First Development...Where to start?

I'm looking at a duplex/TH development project to skink my teeth into for 2017.

Zero experience in this field, so looking for advice where to start my research?

Thanks

 

1. Look at blocks with development potential that are for sale now.
2. Read your local town plan to see what to look out for.
3. Have a look at applications for similar developments and see what the feedback/ issues have been
4. Have a look at what completed products are selling for

 

Some good advice from RIP.

Read threads under Development category, there may be some useful information.

For your first I would start small, tread slowly and don't bite more than you can chew

Something like buy a house that can be subdivided and build new property at rear may be a good start.

Also make sure you consider market conditions, many developers go bust when markets turn, you don't want to be another statistic.

MTR

 

Good advice.
Don't forget to get your money sorted too.
Having some excess cash can solve all problems.

 

Anyone can do this. Have lots of cash to sink your teeth into is also important.

 

Thanks,

I would be aiming to develop somewhere nearing the bottom of the market (e.g. Perth) & my preference is to be able to hold the properties (not sell) until the market peaks.

@MTR what's your thoughts on the demand for duplex-style developments in Perth?

 

Nothing is making sense in Perth as far as developing goes. There is an oversupply at the moment and from what I can see we are a few years off yet. Perth is a no go.
I sold all my developments on the last rise in 2013-14, all those developments would be at least 10% down+.

For your first development I would be trying to find something in your own backyard, otherwise adding another layer of risk.

MTR

 

there are few threads on this forum that you can have quick read thru to get an idea.

Also, feel free to read guide on our website. (link blow). It will give you basic understanding of property development.

 

I agree with @MTR that Perth is tricky right now. However, if you can find a heavily discounted property and can build something out the back that is in high demand but short supply, it could possibly make sense for a hold.

I am looking at a development in the City of Belmont where there is an undersupply of 4x2 family homes. The property I have found it very close to a primary, a high school, a shopping centre and civic centre (library, pool, gym, park etc). The numbers on a build and hold (for rent) look good. The numbers for a build and sell are terrible! However, this property was heavily discounted due to a forced sale and the numbers only work because the purchase price is quite low.

 

I'm busy converting 2x1+sleepout heritage homes into 4 or 5 single bed dwellings, all under one roof.

Everyone gets a courtyard, everyone enjoys the heritage of the property, everyone effectively gets their own 'flat' and if designed right it doesn't trigger Class 2.

$1100+pw out of a single property makes things very attractive for clients.

Best bit is, this is working in Perth right now!

 

Interesting. I was looking at @Westminster threads and it seems that money has been made with her developments. Maybe you have to be extremely picky and careful in the current market?

 

If you want to pick a depressed market and hold then Perth is not a bad choice. There is still money to be had if selling and one is very very careful but it's more of a 'build now and wait' type time.

Besides Clarkson these types of deals are available in Piara Waters and Harrisdale - areas where affordability is the key if you are looking around the $700k project price. In the $800-1m bracket there is a lot more choice around Perth.

 

@Westminster Thanks for your input.

Hypothetically, if I was looking at a total project price of around $700k what would you suggest would be the minimum I would need in cash before beginning (trying to figure out how much to save over next 12 months while Perth bottoms out)?

I am at least 12 months out from having enough $$$ so this is why Perth is looking attractive to me.

@MTR my own backyard is Sydney...and as you can imaging its out of my price range unfortunately. Considered Wollongong/central coast, however I want to stick to capital cities.

 

20% would be good but when I have talked to various brokers they have indicated that banks tend to be more lenient on duplexes and will look at a LVR of 90.

 

On point "3. Have a look at applications for similar developments and see what the feedback/ issues have been"... Where exactly can we find similar applications and the feedback etc?

 

Usually it's local council websites here in WA. Sometimes you can see applications, reports and council meetings where it's discussed.

 

Find some similar properties which have been developed and apply for a planning permit history request on the property.

These are usually under $100 and obtained from the Council.

Great way to see the approved permit and plans (condition 1, Landscape, Engineering)

 

Hello,
I would definitely start small. I have properties and looking at venturing into this avenue aswell. But if study is not done and with the right people. Millions can be lost or you are forced into bankruptcy. I am building my first townhouse, then will lead into unit blocks of 10-12. Hopefully will do two a year. But I do have a mentor, who develops units into the billion project cost benchmark in Sydney. So sometimes it is best to pay for help definitely in this area. Don't want to go in blind, even though I have been acquiring for over 10 years. Maxmillian Property is helping me. Maxmillian Property | Premium Mentoring Program

 

Pay for help does not actually mean you get the right person that is the issue unfortunately and you wont know until the end. I actually see this as high risk, and if a mentor is building billion $ projects what is he doing mentoring... seriously think about it? I certainly am and see BIG FAT RED FLAGS.

The best way to learn is get your hands dirty, I agree start small. You learn along the way, you also build your own group of experts, extremely important because once you have a forumlar and the right people in place that you know and trust then you can continue to build wealth.

MTR

 

I agree with @MTR. I think it's more useful and money much better spent to pay specific independent consultants along the way to help you out if you need it rather than paying a mentoring company for a development project. When I have developed in states I don't live in and I am stuck on an area or needed help, I just paid a little for a consultant to get me through that specific issue.