My "Armchair Developer" Experience (cont. from Somersoft)

Some pics would be great thanks Sanj - I'll msg you my email addy.

To calculate the losses, I took our initial investment ($113,500 for a one-bedder) and used a very conservative 10% compounding interest over the last 3 years (as if it was still in a managed fund or invested in the ASX) to come up with an opportunity cost there of $37,569, then I added to this the cost blow-out due to the extra interest on our construction loan because of building delays ($39,064.11), plus our legal fees on completion (approx. $2,157.95 for each unit/investor at this stage) to come up with the total loss of $78,791.06 for the one-bedders (or the same formula to come up with $95,744.61 for the two-bedders).

The market losses I quoted above may be quite conservative at this stage ... i.e. our one-bedder was valued three years ago by Hegney's at $430,000 but now ... I've said above $35,000 less, so $395,000, but it may even come in lower. Who nows?

There have definitely been some inaccurate costings/projections and timeline estimations from the guys behind the development, that's for sure.

We've just got to get this thing finished!

Thanks to those above for the words of encouragement!

Cheers,
Crido

 

10% compounded returns over 3 years in this market is unrealistic unless your very good. I would use the interest you would have earned in an offset account at 4.5%.

 

I like your way better!

It means we've only lost $57,594.19 on our one bedder over the last three years ... about $20K less than my calcs.

Happy days!

 

The XJO index (top 500 asx companies which is 77% of the total market) is only up 9.0% in 3 years or 3% per year annualised.
S&P/ASX 200: INDEXASX:XJO quotes & news - Google Finance

 

Crido, thanks for sharing, interesting read.

 

Thanks for that link ... I was searching (fruitlessly) for an interactive graph just like that.

 

Crido
what surprises me is these guys are still promoting projects.


MTR

 

These guys are sharks - Have a look into the owners fo Bird property group, who also appear on the council minutes representing the construction comapny for EOS(which they have obviouse ties too) brother / cousin (same last name).

All very dodgy!

 

I feel for you @Crido . This certainly hasn't been an easy seat in the armchair. I suspect your chair looks more like this:

 

Crido. Thanks for your open and honest posts. I read most on my four inch screen.

That loss you calculated is small. At least you'll get the end product and will make a CG in the end for you and your family.

 

Cheers datto!

I'm all for "green-framing" things in life, so thanks for the reminder! Good one!

A new update should be fairly close - the builder has told us two weeks until completion of the build and our development manager has doubled that based on past experience and told us four weeks!

This is taking soooooooo long that we (the investors) feel like we're travelling on the back of a snail!

Happy New Year to all!

Cheers,
Crido

 

Hey Spanna. Can you elaborate please?

Our builder is Danmar and I wasn't aware of any family ties to our development manager, Bird Property Group, but then again, I didn't go looking for any either.

Cheers,
Crido

 

Hi sanj,

I've messaged you a couple of times now after you've offered to take some pics and would love you to take some pics it's not too difficult and you're in the area, however I've never heard back from the private messages I've sent you. Are you getting them?

Cheers,
Crido

 

I smell a class action coming on!

 

The winner will probably be the lawyers that will be the problem.

Perhaps just move on and lesson learnt from this very bad experience.

To think prior to developing in Perth/Melb I was seriously looking at their projects, glad I did not jump in, the reason was lack of control for me and no evidence of experience.

MTR

 

@Crido if I knew this I would have gone and taken some photos for you when I'm in the area but I'm off to Japan today. I'll be back in 2 and a bit weeks if you need anything.

 

Hey mate sorry I was out of town when u sent them and subsequently completely forgot. I'll send some through by tomorrow

 

Yes, I agree MTR ... better to just get this thing finished, learn from it, and move on.

Thanks for the offer @Westminster, and @sanj that'd be great thanks mate!

 

I see a couple of investors are jumping ship

https://gallery.mailchimp.com/3ed58eca368eacb75dfa76953/files/loftus_profile_unit_4.pdf

 

Geez. $665k for 2x1 apartment in North Perth. A bit optimistic? I was running numbers based on $480k end value for 2x2 apartments in North Perth.