Best areas for investment in Land and Duplex

is 800k - 1 mil the budget for the purchase or the entire development

 

If that's the opinion of a broker or banker, great.

If this is a figure you've come up with yourself, please get it verified. Every day I see people who are confident of their own calculations on borrowing capacity, but get a very rude shock when this is tested against what lenders will actually do.

 

Entire development. Thanks

 

I got it verified, thanks .

 

I did reverse engineer some of them and those the buyer agents are claiming, they certainly did well but of course those are the good examples and there will be bad ones too, I am sure. Also, those developments were from last 2-3 years not sure about the current scenario though. Those were around Newcastle and Central coast.

I will reveal the powerball numbers once I am sure where and how to do investment i am planning for

 

are you aware what the construction costs are of a duplex?

If its a double storey 4/2/1 after all expenses id be suprised if you have change from 800k (building and associated costs only)

As the markets are cooling (stagnating) you also would not really have chance to make a mistake and recover from external forces

Most duplexes ive seen are not that profitable - Lot are being done by builders where they arent really counting their own margins and then boasting decent profit

Rule of thumb a duplex unit value is around the same price as a lower quality house on a full block of that suburb. Unless your doing one where the suburb median is over 1 million i do not really see any profit

 

Around 550-580k, correct me If I am wrong please, got some estimates. And I am not targeting Sydney anyway, so will build where land is affordable (Central coast or brisbane) and still good demand, low vacancy rates and other factors etc. It would be 3 bed, single storey. And anyway, I am not planning to sell after building, I will hold it and put it on rent. and that's why researching rental yields of the suburbs as well.

 

Agreed its possible for 550-580 if its a single storey 3 bedder, but good luck finding land in central coast or brisbane for 220-250k where you can put up a duplex.

Just saying anywhere the land is that cheap you would be overcapitalizing

example might be in the hunter region
Land 250k + construction 550k
While existing house and land packages are 500k for 4/2/2 on full size lots and older 3/1/1 on full size lots are 350ish
Good luck getting valuation of over 400k each for a 3/2/1 on a half size lot

Not saying its impossible but for someone quiet new and looking at a buyers agent going to be extrememly difficult and could be costly lesson (either time/stress or financially)

 

If what you're actually looking for is rental yield then maybe consider alternatives to building a brand new duplex.
One alternative might be; buy older houses on larger pieces of land as close to the CBD as possible, with potential to eventually subdivide/develop when there is demand in the market. There are a few threads on Property chat talking about areas in South East QLD that have good rental yields between 5-6%+, you could probably buy 3 (maaaybe stretch it to 4) existing houses for the same money as you're talking about spending on a duplex development. Just a thought.

 

Thanks @Lindsay_W , this is a great suggestion, indeed. I have that in mind as well. Right now, I am exploring all options and research with my inclination is more towards duplex building due to potential high growth (or not). My main focus is to build good and quick equity as I mentioned in my post(not that easy, I agree). But as I said earlier, if I think it's too too risky or not that profitable, I will stick to buying some old house in Melb/QLD.

I completely agree that I can buy 2, may be one in Melbourne, one in QLD and can make my portfolio diverse by investing in different markets. But on the other hand if i build, I dont need entire money at one go and it will be in phases which will give me time to save more. Again, both has it's own pros and cons and being a newbie makes your suggested approach much safer, I agree.

Talking about QLD, anyone has any idea on which suburbs to invest for best growth in 2-3 years with no negative gear. I just read an article an found three suburbs could be good - Kedron, Strathpine and Oxley with prediction of 20-25 percent within next 3-5 years. I found Kedron is bit expensive and Strathpine is bit far from CBD (not that much though) which makes Oxley a winner (for me) as it is affordable, positive gearing (not all though) and close to CBD (9 KM), all with vacancy rates lesser than 3 percent.

Also,how about suburbs like Ormaeu and Caloundra, are they good for growth down the line?

Thanks,
Deepak

 

I agree I need a great luck to find the cheap and good land in good area, as you said not impossible but close to impossible for a newbie, which makes it riskier. Thanks for your honest feedback/suggestions though, appreciated

 

Am I the only person to have some concerns about this? I just think out of all the things to outsource when developing, having the skills to assess and find your own site is not one of them.

