Brissy prop

Hi guys,

I've been a long time reader of this forum, and I'm sure I had an account years ago, but couldn't find my login. So here's to a new beginning

I've worked for developers in my early twenties, and nowadays do small property deals for myself (mostly small land subdivisions with a fixer upper component) in south east queensland. I currently have 6 deals on the go, 5 of them in Brissy. All in various stages (acquisition through to waiting on titles/sales settlements), so I'me reasonably full time with it these days. When I look for deals they have to have 6 figure net profit, 20% return on cost base, be code assessable DA's (or no DA.. ie: title splitting), and able to be completed in 3-12 months. Speed is king, and I always take an opportunity to de-risk each deal with creative conditions and things like pre-sales.

Always learning and sharing what I learn. In fact, I have to always wind myself back in at bbq's 'cos I can chew peoples ears of talking property.....

Great to be a part of this community. Again..!

Cheers,
Leon

 

Gday @LeonW , welcome aboard.
Quite a few Brisbane people around.
Which areas are your deals in?

 

Really like your boxes which need to be ticked for each deal.
- six figure net profit
- 20% return on cost base
- code asessable
- timeframe 3-12 month

Great way to mitigate risk and take on deals that you know are going to make you money in a reasonable amount of time.

Did you always have these set guidelines or has it been through previous trial and error?
Will you still look at deals that aren't code assessable / outside the box if you can tick everything else and the return mitigates the risk? Or are these set guidelines you work on now?

 

It is my understanding that QLD is still capping council to charge max 28k. I believe dwellings developed under MCU that are multi-dwelling such as townhouse/villa might be lower...

 

Six figure man!

 

Great post! Answered lots of questions I had in my head without me even needing to ask them.

Would love to hear what your risk-mitigation approaches are and how you determine the best way to make use of a site.

Have you ever bought sites with an existing DA for units/townhouses? What criteria do you look at other than the margins and profitability stated in your intro?

Hope to hear more about some of your individual projects over in the Development Forum.

 

Thanks mate. All over the place. I've currently got stuff going on in Cleveland, Hawthorne, Auchenflower, Nudgee, Ferny Hills & Rockhampton (long story...) But I've done stuff elsewhere, mostly within 12km of the CBD. I'm not really any "suburb expert", but I do know a good deal when I smell one...

 

Hi @Brady
To be honest when I first started on the Brissy market (I'm from central qld originally), I thought I'd be happy to make $40-60k on a deal. But then I got spoilt, making 6 figures even on simple reno flips in a few months. So I decided that in addition to the other stuff (code assessable stuff and 20%) I'd make the net figure $100k+. The reality is, there are plenty of deals out there. Some of the ones I'm working on now have between $300-800k net.
In saying that one of them is not code assessable (impact assessment triggered by character overlay - but get this, it was able to be put through Risksmart so I had DA in 5 days after the 15 days public notification period ended...), and 2 others are just title splitting (no DA or council involvement...).
Yes, I'll look at non code-assessable stuff, but most of the time it's not worth it for what I'm trying to achieve (speed!)

 

Yes, the $28k cap has only ever been for newly created lots of land or for 3+bedroom dwellings. 2 bedders was around $21k and 1 bedders $14k (although each council is different). There was some changes to SPA legislation last year and BCC tried on a few things (ie: charging infrastructure contributions for splitter blocks or 2 into 2 subdivisions), but they were quickly pulled into line.
From what I've heard in the last month or so there may be some changes in the wind..

 

Hi @wombat777
The biggest risk mitigation is having certainty of being able to do what needs to be done to exit the deal in profit. This normally comes down to a) buying below value or b) having certainty of getting approvals and knowing you civil costs etc..
I often do deals subject to D/D and DA, and even if the site already has DA, my offer contract may then be subject to satisfactory OpWorks approvals (as the engineering conditions from council can alter costs by 6 figures!). The other main things I look for (especially in new suburbs) is:
- days on market (for the end product I want to sell)
- DA's for similar deals to mine
- what other backup exit scenarios can I run with to get out of the deal.
- funding options (vendor finance, options, jv's, commercial funding) - I just did a deal that included all of these in one... No money down from me, weekly cashflow, with a put option at my end if the market turns. But this was a commercial property so a bit different. I'm using options elsewhere on resi deals, but they are a bit trickier to get over the line as outside of the commercial world most agents/conveyancers don't understand them..

 

I'm most familiar with the Ferny Hills area out of that list.
Would be keen to hear more details about it when you have some time to post it.

 

I think if you do 2 seperate submissions, say reconfigure of the land then another submission to build a 2 bed dwelling on the new lot, you may hit with $28k payable when you reconfiguring the lot..and I think it's difficult to get council to reimburse (I could be wrong though)

The development and infra fee are high in QLD, but you surely showed to make good money..

 

@LeonW love your posts mate, I find myself continually nodding as I read them. Hope you post a lot more, maybe post a dev your working on in the development section. Many don't like to and I can understand why but perhaps you might want to..

Cheers

 

+1

 

+2
Would like to hear some of the details.

 

correct. For ROL's, council charge for the newly created lot regardless of how many bedrooms there in the dwelling built on it. But if it is a strata (building format) subdivision (units/townies) then the numbers of bedrooms count.

 

This is probably a silly question, but if we got council approval to subdivide (but kept the house and extra block for now), would we have to pay 2 lots (excuse the pun) of rates?

 

Thanks mate. Might sneak something in there now and again. To be honest my stuff is pretty simple, I just do the hard yards finding the deals that work and avoiding the duds quickly...

 

Nicely put.

 

One of my mentors many years ago said "the only silly question is the one you didn't ask..." :-D
Basically, getting an approval does nothing to your rates.
Acting on that approval can cost you though as follows:
- if conditioned on the infrastructure charges notice, you will have to pay the contributions charge to council (ie: $28k) prior to council issuing sealed plans and compliance certificate.
- then you take those sealed plans to the titles office (actually DNRM - Department of Natural Resources & Mines) and get the new titles registered. (about $350)
- then next time council calculate rates, you'll get charged for each new title, generally based upon what OSR has determined your rateable value to be (or unimproved land value). Theoretically you could then apply to have the titles combined and the multiple lots remain, to only have one set of council rates. (this is essentially what happened 50+ years ago, which is how all those splitter blocks, 2 lots on one title, were created)
- the doozy here - land tax from OSR. (qld office of state revenue. The ultimate fraudsters...). They calculate at midnight june 30 each year the value of land held by one entity. $350k for trusts/companies, $600k for humans. And then if your newly created titles/lots exceed that amount (at midnight june 30) they put on their balaclavas and send you a big bill in the mail for something that otherwise wouldn't exist...
(note: I often pre-sell land with the settlement date 14 days after getting title. I avoid getting titles registered after about 10th June....) I did a 3 lotter last year. Got titles on June 16. Settled 2 on June 30. The 3rd one was 2nd July (buyer's bank screwed around). Didn't matter as they were worth about $270k rateable value each, and I only had one left in that entity. Just to be sure, I actually granted early possession to the vendor before June 30 (as it is technically "possession" not "ownership on title" that legislation states land tax is to be calculated from). I rang osr a few months later to check and it was all good... (even though I'd checked with 3 different solicitors!)