澳洲Australia property Developers vs Builders | Sydney


在澳大利亚 Hi Guys, Ive found a property that has mentioned two payments coming up of $1400 to apparently top up the admin fund and 2 have just been paid. Im looking at a financial statement (basically a balance sheet) for the strata and its all a bit Hi all, I currently have a PPOR and 10K cash in the bank which I plan to use as a deposit for a IP early next year. Is it possible for me to place this into my PPOR loan and then redraw the 10K when Im ready for the IP and then claim the int


Hi all,

Over the weekend I had a look at a property that was perfect for redevelopment: 20 by 45 m; totally flat; high side of road; good area; small fibro that would be OK to rent as is until plans are ready; council seem to allow townhouses (I have not yet checked).

The property was up for aution.

While I was at the inspection I saw a few people that looked like builders which made me think, how can I compete with them? If a builder was interested in the same property as I am, they would be able to put in a bid much higher than me as they would bake this into their total profit magin. If I put in a bid I have to have my profit margin and then also the builder's margin (possibly hiring one of the builers that I had just bid against).

Any thoughts on this? How can I compete with a developer/builder?

Cheers,
Lars  

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Dear Lars,

If you think you can you can. If you think you can't you can't.

Couple of questions:

-Is it easier to find good deals on a Saturday or on a weekday?
-Would a builder in a heated building environment give up their margin to take on the financial risk of a project?
-How many projects can a builder/developer finance at any one time?
-How well do you know your local market? Have you taken the time to research the local zoning maps and future council plans for the area?
-Why can't you become a developer?
-Why do builders advertise their services for sale if they can do it all themselves?
-Do real estate agents take the time to purchase zoning maps?
-Are you creative enough to find new revenue streams for the property and ideas that others cannot see? (This may give it a different or even higher valuation than others think is possible.)

The point is no-one knows everything and no-one has the resources (money and time) to do all the things they would like to. My last purchase that I signed a week and a half ago had only two buyers come out and see it. I was one of them and I signed a contract on the spot. If I was not able to go out and visit the property when one of my real estate agents called it would have been sold before I had the chance.

If it was a perfect market then the property would have sold for a considerably higher amount. And if the property was marketed and advertised well and attracted lots of publicity........

Yes you can compete. If you think you can't then you have already lost. Know your market so well that you know it better than your local agents. You will find the opportunities.

Cheers,

Sunstone.  

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Thanks Sunstone,

Very wise words.

I have to think more on seeing the opportunities rather than all the negatives (I am working on it).

Cheers,
Lars  

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Dear Lars,

Good to hear mate.

Let us know how you go. This forum is here to encourage and help each other. :)

Cheers,

Sunstone.  

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Lars
You are correct in saying a builder can usually pay more for a potential development site than you.
I have often lost out on sites when a small builder has purchased a property at what I would consider too high a price and it is obvious he is buying himself a job for the next year. Either he is not that interested in the development profit or can't do his sums (probably the latter)
The other challenge we have is the inexperienced developer who pays way too much for a property because he doesn't know what sums to do.
The answer:-
As Sunstone says there are opportunities in every market - you just have to keep looking for them and not be discouraged.
The good thing is as you start looking at bigger projects 4- 10 unit sites - where the land cost is $1 to 2 million the game changes. You are dealing more with professionals who all do their sums the same way.
Keep searching and doing your homework Good Luck! (I guess you make your own luck)  

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Lars,

Put a bid in now!

There's a chance that you can tie it up and take it off the market before the auction, maybe doing a run around the builders who need more due diligence before they can secure finance.

Cheers,

Aceyducey  

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Allow me to add my 2c worth.

Personally I have found it a big fun and excitement exploiting the niches in between developers/builders market and "conventional investor" market.

100% agree with MY that small builders mostly looking for a next 12 months worth of job. The other thing is that both "professional developers" and builders looking for an easy stuff - to get in and quickly get out.

It means that if there are any "grey areas" - say they anticipate even smallest problems with council approval, all-weather access, neighbours, etc. - they usually make sour face and pull out of the competition.

Conventional investors on the other side do not favour potential dev sites - too big, too much maintenance, too expensive, too scary....

I currently circle like a vulture around 3 such niche sites that nobody seem to have wanted. I ring agents once a month, ask silly questions, then go into silence - again and again. Sooner or later agent gets sick, vendor gets sick and they let the property go at the price that is quiet ordinary.

I am "buy and never sell" type. Do I have to give a damn to how quickly I can get DA through council? Do I have to worry that there will be delays in construction in bad weather? I guess it is not that important. If I subdivide and build in 3 month time and hold it for 20 years, or I subdivide and build withinin 20 years - after 20 years property will have the same value. (Just kidding about 20 years - so far no council could bear my whingeing for more than 18 months) :D

Just couple of weeks ago I have brought one buider to one of the sites that he has rejected and I have bought. He went pale and nearly fainted after seeing what I have done to it.  

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Originally posted by multi
I am "buy and never sell" type. Do I have to give a damn to how quickly I can get DA through council? Do I have to worry that there will be delays in construction in bad weather? Click to expand...
Hi multi

You would if you had $X millions of loans and no income (rent) coming in !! ;)

Regards

Investor :)  

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Michael Yardney posted:


"I have often lost out on sites when a small builder has purchased a property at what I would consider too high a price and it is obvious he is buying himself a job for the next year. Either he is not that interested in the development profit or can't do his sums (probably the latter)"

I have quite a few builder mates and believe me they know how to do their sums better than most.

They just screw their subbies more to make up the difference in margin or use cheaper material or reduce the quality of their inclusions/appliances..etc...there are plenty of ways a spec. builder will pull back his margin if he has paid over the odds for a site

A lot of the above is determined by the state of the market...thats the property market and the supply/demand situation of the building industry re subbies & material.  

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[
Originally posted by brains

I have quite a few builder mates and believe me they know how to do their sums better than most.

They just screw their subbies more to make up the difference in margin or use cheaper material or reduce the quality of their inclusions/appliances..etc...there are plenty of ways a spec. builder will pull back his margin if he has paid over the odds for a site

A lot of the above is determined by the state of the market...thats the property market and the supply/demand situation of the building industry re subbies & material.
Click to expand...


You're right Brains. Builders somehow seem to get better deals for their own spec projects than they do for a project for a client - by pulling in favours and getting subbies to give great prices, etc

I guess it just confirms my point that at times it's hard to compete with them. I didn't mean to offend your builder mates - they probably do know how to do their sums well. It's jsut that I have not seen to many builders do the transition from builder to developer well. It usually takes a different type of entrepreneurial personality to be a successful developer.

But that's just my opinion.
 

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Hi all,

In my original posting I said:

"Over the weekend I had a look at a property that was perfect for redevelopment: 20 by 45 m; totally flat; high side of road; good area; small fibro that would be OK to rent as is until plans are ready; council seem to allow townhouses (I have not yet checked)."

Well, the property was up for auction today. There was a lot of interest and the property finally sold for $905,000!!!

Hmm, I was not even in the ballpark with my guess.

Couldn't have been a builder as with this price it would cost him $300K per villa just for the land (assuming you could fit in 3 villas). The successful bidder put in one single bid just when the hammer was going.

Cheers,
Lars  

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