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Finding next dev IP with no buyers agent, what do I look for?

Discussion in 'Development' started by Daveh, 9th Jun, 2016.

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  1. Daveh

    Daveh Well-Known Member

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    Hi all,

    I was initially thinking about using a buyer's agent to purchase our next build and retain IP. As we've already built 3 units on a triplex in Nollamara, used buyers agent, and was successful.

    However it's a fairly expensive process ($13k) Plus I'm not really learning anything, which is more important.

    If I was looking for a potential triplex or duplex site in Perth for a build and retain, other than the information I can already gather....

    Area
    Block sqm
    Zoning
    Historical sold and rented values.

    What else should I take into consideration?

    Septic tanks (if any exist)
    Power dome (if it exists and where is it located)
    Sewerage (where is it)
    3m gap between existing house and boundary. (To build at rear)
    Block topography. (For retaining)

    How do I find this information? How do I find out what costs are involved? Other than what I've listed, what am I missing?

    Thanks
    Dave
     
  2. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    Why aren't you learning anything? :confused: Ask the BA to cc or bcc you in on all the stuff they do to assess a property during the search. If they won't do it, choose a BA who will.
     
  3. Daveh

    Daveh Well-Known Member

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    That's fine, however this is a BA's Intellectual Property, I'm sure any BA wouldn't want to part with all of their knowledge.

    If the information I receive in this thread shows that it's too much for me to handle then I'll end up maybe having to use a BA anyway. I just want to see if it's in my capability to learn how to do it from all the pros on this forum.
     
  4. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Paying a Town Planner for the local knowledge and tech support may be an alternative. They can assess each site for max value and what council permits etc
     
  5. sanj

    sanj Well-Known Member

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    The most important thing to consider is the expected realistic margin, taking into account all costs and including a contingency.

    Some of the items you mentioned above are of course relevant as well, just remember everythinf is about the $$ ans whether the numbers stack up.

    Who did you use previously to buy the nollamara site? Was it momentum? They would/should have given you a feasibility as part of their recommendation to buy this site and max purchase price the project could handle, if you dig that feaso out it will be a good starting point for you to see what you need to take into account (assuming it was a decent feaso).

    Were your final profit figures at the end of the project in line with the feaso? If not why?
     
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  6. Leo2413

    Leo2413 Well-Known Member Premium Member

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    @sanj Do you generally set a contingency of 5-10% of the construction costs?

    Thanks mate
     
  7. theperthurbanist

    theperthurbanist Well-Known Member

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    Yowsers! $13k! The last quote I got for Perth always $17 BA fee for a development site (with Momentum wealth, so admittedly every other player in town would be cheaper than them.
     
  8. Perthguy

    Perthguy Well-Known Member

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    Council web sites should be able to tell you the zoning. Some also have power and trees, such as City of Belmont. Also check google street view to see what you can see. This can give some indication of topography. Mostly though, you would find out from a site inspection.
     
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  9. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    There are not a lot of players in this space that I am aware off so would have been 1 of 2 others who are slightly cheaper than MW.
     
  10. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    I purchased a devie site via a BA and learned a lot from them. Will request a cc in every email in future as thats a great idea.
     
  11. JohnPropChat

    JohnPropChat Well-Known Member

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    Practice to do a complete feaso on blocks. Go to the opening, check the area out and start a checklist. Each site is different but there are also a lot of common things to cross off and you've listed some of them.

    Draftee/Town Planners tend to have good insights into dev potential. Nollamara did well in the last cycle. Congratulations.
     
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  12. Perthguy

    Perthguy Well-Known Member

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    @Daveh I suggest you just run some desktop feasibilities on properties you are not that interested in to run past the group. There is a lot of experience here and in my experience people are happy to critique any proposal. For example, take a property in an area I know well.

    61 Arlunya Avenue, Belmont WA 6104 - House For Sale - 2013009482

    My first port of call is the ksou property report.

    61 Arlunya Avenue, Belmont - Report, Sold Price

    which links to land slope

    Land slope of 61 Arlunya Avenue ,WA

    The asking price for this property is $578/sqm. How does that compare to the area?

    This is where some knowledge is required to make a valid comparison. You will be trying to compare similar block sizes and similar condition houses and similar locational features. I can give 3 examples.

    1. 21 Arlunya Ave sold for $646,000 in July. It is a similar sized block but having a look at the pictures, the house is in much better condition inside and also has a pool. This would indicate a higher sale price.

