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• Case Study 1: Developing the Undevelopable
• Case Study 2: BTR
• Case Study 3: Developing the Renovator
Introduction
Case Study 1: Developing the Undevelopable
Summary• Non-development sites can often be development sites if you think outside the square• The best place to buy is often in your own backyard…like your neighbour!• Employ the experts• Have at least a basic understanding of the rules• Demonstrate what you want by showing similar projects• If you believe something is possible but you are told ‘no’ ask again another way or ask someone else• Scrapping is great!• Opportunities exist everywhere!
Case Study 2: BTR
This property made me over $1 million…during the ‘worst financial crisis since World War 2’
Let’s take a look at how I did it.
Case Study 2: BTR
There were two reasons why I was keen to buy this despite the other client’s poor feasibility
1. I already knew I had made 98k!
2. I used a different feasibility
Case Study 2: BTR
Build to Sell doesn’t work for me…it just creates a tax problem!
Capital gains tax
PLUS
I have an existing land tax issue
Case Study 2: BTR
And thanks to a comment I heard from Michael Matusik…
I decided to build 10 x 1 bedders to rent!
Case Study 2: BTR
So what went wrong?• I designed for fully furnished but no one
wanted furniture!• As a result…washing machine…
fridge..queen bed• Bloody energy saving light bulbs• Storage area vs water meters• Broadband cable• Ponding• White courtyard tiles
Case Study 2: BTR
COSTS $Purchase 532,000Costs 26,000Consultants/Appl. 72,215Build/Inf. Charges 2,191,158Holding 89,115Total 2,910,488
Case Study 2: BTR
END VALUE
Value @4.5% yield$3,952,000
Equity $1,041,512or 35.8%Rent $3,420pw
$177,8406.11% gross + Dep.
Case Study 3: Developing the Renovator
• 592m2 corner site• Zoned for units/townhouse/SUDs• House must be kept• Can build to 2 storeys
Case Study 3: Developing the Renovator
The numbers:
TOTAL COSTS $1.095mEnd value renovated house $575kNew house $775kTOTAL END VALUE $1.35m
Equity gain $255kReturn on development costs 23.3%
That’s the power of a quick reno and a small development.
Summary
• Employ the experts
• BTR or BTS
• RDC!
• Look for development sites at non-development prices for long term gains and options
• The 20% margin rule is misleading
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