builder should I target? And while selecting area, I think I should keep in mind council approval too, some councils are hard to approve than others?
5) Lastly, there are lot of buyer agents and since I don't have prior experience, is it wise to hire a buyer agent specialised in development (I am thinking Caifu , if any one has used them? ) for this strategy for the first house or not? I know they will charge money but it will save lot of hassle as, as a newbie I don't know many things at in depth level. So, my main reason is to pay them just not to buy and build but to learn and acquire knowledge too, it might be faster than studying and doing own research, i think?


I would really appreciate suggestions on these pointers. I know it will take a lot of research and study and I am doing it, but it is always good to take opinions/suggestions from other people who did it themselves rather than biased views/opinions from agents (mostly).

Thanks,
Deepak

 

Imho it's too much info and knowledge to sporadically learn from a forum. I'd do a development course to at least get a foundational framework to start from. Yeah many ppl will say its not necessary and they're right, it's not absolutely necessary. But it's a dam solid place to start imo for someone who is very serious about this.

 

If you don't have any property experience, then I would recommend against trying to do a duplex development for profit. That's my short recommendation.

There's just a lot to learn about property investment generally, and then developing again is another learning curve on top of that.

You should spend some more time on this forum as well as chatting to other developers in person to try and get more of a feel of all the issues involved.

 

Sure, thanks, and I agree that it's a lot to learn in this area and that's why I am thinking to go through an agent who handles all these things and I can eventually learn as I will do my research and due diligence on top of it, so kind of managing a manager and learning from it?

 

Thanks for the suggestion, I get it and will keep in mind. I just joined this forum and trying to spend as much time here as I can. What would you suggest about joing agent who handles everything for development and eventually learning from it with my own research on top of it? Assuming agent is good and I afford to pay them.

 

It's very hard to 'manage the manager' when you really have no knowledge or experience. It's a catch 22 I understand you gotta start somewhere I guess. That's just my approach, to gain a solid, logical framework of knowledge ( via a good course) before even contemplating talking it on.


However as thatbum said, if you take a step back and really assess if this is within your risk profile at the moment. If you have minimal net worth, no property investment experience ... I wouldn't be recommeing to anyone in that position to take on a development.

I know it's not what you wanna hear but it's the responsible answer on my behalf.

 

If it were easy, everyone would be doing it. Lots of risks involved, and you need to identify them and mitigate them within your risk appetite.

Money to be made by correctly understanding the risks and being able to act when others can't figure out a solution. Money to be lost out-bidding someone who has underestimated the risks (one of you will end up taking a bath).

 

I would buy an old house in Palm Beach on the gold coast and build duplexes. Gold coast is doing well and will continue to grow. Let me know if you're interested in a joint venture.

 

Thanks but wouldn't it be cheaper and better to built on land rather than already built?

 

Some books which give you a broad outline of the basic process.

https://www.amazon.com.au/Australian-Residential-Property-Development-Investors-ebook/dp/B00SYHM5FE

https://www.amazon.com.au/Build-Pri...231293&s=gateway&sprefix=property+deve&sr=8-1

 

Thank you, much appreciated !! Will have a look.

 

First step is to understand the finance side of things - i.e. how much can you borrow, how much deposit will you need for a duplex project, finger lot project, triplex, etc. Once you have this in your hand you can determine the exact budget and in turn locations.

When you are looking at locations - look at a) the amount of stock/supply currently on the market, DA approvals in the area (upcoming stock) and current rental market. This will help you make projections about resale ability.

Its way too early to think about builders but you should understand construction cost and potential construction issues such as but not limit to access (busy streets), hydraulic requirements, basements, bush fire requirements, etc.

Buyers agents are fine but like anything you really need to find someone who knows what they are doing and they need to have the runs on the board.

 

Thanks @Shahin_Afarin , Yes, I have done calculation regarding my borrowing capacity( which is good as I have high earning job) and my budget(800 to 850 max). Plus, I am thinking to go through a buyer agent specialized in development and seems legitimitate so far. And will try to learn myself as much as I can through research and reading forums, blogs and books. Thanks for your suggestions and I am following similar approach to select area.

 

Have you done the borrowing capacity calculation yourself? The reason I ask is because if you have then it could be way off, speak to a broker asap if you haven't already, the finance side is very important to get right before you go down this path.

 

Furthmore @Lindsay_W comments, if you have spoken to a broker/banker and discussed borrowing capacity, are you specifically talking development.
So many variables to take into account.
Everyday everyone wants to be a developer, many mum and dad investors jump in without any experience or research, many only break even or some cases small loss!

 

No, I have discussed it with multiple banks and I have pre approval of 800 to 1 Mil as well. Thanks.

 

Agreed !! And that's why I am doing lot of research before straight away jumping and selected a buyer agent too. If, at some point, I would realise, I cant do it for sure, I will buy something already built in Qld or Melbourne, would be safer , might or might not give high returns.

 

Have you done a feasibility study regarding the complete costs for this kind of development and what the net gain is ie. 10% 20% etc? If you're relying on someone else to do this for you it could easily end badly for you. Buying existing property is much less risky, might not give as high returns but less likely to lose money too.
Ps. Pre approvals aren't worth squat unless they are fully credit assessed, which many aren't.

 

I agreed on both factors, but on borrowing capacity I am very sure, I will get it. On risk mitigation, I am trying to minimize it, and as per my research and study so far , yes, it would have high returns ( 10 to 15 percent atleast) but obviously with more risks involved, and which are more because I am not an expert at this stage( nobody is, I think but I am far from being an expert as i dont have prior experience). I really appreciate efforts of all of you guys suggesting other people with your valuable suggestions, experiences etc. This forum is a great place !

 

Can you find some examples of finished properties of the style you are intending to develop?
Look at final sale price, initial land purchase price etc
Reverse engineer/ backwards calculate to see if they made a profit.
I have done this to a few developments around me. Lots make little to no profit at the moment

Anyone know next weeks powerball numbers?