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Starting through new builds

Discussion in 'Development' started by TDITD, 6th Aug, 2015.

  1. TDITD

    TDITD New Member

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    QLD
    Hi Guys,

    Im new here but did used to lurk on somersoft from time to time over the past four or so years.

    Anyhow, I am looking to get involved in development of new homes to sell. In the gold coast - brisbane areas.

    A little background: was about to get into property renovations three years ago, had quite a bad accident and am only just now coming out the other side. Reno's are out of the question now.

    Current: Have a builder friend who i'm teaming up with to build new houses on new estates.

    Obviously with all investment there is risk. Has anyone started out like this before or dabbling in it now?

    We have only just started looking at new estates now so are very fresh into our venture. I have seen many excel sheets and checklists but not any tailored towards this particular field. Also looked for gold coast meet-up (bugger there are none).

    Does anyone have any helpful tips ? anything from books on this to people I could sit down with and pick their willing brain ?
     
  2. Hodor

    Hodor Well-Known Member

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    Have to ask yourself why someone wouldn't build exactly what they want rather than buy off you when there is plenty of land in new estates?

    Leveraging your building contacts sounds like a good idea, especially if you also add expertise to the equation.

    I have just built in a new estate, probably would make ~20% profit on build price (everything included) if I sold. Taking out holding costs, lost opportunity cost, transaction costs etc I'm not sure the risk would be worth it if selling was my goal, especially considering the market has gone up accounting for some of the profit which I could have made buying established.

    Hope that's some food for thought
     
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  3. TDITD

    TDITD New Member

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    Hi @Hodor thanks.

    Yes I have pondered that same question - it seems many houses are being sold off the plan, having been on a fair few little 'drives' around these new estates and spoken to some of the sales people (i know) it seems that
    1. people don't value decent sized blocks anymore - even in further outr suburbs
    2. many people seem happy to move into a newly built home instead of the 'hassle' of doing it themselves.
    3. enough smaller builders also do this.

    I was hoping to get into this to start off with as opposed to finding a duplex opportunity straight away.
    Also seeing that with such a big community here I have not really seen it talked about, there may be a niche for it (alternatively it could be a terrible way of starting out)
     
  4. Aaron Sice

    Aaron Sice Well-Known Member

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    those "splitter blocks" as you Easties call them - look for areas where the end split product has a disproportionately higher sqm rate than the unsplit lot.

    ie us Westies call them duplex lots. So a duplex lot, unsplit here, might be $1800sqm. But after the split, they can be moved for $1950 - $2100 sqm as long as there's plans in place, for example.

    that's the smaller way to generate equity, but the kickback is usually sitting inside a builder's rebate, structured either as a markup or a commission.

    so you might make $20k on the lot and $20k on the build, leaving you with $40k after costs.

    even in new estates, a 400sqm lot might sell for $400k, but a pair of 200sqm lots might sell for $225k each - they're the kind of opportunities that are easier to jump on first up.
     
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  5. TDITD

    TDITD New Member

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    Im with you Aaron, much prefer duplex lot sounds far better.
     
  6. Be Developer

    Be Developer Property Developer Business Member

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    On side note, as you said you have builder friend.

    Best to have clear and documentend partnership agreement detailing investment and proft distribution and duties!

    I have seen many such JV ending bitterly!
     
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  7. lil85

    lil85 Member

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    Location:
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    I am thinking of doing the same in Melbourne, even though I don't have any builder friend. Luckily in Melbourne there are new estates in established suburbs.

    Just attended an auction in Doncaster, brand new house with standard finishing sold for $1.8 million. I am guessing the build cost was about $600k as the land had a slope, so it has basement garage. Same size land in the new estate was sold for $875k. Not bad profit at all. Being a new estate, I guess it would be easy to get plans and permit.

    Any one tried this strategy before?
     
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  8. Brian84

    Brian84 Well-Known Member

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    Not sure how it works on the Gold Coast but in Sydney in new estates you have to wait upto 18montgs for the land to get registered. From time of purchase to settlement/land Registered you only have to put down a small deposit then once it is settled you sell the land as a registered block and make some money that way. My sister bought land in oran park sydney and it has gone up $150k while she has waited for it to register. I also know a guy that done this in kellyville in the early days and made approx $500k with a few blocks. I think those days are over for sydney now though.
     
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