Best JV options in this Brisbane market

Discussion in 'Investment Strategy' started by Medusa, 6th Sep, 2020.

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  1. Medusa

    Medusa Well-Known Member

    Joined:
    11th Sep, 2019
    Posts:
    75
    Location:
    Brisbane
    Hi all,

    A long term friend of mine is a builder is finishing up his latest Reno flip end of October, has asked me if I would like to partner with him in a JV around Christmas time. I suspect he wants my cash to inject into the higher price range neighbourhoods in order to make a higher return, ie Paddington / Bullimba / Ascot and the likes. His previous flips were around 7km to CBD.

    Options he gave me are all flips:
    1 Raise character detailed timber house, renovate and build under min 600sqm lot.
    2 Buy a splitter block, knock down build new home, sell 2nd block vacant.
    3 Buy a battleaxe sub-dividable block, renovate house (possibly build under), sell new lot.
    4 Buy house with large enough lot allowance for 2 townhouses in back/side.

    Does anyone have any advice if these options are still making decent money in 2020? And or if there are any better safer options that aren't going to break the bank - ie further out from the city. If we can make less money but faster in say 20km radius from CBD I would much prefer that, but I fear he only wants to work in the under 5km CBD radius.

    I know he is quality builder, I've seen his previous work. I guess I'm a little hesitant of the extra risk associated with the high costs of Brisbane's premium suburbs...and also going into business with a friend.
    Cheers.
     
  2. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    10,260
    Location:
    Australia
    Surely the first thing to consider in a flip is have an idea of how much you can sell the end product for? Why do you have to ask if these options are still making decent money? The business plan should include selling prices and comparables.
     
  3. Medusa

    Medusa Well-Known Member

    Joined:
    11th Sep, 2019
    Posts:
    75
    Location:
    Brisbane
    Hence me asking about best options. This is essentially the starting point of the business plan, I have not agreed to the JV or discussed finances yet, (we are meeting next wknd). This 1st step is trying to zone in on what type of venture is best suited to current market conditions to yield highest return, then we will get to capital, P&L and market comparable sales etc.
     
  4. wylie

    wylie Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    13,934
    Location:
    Brisbane
    We are doing four townhouses in Coorparoo. A builder friend wanted to buy our block, ignore the DA we got, and do a major renovation, add a pool, high end renovation that would sell for around $2m+. He said in the current climate (18 months ago) the money was not in what we planned to do (townhouses) but in high end, big money renovations in good areas.