Buyers Agents for small developments?

Well bought one 800K (yet to settle- basically will put 4 townhouses and end values will be 800K each bringing it to 3.2 mil end product value).

My 12-14 Tonwhouse site bought 1.1mil ( 12 townhouses - 750K each) - 9mil end product value. if the site sells for 2.5 mil - unless the build cost exceeds 5 mil still there is fat in the deal. Spoke to CBRE Savills, colliers international -lots of ppl still looking for dev sites and looking around

I have a few town planners i used but if one reviews 20-30 sites per week, you're be paying it out. Rather than hiring a town planner all the time this is technique used (like all variables are constant - use the concept of "architectural templating" - this is easier technique to weed out unsuitable sites before progressing to the townplanner

you don't need a commercial loan for 4 townhouses. you can get a resi one for it (done it before). For Vic, a site that is zoned higher density will always be better for dev than a lower density. Why simple logic (there is no garden minimum reqruiement) you can build a higher sqm house or less ex house because of it. Unless one is on the ground and know the codes and areas well - of course numbers do not stack up (it is like me searching for a site in Hobart based on assumption of facts)

 

I dare not tell my TP that... after getting me two sites he'd slap me silly if I told him that

 

I have asked several BA's at previous REBAA events most don't seem to want to touch the feaso. Firstly its perceived risk and Secondly they take a long time. I do rough ones but I am SUPER clear with clients that the client is taking their OWN development risk and must check all numbers for themselves. I act in good faith on reasonable estimates at the time and try to be conservative with it all but I don't want a first time developer to hear the good, ignore the bad, assume the best and then be upset with the worst. People need to be willing to own the risk if they want to become developers.

Correct most don't.

 

I had someone source a site for me acting as BA but he was a developer and understood the market that we were buying into as he developed here many times.

 

Good option @MTR - my personal dev volume is tiny but I like to think I understand the market ok and have enough local active mates in design/TP/vals/civil that I can always call to check a price when in doubt

 

Yes RAMS lo doc do 4 unit developments on resi however have to meet criteria

 

Absolutely and goes for all facets of life. Good to know what the risks are before committing rather than after the fact.

 

Hi Spotty,

i am interested. can you please email me the details? [email protected]

thank you very much!

 

well said about Perth! i was looking at subdividable sites, but hesitate to pull the trigger!

did you buy anywhere recently?

 

have you bout any?

 

Well said! i am using my SMSF super of near $300k. looking to buy small development sites in Melbourne/Vic to either subdivide and sell, or landbank for a couple of years and then sell. with SMSF you can only borrow 70%, but you can lend money to SMSF to subdivide if needed, or even do a progressive development, eg small units one by one.

Where do you think i should be looking at?

it seems that subdivision cost is lower in Vic, SA and WA.

Thank you!

 

Have you sought legal advice on this?

 

Yes. if you only subdivide and sell the lot, using money within SMSF, or borrowed money from yourself or relatives at arms' length, you can do it. the limitation is only with Limited Recourse borrowing from a financier- you can't borrow from them to build or subdivide.

google and you will find the answer. I can't remember where I saw this.

 

This is not correct.

 

Terry knows his stuff proceed with a large dose of caution. Most of my clients buy more passive buy and hold property in the SMSF and do the small developing in own name/trust or company. IE NOT in the super fund itself.

 

T

Thanks for the caution.

please refer below.

Can I develop property using my SMSF? Jo Chivers

 

why?

 

I have now read that article - not sure why you referenced it.
It shouldn't be relied upon, but it supports my position that your statement above is not correct.

A SMSF cannot borrow to sub-divide property.

 

@FullRun689 - as per your article it states no borrowed funds mixing with development (which changes the asset) and under "strict highly regulated" circumstances it may be allowable but not with traditional bank debt or LRBA of any kind (my non expert interpretation of the article). However your post above says you have 300k and want to borrow 70% (presumably under an LRBA from a bank). Hmmm. Seek advice before committing to this path as Terry has stated. If you have a verified strategy in mind by all means post it up in detail so we can learn as this is an area that not many people understand.

 

Please read carefully.
You certainly can, as long as the money used for development is not borrowed from the bank, against the property. this is what the regulator is concerned about.

if I am using SMSF, leverage @70% to buy a 400k property, and use the remaining money in my SMSF to cover 50k subdivision cost, that's perfectly fine.

you might want to check with ATO to confirm if you don't believe this.