Officer South House and Land Deal - using very little deposit

Been lucky. Right strategy, right place, right time.

I am in the industry so close to it. I sold my ppor unit that I bought in the previous peak and renovated and all I was left with was $50k (bought 105%).

I concentrated on the SE because that's where I was working.

Now I need to spread my wings a little.

Your the brave and clever one identifying interstate markets and acting on it.

 

All,

Been reading thread with great interest, thanks all for contributing. Certainly need to be a little more creative these days and impressed with a number of deals done here. Been playing around with some numbers myself and have come up with something for Armstrong Creek. Would need to have a drive around the area of course but as a brief feaso is this something you guys would look at?

Watermark Estate
263m2 lot size for 131,900
Build cost for 3x2x1 is 160,000
Stamp Duty - 3,500
Legals - 900
Total Cost - 296,300
End Value- 330,000
Equity - 33,700
Rent - 350-370 a week
Yield - 6.1%

Realise this isn't a great deal and ideally would be looking around Cranbourne way as closer to home. I live around Mornington so happy to shout you lunch\dinner if you would be happy to go through some numbers.

Thanks again for the insights.

 

I'm looking there too.

My concern with Watermark is the amounting of investors that seem to be buying in that particular estate as opposed to owner occupiers. Might become a bit of a rental ghetto in that corner of Armstrong Creek.

Also, with so many rentals coming online in the next year or two, 350-370 rent might be optimistic.

What builder are you looking at?

 

Was going to ask if your a QLDer.....only place I had people use that saying in convo with me...

 

I'm originally from Sydney. Funnily enough that's the first time I've used the term. Ever. Didn't sit well with me either.

 

Hi Jimmy,

I was just throwing some numbers around to see what people think. Figure I got was derived from Porter Davis, one of the designs was 175k from memory. Also looking at other estates Rockbank and Cranbourne and seeing if the numbers work.

I do see your concerns though, how have the other estates managed when a number of the H&L packages have completed? Easy enough to rent out?

Cheers

 

how do you choose what is the best lot size ? would you choose 250m2 vs 330 m2?
choose the smallest and try and fit the biggest house u can on it ? what minimum frontage ?

 

I'm confused. Your initial figures quoted $160k for the build, but here you're saying $175?

There is a lot of new rentals continually coming online in the estate, but most seem to get rented, so there is obviously a demand.

 

Hi Jimmy,

Apologies was at work when I tapped this out and for some reason thought the figure was 160k. Good to know that there is a demand. Will have to make the trip there one weekend.

I did spend some time driving around Cranbourne, Clyde and Officer. Impressed with the Clyde and Cranbourne North estates though someone took exception to my loitering. Don't blame him. There looked to be barely any vacant properties and not many rental signs (could be time of year). Do tend to agree that the ship has sailed for the smaller land deals but the interesting thing was the larger deals. Saw some plots in the St Germain estate where you could pick up 380m2 land around 220k mark, put a dual story dwelling for circa 260k so lets say 500k all up and end product selling between 650k and 800k mark in an adjacent estate. Obviously low yield is a factor here but 30% margin unless I've done my sums wrong. Serviceability will be shot after a couple of deals if planning to hold but a two year turnaround could yield a good result. Interesting to hear people's views here.

Other interesting thing I noticed is that the prices in the newer Berwick estates have barely moved in years, guessing this is because of the supply coming into the market. Anyone have any thoughts here? The major (perhaps minor) negative with the Clyde sites is the distance to rail. Certainly the Arcadia sites benefit with proximity to the Cardinia station.

I think Sash stated the strategy feels a bit like prospecting for gold, see what he means. Anyway was an interesting day, plan to drive to Melton at the weekend to see what I can find.

 

Clyde pricing is through the roof (300 sqm going for 215ish), St Germain is significantly cheaper than other estate (25% lower) due to the being extremely close the power lines, I think you will run into trouble with bank valuation when purchasing there, just some food for thought. you gotta be extra careful when it comes to Clyde due to powerlines running through the surburb.

 

Interesting thanks for the information there. I see you have bought in the area before, have your valuations been affected here? Some pretty decent houses in the estates here selling for good price. Good amenities also, any estates you favour over others?

 

I havent been affected by valuation due to being in Cranbourne North which is around 2km away from power lines, Clyde area is also know to have high costs too as I got a few quote done for lots I was looking at (20k for a 17sq house) in Hartleigh estate. For south east im favouring officer (arcadia estate) however prices are through the roof now as they want 175k for 262sq lots. However it is still the cheapest estate in Officer as it borders Pakenham compared to Timbertop etc which borders Beaconfield. I did like Rockbank but was too slow to act on it, as prices are ridiculous now. If not in a hurry, i would wait for a few new estates release in the north side (donnybrook, kakallo, lyndarum north) as south east and west are done to the death now.

 

I havent read past the first couple of pages, but congrats sash

Perfect example of thinking out side the square and you dont need to be a squillionaire or be a real estate agent to get good deals.

for me its a bit too risky however if Iwas going to do it, and I was sure about it, Iwould have bought 5

 

Thanks mate, have a few things on the go so happy to keep researching and see if this is the right strategy for me. I've signed up for updates on the land releases for the ones you mentioned. How are you finding these just out of curiosity? Driving around? realestate.com.au? Wonder how someone goes about doing this in for example Perth.

How did you go with your Cranbourne project?

 

Yeah i being doing abit of driving around and looked on RE.com, also spoken to a few builders etc. I only started my building process on my cranbourne lot , i was the an idiot that bought land and let it sit there for 3 years. Making up for it now

 

Sorry to hear it but I would imagine you've learned a lot from that. I reckon most people here have screwed up one time or another.

I once had a dev site in Pascoe Vale South, paid 465k for it, could have built three townhouses on it or renoed it for 100k adding significant value but there were issues with drainage which was missed during my feaso and with heavy work commitments decided to offload instead of think rationally about it. Reckon its probably worth 800k now. Learned a lot from that one. Having an exit strategy is very important is one!

Sorry don't mean to derail thread. I'll start calling around some of the estates in question and start putting some proper numbers together.

 

Wow was the site large in Pascoe? Townhouses there be worth 700k each by now if they are built if they are 3 bedrooms ones. Developments are very time consuming, my parents is doing a development at the back of one of their IPs and its being 1.5 years worth of back and forwards with councils with no plan approved yet.

 

How does one select an estate ? How does one go about searching for estates in a given suburb. And how does one know that a given estate is selling lots that will settle in 6/12/18 months ?
Google-fu only brings up estates which are settling currently ?

 

No 420m2 but DA approved for 3 townhouses. Build cost was 700k from memory with the townhouses valued at 550k each for 2 bed. We got the approval in 4 months but there were some unexpected costs and I decided to offload. Big mistake was not making sure the property was in a state to rent while get the relevant approvals. Knew it was a great deal but at the wrong time for us. So we all make the odd mistake.

Hope the development for your parents pans out. What are your future plans?

 

Hi Sash, I am new here and already heard about you and reading quiet a lot of things you have written/shared with the community.

I am keen to know how did you start property investing and what inspired you?

Not the right forum to ask this but I couldn't hold myself!