Today is a very exciting one! It marks the start of yet another new journey for us as investors. Up until now, most of our property portfolio has been accumulated using a buy and hold strategy along with cosmetic renovations to maintain and improve property values and equity on revaluation. But this…. is our first major property development project.
Objectives For This Property Development
This site has been purchased with the intent of building a second house at the rear of the property. Demolishing the original house and replacing it with a new one. Applying for a DA approval to sub-divide the land. And at least one of the titles, if not two, will also have a granny flat constructed. This will give us at least three (possibly four) avenues of income from this one existing piece of land.
This is a project we are doing with a joint venture partner. You can read all about how we set up the joint venture agreement here in case it’s a strategy that would suit your investing goals.
Negotiating The Deal
You can see the listing price of this property was $825,000. With some smart negotiation skills, the property was finally secured for more than $175,000 LESS than the listed price. In addition to the originally signed offer, a further $11,000 was taken off the purchase price after we sent in a building inspector prior to settlement.
Quite a bit of maintenance will be required before we can put a tenant into the property.
There were a few last minute glitches with the settlement process today (which can sometimes happen unexpectedly). But in the end the bank now has the money it requires for the purchase and we start the next phase
Getting the Original Building Rented
The builder will go in tomorrow to start the maintenance and repairs.
The managing agent will also go in to take photos and details so the property can be listed as available for rent. We obviously want to get a tenant into the property quickly, and will most likely put them on a six month lease. This time frame will see us over the the time required to get building permits, approvals, architect plans finalized. If more time is required, we can always put the tenant onto a periodic lease after the six months.
Quotes for insurance required on the project have been received. Although it will be necessary for any builders or contractors on site to have their own risk insurance cover, we take out Public Liability Insurance for not less than ten million dollars. There was several thousand dollars difference between companies for the insurance we require. So it’s a good reminder to be sure to get at least three quotes for what you need wherever insurance is required (or anything for that matter!).
Well, I just wanted this post to be a ‘quickie’ to bring you up to speed on our latest project.
Feel free to share this post if you know this could help others.
Up to the minute updates on this project and others, get sent to our community mailing list, so if you’re not part of that yet, I’d love you to join us today!
Here’s to your success!
P.S. Since everyone has a different comfort zone when it comes to choosing an investment strategy, I would love to hear YOUR thoughts on doing a development like this.
What is your preferred property investment strategy and why?