I don't know any successful small scale developers that do this.

 

It's not exactly someone else finding my site but someone with expertise providing multiple options and i will access (try my best) and then decide if those options are really profitable and with least risks involved. I completely understand your point though and yes, i agree for an inexperienced person, it might not be very wise or might need a great deal of time, research and passion but as I said I am at that stage where i am exploring all my feasible options to maximize my profits after mitigating risks involved.

 

Yeah but I think you're approaching this developing thing with a presumption that generally most people make money. I would say you should be approaching it with the presumption that you will lose money, unless there is something exceptional or special that you are doing in your developing process.

So for example, that might be site selection, or being a builder and saving on construction costs.

If you're just outsourcing important parts of the process, and inexperienced in others - then where is the part where you are adding value or earning the profit?

Sorry to be brutal, but I all too often see inexperienced developers lose money.

 

Thanks for being brutally honest, I need honest opinions anyway and not sweet words which everyone wants to hear, if it comes to my investments I agree with you and to be honest I am not that experienced yet, to do it stand alone but the buyer agent I am thinking, looks good for now, I will have a discussion with them next week though after which I will dig more and will then decide. I think I have mentioned in one of my previous posts too, the agent i am thinking is Caifu properties and I haven't found anything against them yet. If anyone personally used them, I am open to suggestions and would love to hear thoughts. They are claiming to provide better deals than market(lower than market value, their words), using good builder and managing end to end from approvals to build to rent it out. And they will provide options until and unless I am 100 percent satisfied and will go with the one with an option to buy multiple properties within 12 months of buying my firs property, if I have capacity. Also, they are charging fee but their way is bit transparent in terms of they are not hiding their fee etc and it's still lot lesser than other agents. Also, i am sure they must be making money in other things too but as far as I am gaining profits as they are claiming I don't mind.

Last but not least, yes I am hoping for profits but in worst case I know it will be no profit no loss or bit of loss but still i am thinking I will have two houses (not houses -houses but still will be better than Units) and I can easily rent it out as anyway my plan is to hold,provided I chose the right location, so I think site selection is most important.

 

After a few of the above replies you might want to read through every single post on the development section (yes it might take a few months) and learn - lot of people have shared their diaries which are really good and also check how old those threads (few are 3-4 yrs from start to complete). Id find this more valuable than any textbook or book (no developer you are aspiring to be at this stage ever wrote a book haha)

Developing is a part time job at minimum and it will take an impact on your current employment (unless you feel thats part time as well).
Doing it in a different state or city will make if more difficult

Ask yourself what is your value in the project? Dont need to answer to us but what do you bring to the development.

Im sure a buyers agent will find you something. Heck give me 10k and I can find you a duplex site tomorrow and hold your hand through most of it. The only problem here is that the gains would be extremely minimal and if it was me id personally not bother

Are you handy? ever considered buying cheap poor condition and renovating and adding equity in better area (maybe even sydney)

 

Lol I am programmer with full time job, just doing like a part time job today, that's a different story and yes, I get that, it is already killing/impacting my current job a lot and I haven't even started. That agent is costing lot lesser than 10k and that's why I got bit of interested. But with all your valuable feedback, I already have started thinking in other directions too. Any suggestions on QLD suburbs for already build houses?

 

I would be suprised to know what the agent is charging you and for what?
Buyers agents usually charge around that and thats only for sourcing not project managing the development

 

They are charging 5k for these development projects and i think they have teamed up or may be have contacts with lot of builders, architects, etc, not sure and they are claiming they will handle everything and will be transparent at every stage(of course it is too good to be true and that's why I am going to meet them , although it wont change much I guess). Contracts and all they ll explain and will start only If I am 100 percent happy and would like to go, otherwise they ll tell next suitable option. A quick google search on caifu properties and watching some of their videos would do it for you. They have done it in Wadalbla and Fletcher as their successful examples which they are showing in their videos. They said currently most of their projects are in Brisbane and some are in Coast. One of their guy told me some of the builder names they are using too.

 

That is suspiciously cheap.