Safe is not always safe… Many people come to our office very - TopicsExpress



          

Safe is not always safe… Many people come to our office very proud that they are now in the ‘game’ of property development as they have finally purchased their first development site. As this is their first project, they have been safe and purchased a cheap site to minimize the risk. Bad news… The cheaper the site (at least in cheaper areas) the harder it is to make a profit. Please refer to our other blogs which refer to ‘The Money Is In The Land’ which goes into more detail about where the profits are in the land subdivision. Basically, in terms of multi-unit developments, most of the profit is made in the actual land development (not the building of the houses). So when you buy a property which has little value in it, you are wasting profit and expenses in the construction of the dwellings. By this I mean that a house costs the same no matter where it is built. So a house built in a cheap area will sell for cheap, a house in a more expensive area will sell for more. Often building a house in a cheap area will cost more to build than what you will be selling it for. This may be ok if you plan to retain the units and wait for capital growth while also getting depreciation benefits, but in any other case this is bad news. So rather than spending as little on a larger site, look for a smaller site (such as a 2 unit site) and spend as much on it as you can afford (meaning spend as much to get you into the right suburb as necessary). FYI – In our experience, the most profitable project (bar none) is a dual occupancy where you retain the front house and build a new unit in the rear. Please make sure you contact our office and get your free development appraisal prior to purchasing your site as this could save you thousands of dollars and years of stress. You can use our free link to submit number of projects to us via: abodeinvest.au/townFeasibility.php We are more than happy to help you find the right project, as in the end it makes our role so much easier and more rewarding when it is the right site for development.
Posted on: Tue, 12 Nov 2013 23:45:43 +0000

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