    21 Arlunya Avenue, Belmont, WA 6104 - View Sold History & Research Property Values - realestate.com.au

    2. 49 Arlunya Ave sold for $500,000 in August last year. It is a similar sized block but it is right next to a large electricity sub-station, which would indicate a lower price. There would also be issues for a retain and build scenario.

    Sold Price for 49 Arlunya Avenue Belmont WA 6104

    3. If we sneak into the next suburb (Cloverdale), there is a recent sale at 79 Arlunya Ave, which sold for $485,000 in June. The block is much smaller but is still a potential duplex. Cloverdale is generally cheaper than Belmont, so the $/sqm price would expected to be less than 61 Arlunya Ave. Looking at the pictures, the house is partially renovated but looks to have some issues. It also has a pool, which is a negative for a retain and build scenario.

    Sold Price for 79 Arlunya Ave Cloverdale WA 6105

    The asking price of $578/sqm for 61 is higher than the sale price for 79, which was $552/sqm. Accounting for the higher price in Belmont, we might say that 61 is worth $560/sqm, which would put the value at around $572,000. This would need further investigation of course, but it gives you some idea of how to get started.
     
  13. Perthguy

    Perthguy Well-Known Member

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    Next I would check the council web site for map data, IntraMaps

    Looking on the aerial photo, it looks there is potentially enough access down the side for a retain and build scenario. I seem to recall Belmont having street trees and maybe some kind of drainage assets on their mapping? I don't see any of that but I could be getting mixed up with another council.

    Google street maps street view confirms there are no street trees or power poles blocking access. Also note the location of any side entry pits (drain covers). You don't want them where you would locate a driveway. There are none for this property but there is one next door to give you an idea of what they look like.

    https://www.google.com.au/maps/@-31...zV2sZh4O6d44SHSqLQ!2e0!7i13312!8i6656!6m1!1e1

    Also check google aerial photo for large trees, which can be expensive to remove.
     
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  14. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Once you have worked out the things that @Perthguy has listed above then you get an account with Dial Before You Dig (it's free) and put in the details for the block so you can see where the sewer lines are.
    It will also show you other information but it's mainly the sewer lines from Water Corp that is the initial place to get past.

    You can do the maths first and determine if it's feasible then do the physical/structural feasibility (slope, trees, sewer etc) OR you can determine physical attributes then work out maths/money
     
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  15. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Once you have the AOK on those then double check the local town planning scheme to ensure that there isn't something to prevent it - especially be wary of split density coding like R20/40. Note there is a lot around and many subpar REAs are advertising these as R40 when they are R20/40 so ALWAYS double check the zoning listed in an advert.
    When looking at Town Planning schemes check special design guidelines ( may stipulate different setbacks etc than Rcodes making a site almost impossible to work with), developer contributions, character preservation areas, zoning tables not allowing certain types of developments etc etc
     
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  16. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    @Perthguy and @Westminster thats (potential) gold right there.

    Its a good idea if you want to fast track it by haveing someone to do all that for you OR to have them check your figures and feaso.
     
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  17. Perthguy

    Perthguy Well-Known Member

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    This is super important! I am developing on an R20/40 block in City of Belmont and it been painful trying to navigate the rules in the Local Planning Scheme that relate to the R20/40 code. Even if your block is coded for R20/40, you might not be able to develop at R40 particularly if the block is too small or too narrow according to the rules.

    That reminds me too that some Councils have special rules for corner blocks. In City of Belmont, I think you can have any corner block as R30, even if it is coded R20. That won't necessarily be in the ad.
     
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  18. JohnPropChat

    JohnPropChat Well-Known Member

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    Agree with the R30 for corner blocks in City of Belmont. City of Belmont had/has this weird rule about one of the lots being built as a duplex to develop at R40. Is this still the case?
     
  19. Perthguy

    Perthguy Well-Known Member

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    That's not my understanding. They have a whole lot of rules in the R20/40 code if you want to develop at R40. One of the rules is this:

    A minimum of 50% of the total number of dwellings in the development are two storey where the density exceeds R30.​

    http://www.planning.wa.gov.au/LPS/D...Belmont - City of (Scheme 15)/Scheme Text.pdf
     
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  20. JohnPropChat

    JohnPropChat Well-Known Member

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    Yeah, not a big fan of rules like that. I think Belmont has better end values for single storey products. Town houses got hammered real bad.