New vs Old - What do you think?

@sash since you know a bit of investing in VIC state, what do you think about new H&L in Cranbourne ?

Would that be a good deal or better off buy existing 3/2/2 house as investment in the long term vs. the other area like Frankston or Werribee ?

 

Political corruption in land rezoning is not a trivial issue (a couple of inside jobs) and there is well documented research available on it. Consider the following analysis in Queensland alone comprising a period from 2004 t0 2012 in 77 councils
http://ftp.iza.org/dp9028.pdf:

• 75% of rezoned land was held by politically connected and favored property developers.
• 58% of the improved land value was transferred from the community to the connected land developers.
• The final rezoned areas (predominantly privately owned) declared in ULDA declaration (2008-2010) were dramatically different (location and size) to those proposed in SEQRP (2004).
  
• When this sample is extrapolated to national level, billions are being transferred to the politically connected. http://www98.griffith.edu.au/dspace...on2006Corruption_LandDevt_SOAC.pdf?sequence=1

The disagreement appears to be namesake, as you (a) partially concede risk transfer to shareholders and (b) Ignore the profit transfer to the principals of the syndicates.

• It would appear there is conflict of interest in your posts. Hence the promptness with which you attempt to disregard the corruption in rezoning. There is a strong plausibility of your employee benefiting from political connections.
  
• Prima facie, your strategy is akin to front running in shares.
• Even if legit, a normal investor would not be privy to the kind of inside information, that you have with regard to H&L packages.

 

If you mean Cranbourne East, Cyde North they are going nuts.

The issue is buying well...the prices have gone up alot....280-300sqm lots are now hearing into the 2s. By the time you build a 17-18sqm home you are pushing into the high 3s..low 4s. The rents are likely to be 360-380pw..so the return is questionable based on the pricing.

As for Werribee.,some potential again it has moved...there are other areas which are better value.

 

We all know this..it happens all the time in NSW also...the question is how much due diligence do you do?

 

WTF!

I'm self employed champ! I have never had any inside information into rezoning. I have no idea if previous employers have or haven't to be honest. I have only ever worked and/or researched Melbourne (up until very recently), so my comments were with regard to Melbourne no other state.

Any information I have on H&L packages is from research and asking questions. I have no insider knowledge, I have researched knowledge. I would suggest from reading @sash posts that he has managed to aquire the same knowledge as me (if not more) does that mean he also must be trading on insider knowledge.

 

hmm isn't risk mitigation a fundamental part of any business. The developers that divest interest and charge PM fees are just excersing a different investment model to those who don't.

I have worked for both, but prefer Private Developers as they make more rational decisions IME, as they are less concerned about share prices and profit smoothing and more driven by net profit.

 

No point discussing ...there is a level of scepticism in making money on H&L...either you believe it or you don't.

 

Which one is it ? Both are mutually exclusive.

 

How so?

If I used to work for a financial advisor but then left and now worked for myself and bought and sold shares would that make what I do insider trading?

 

Cool, many thanks for the insight and sharing sash, I guess I'll just wait until my Park Ridge IP appreciate in time, then I can extract the equity to move on with another one in VIC state.

 

OK ..if you pull equity...please share it...it will floor some people here...

 

@sash Sure mate, looking forward for that moment

I'm sure @JDP1 will also understand that I'm confident in the suburb despite many people lose faith in it.

 

Water views in Butler I don't think so, unless you're on the other side of Marmion Ave, then this will be Jindalee or Akimos and not Butler. You will need be few levels up to have that water views.

I purchased a new townhouse in Sydney as my PPOR. It is flashy, new and great to live in. Over a period of 10 years, a 5 year old townhouse performed much better in terms of capital growth of similar location.
It's good for PPoR as inevitably emotion/family plays a big part in the purchase, but for investment on new dwelling, only the depreciation is the icing and nothing more.

 

tekoz. Ive said before that i think park ridge is as blue as johhny walker blue label :)

 

Go Tekoz!!! You got to have faith in yourself to go against the herd. There are few recent ownership of the acreage properties in PR that are of Asian surnames. You only put a few grand in for the deposit, and if Brisbane does pick up/Boom, will benefit when your PR is ready to settle. If it increases 20% upon completion, you don't need money down for the deposit.

 

In one statement you are stating that you are working for land acquisition and sales and in another you are claiming ignorance of inside information. You will not be able to do the job without the inside information, hence the contradiction. Now having the inside information, you have exploited it at two different levels and taken advantage of both your employer as well as the unsuspecting customers:

• Positioning yourself before the herd. Effectively you were buying the product that you were supposed to be selling with an inside knowledge that it will escalate the price. When Your Agent Buys Rather Than Sells Your Property - Lawyers Conveyancing
  
• Negotiating a better deal as alluded to in your other post where you have bypassed the selling agents (commission of almost 20K on a block worth < 200K) which you yourself have hired.

Simplistic and frivolous example, devoid of facts about access to the information and its unlawful exploitation either during or after the employment has been terminated, so cannot be analyzed any further.
Nevertheless physical, current or contractual association with the information is not necessary for the actions to be classified as insider trading. Insider trading laws in Australia

 

That is exactly the point that I was making since yesterday. Not only has the risk been transferred to the buyer, substantial profits have been accumulated in the beginning of the staged release, so as to bestow an unfair advantage to the estate developer in case of a downturn (OP).

 

@sash I am not contesting the profitability of H&L or your experiences (quite the opposite, I admire your willingness to share and teach as well as low entry levels, value addition and low LVRs of your strategy).

My skepticism was towards the strategy promoted by @Cactus which:

• Presumes a high level of inside information and the ability to circumvent the marketing costs which are a substantial portion of the equity gain by the time H&L is finalized.
  
• By his own admission has no backup for downturn.
  
• Has no entry or exit markers:
  • Which estates to buy ?
    
  • Any estate in Melbourne as long as it is the first stage ?
• Has no answers on when to buy as repeatedly emphasized by @MTR (beginning of up turn)

 

OK.

You do have to be selective of estates...I believe he is mostly looking at estates similar to my criteria. But agree you have to be very selective...not just any estate...the infrastructure going in is important.

 

I still think your being unreasonable as IME in acquisition, properties have been bought in already zoned land or previous to the zoning system we now have in Vic were bought subject to permit and then went through a DA process. The properties were bought based on normal business fundamentals targeting an IRR of 18-25% post management fees.

Depending on where I have worked this was either done under a private investment model or a public investment model.

In both instances some projects were successful and some less so.

The investors into these syndicates are provided all information as to the risks.

I have personally invested in some syndicates before where I believed the chances of success were high based on timing of the market.

Most of the investors to my knowledge were repeat investors for generations, some big family names here.

I have to say I'm a little disappointed with the way you go about posting on this forum you make extremely offensive implications towards people's character with very little evidence to support it.

IMO there is nothing wrong with a company raising money into a development project, debt or equity. IME it has always been done under the requirements of an AFSL giving the investors information to make a decision.

Like all investments Investors should carry out their own DD. Just like they would if they where buying an IPO.