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Inner Bris Development - More

Discussion in 'Real Estate' started by Jane, 19th Dec, 2005.

  1. Jane

    Jane Active Member

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    Hi all,

    Just to let you know, we are turning the first lot of dirt before Christmas! Yeaay. Then I'm giving the builder a couple of weeks of then work starts in earnest early Jan. so we're away. There are a lot of things that still need to be done, but all the hard stuff (for me, anyway) is finished - like dealing with Lenders (sorry anyone), architects (sorry again - but they are creative and don't usually have timelines in mind).

    So now I think I'll look for another one.

    Merry Christmas.
     
  2. Jacque

    Jacque Team InvestEd

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    Another one already? :eek:
    Jane, where do you get your energy from?!!!
    Keep us posted when the next stage happens- maybe with some tips about what to do and what not to do :)
     
  3. D&K

    D&K Well-Known Member

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    Hi Jane,

    You make it sound so easy, excellent work. May I ask how you structured finance with the lenders? No need to provide details if this question is too intrusive.

    Did you base the loans on the development costs (ie somthing like 80% loan on building and land costs but not approval expenses) or completed value (ie 70% of estimated final value)? Did you consider both or a different option and what made you choose?

    I guess my curiosity is based on the changes in values in Brisbane recently. As they neared the peak (mid to late 2004) the valuers became very conservative, particularly on new developments. Prices then dipped but seem to be creeping up agin in the centre / middle ring. This (the dip) could have made the development costs calculation more favourable over the completed value calculation, which seems better mid-boom.

    If you guessed that I'm trying to work this out for a reason, you're right!

    Kind regards, Dave
     
  4. Jane

    Jane Active Member

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    Hi Dave

    Don't mind you asking any questions at all. Thanks for your interest.

    Financing wasn't rocket science; this time round, we financed the purchase initially and then the construction of up to 80% & 70% for construction phase. The value is based on the end product ie what they would sell for in a realistic market. Purchase costs are not included in the initial valuation so we had to make sure we had that sitting elsewhere.

    In out pocket of Brisbane, reasonable growth is still occurring (in fact it never went negative) so we have budgeted for a certain return. We have a benchmark where, if sale price doesn't reach our budget, then we hold them for a while.

    The important thing here is that we are, firstly, investors, then secondly developers. This means that we are always happy to hold and have this built into our strategy, and sell if the price is right.

    Hope this has answered your queries adequately. Feel free to message me if you'd like more discussions.

    Cheers
    Jane
     
  5. D&K

    D&K Well-Known Member

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    Hi Jane,

    Thanks for the info. Presumably this was based on a valuation once you had DA and BA?

    You are probably right that Brisbane as a whole didn't go negative, however, we have properties in the inner south east and the values definately dipped, both in valuations and our own attempt to sell. Agent's reported Wynnum-Manly area dropping by about 10%. The PRD research report for Brisbane issued in August clearly shows the dip in inner ring and bayside. Many of the outer suburbs were still creeping up at the same time - so it probably balanced out ... and since then it's gone up further. Very interesting that Brisbane has the resilience to continue climbing, the fundamantals are still strong :)

    Since development can take over a year (and that's just to get DA) it is an interesting issue when looking as an investor, rather than turning over property as a developer, hence whether to look and construction cost or completion price when seeking finance.

    Will your building loan role over into a longer-term investment loan, or are you going to look at another loan if you decide you want to hold on to some of your creation!

    Excellent thread, can't wait to hear how it all works out for you.

    Dave
     
  6. JoannaK

    JoannaK Member

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    Congtratulations Jane,

    I hope it all works out for you!! Well done.
     
  7. Jane

    Jane Active Member

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    Hi Joannak, D&K

    Thanks for your posts.

    Briefly, finance was along those lines, D&K, on DA & BA status end value. We will look at the situation again at sale time as to how we treat finance, ie refinance, rollover etc. We have some options.

    First stage, old house moved over today.

    Cheers
    Jane
     
  8. D&K

    D&K Well-Known Member

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    Sounds excellent. We've sort of looked at the inner South East (Coorparoo, Greenslopes) and we're still coming to grips with the BCC requirements for "character" and no demolishion zones - and thus the need to move houses. Did you have the option to move the house to another site or is this too much hassle? It seems like you need a demolition approval just to move it on the same block!
    Other councils (ie Redcliffe) aren't so particular but we're not sure if the returns are there yet.

    Can't wait to hear more!

    Dave & Karen
     
  9. Jacque

    Jacque Team InvestEd

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    So where are we up to now, Jane?
    Is the slab down yet and the old house moved over?
     
  10. Jane

    Jane Active Member

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    Progress Report

    Hi Everyone,

    I've been lazy, I know, not posting our progress. But here it is.

    Slabs are down, on both renovation to existing and duplexes. Framing is also complete on reno and cladding and remodelling. Of course, with the slab done, all hydraulics, electrical and other plumbing are connected and the plumber has done his bit for the correct connections within each dwelling.

    It seems that the slowest stage is waiting until the slab goes down and framing goes up. This is because there is so much perparation work ie excavation, connections etc. We are well on schedule and cost; everythings working well.

    In the meantime, I'm working on fixtures and fittings and colours (the fun stuff).

    I always look for ways to improve each time I do something, and I already have a mental list going for this one. It's not hard to do developments, it just takes organisation and time (oh, and a bit more money).

    Let's see how we go.

    Cheers
     
  11. Jane

    Jane Active Member

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    Hi D&K

    In response to your questions about demolition, we had a restriction on the property/dwelling as it was in a demolition control area. We didn't try to remove it, rather than demolish it, as this is a whole other process. We had DA approval for relocating it on site and remodelling it. I think this is called partial demolition. If you can prove that the remodelling is not going to alter the integrity of the heritage much/at all, you've got a better chance.

    In my view, it certainly would be much easier to work with a post war property - less hassle, and cheaper to develop.

    CU
     
  12. Jacque

    Jacque Team InvestEd

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    Thanks for the update, Jane :)
    What have the challenges been so far to date?
    I know that you've done it before, but is there anything that you'd do differently yet?
    Exciting to have the slabs down!