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Highest Returns in Perth and WA for Developments

Discussion in 'Development' started by TobyRichardson, 23rd Mar, 2016.

  1. TobyRichardson

    TobyRichardson Active Member

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    Hi guys,

    I've seen a lot of people asking about various areas and which areas are good for investing so I thought it might be worth me posting the returns I'm getting for different projects in different areas.

    These are my results for townhouses and units:
    Cannington: 28%
    Midland: 18%
    Maddington: 17%

    These are my results for other developments:
    Bunbury: 30% (longer sales time)
    Geraldton: 27% (longer sales time) 10% Rental Yield
    Broome 50% (Industrial)
    Port Hedland: 23% (Not repeatable at the moment)

    What are you guys getting?
     
  2. thatbum

    thatbum Well-Known Member

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    Not sure how useful a comparison of percentage numbers is in isolation...
     
  3. TobyRichardson

    TobyRichardson Active Member

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    True.

    It's more to do with a lot of people saying you can't get good returns in certain areas etc. and being negative.

    I just wanted to show what's currently being achieved despite market conditions. The Port Hedland property is the only one that wasn't very recent.
     
  4. Big Daddy

    Big Daddy Well-Known Member

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    Well done. Thanks for sharing.
    How are the build costs and build timeframes in Bunbury and geraldton compared to perth metro?
     
  5. TobyRichardson

    TobyRichardson Active Member

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    It's hard to say with time frames because it varies so much from builder to builder. I shop around a lot with any builders that I use so prices usually are on par with Perth. They might have less work but they also have less overheads in terms of rent and traffic management etc.
     
  6. MTR

    MTR Well-Known Member Premium Member

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    hi TobyR

    are these % after sales?

    are these recent projects


    23% returns for Port Hedland, you dodged a bullet then, prices have dropped 40%

    are these your projects or these clients projects?

    sorry all the questions, but perhaps I am doing something wrong because not much is stacking up today in Perth market.

    thanks
    mtr
     
  7. Aaron Sice

    Aaron Sice Well-Known Member

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    Broome? Really? How old are these figures?

    Best deal I've seen is 35% but most yield about 18-25% pre GST.
     
  8. Big Daddy

    Big Daddy Well-Known Member

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    I would have thought it would be extra build costs due to the material transport costs outside Perth metro.

    30% is a fantastic return. Can anyone get these returns with some DD in those areas or did you source the land off-market or pay cash, or know/are a builder and have low construction costs?
     
  9. TobyRichardson

    TobyRichardson Active Member

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    The Broome figures are recent. It was a construction of several factory units that were then tenanted and sold as a going concern. The value comes from the lease more so than the building. "Light service industrial" is really cheap to build compared to the income they produce.
    We had the adjacent block for some time but that's not really a part of this deal at all.

    Bunbury was all land sales without construction costs. Builders are pretty easy to get cheap at the moment. I'm more referring to Bunbury as being on par. It could be hit and miss in Geraldton and I haven't done enough projects there to say for sure.

    The elusive art of deal finding I think comes down to having cash on hand for a deposit more often than not. With different zoning changes and more public awareness about developments, there are a lot more people asking too much for their sites and it's quite tricky but definitely still possible to find deals. I think working in the 23-25% sort of space is probably best so we're not waiting around too long for sites.

    Got out of Hedland at a good time but also got in at a good time :). Definitely not figures that one should expect any time soon.

    None of these are clients projects but none of them are 100% mine. They're all different sorts of joint ventures.
     
  10. TobyRichardson

    TobyRichardson Active Member

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    As an addition to the above. It might be hard to get a deal to stack up in this market but it's twenty times easier to negotiate on it and get better terms.
     
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  11. MTR

    MTR Well-Known Member Premium Member

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    [
    I just wish it was that easy.the problem is the end values in a falling market, and I know from research that buyers have choice in this market so as a developer we are screwed unless we are keeping the prices real, so account for lower prices on completion. Is this negative, I don't think so, this is realistic.

    Caveat......If investors are holding developments and it is cashflow positive fantastic.
     
  12. TobyRichardson

    TobyRichardson Active Member

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    Accounting for lower prices is just a standard part off DD. No changes there.

    Build prices are now cheaper, land is a bit cheaper, consultants are cheaper, agents are cheaper (not that I would ever use a discounting agent) and the list goes on.
    Times like this are the best for developing. Once prices start rising all we will hear about is "the bubble" and how it wont last and people shouldn't be developing.

    It comes down to not over extending yourself and only ever risking a certain percentage of your money. If people are that worried about it, they should only do a development that they can afford with cash so there's no holding costs. I know a few people who only do deals where they can purchase the land outright so that there's no holding costs until building.

    The time for grasping your future is always now my friend.
     
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  13. MTR

    MTR Well-Known Member Premium Member

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    great stuff
    can you give an example/figures of one of the recent deals you mentioned

    thanks
     
  14. Aaron Sice

    Aaron Sice Well-Known Member

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  15. Aaron Sice

    Aaron Sice Well-Known Member

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    Know your market.

    Recent parcel of land I saw, only suitable for two dwellings changed from a 20% equity deal to 30% by simply changing the product slightly.
     
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  16. sanj

    sanj Well-Known Member

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    no one has mentioned building better product, putting more effort into design and not just changing specs to include stone tops in bathrooms and 900 wide cook tops.

    the day of lazy developers producing average 3x2 villas that looks like hundreds of others with barely any thought going into it is over (for now). long may it continue

    you can no longer go to a builder for a 3-6 pack standard villa design and build and expect to make good money, that's imo a good thing.

    you need to know your feasos inside out, be on point with every single aspect and be smarter.
     
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  17. Aaron Sice

    Aaron Sice Well-Known Member

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  18. Big Daddy

    Big Daddy Well-Known Member

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    Can you elaborate please ? What was changed ?
     
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  19. MTR

    MTR Well-Known Member Premium Member

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    I agree to a point, but there is an oversupply of apartments in Perth? what product
     
  20. TobyRichardson

    TobyRichardson Active Member

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    What deal do you want to know about?