Posts Tagged ‘Property Development’
Yes it is about time that I build a bridge. Not in a personal or relationship sense, but in a construction sense. We have a property that to date no-one has dared to develop because it has been “too hard”.
That phrase I hear all too often about how hard it is to drive around Auckland, buy a home, buy an investment, build a house, save money, give up smoking, {insert next random thing}.
Well as you all know great rewards are gained by those that persevere, don’t give up and say it is just too hard. So I am putting in the hard yards on a project that I have under due diligence in West Auckland. It is a 3 lot residential freehold subdivision and their is a creek running through it. This creek has freaked out a number of investors and now the property has been getting stale on the market for 3 months as those that saw it thought it was too hard.
All it needs is a bridge over it to unlock the equity of two dormant sections – sleeping financial giants. So I have learned today a lot about bridges and how cheap section + cheap section = big money.
Note that this is not the creek or bridge I am building. In the absence of my digital camera yesterday this is a nice place filler
Whether or not the agents have in this case done the best job they could have for their vendor client is another issue and not my primary concern, however we are the best offer that they have in front of them on paper at the moment. The thing is we are basically getting the land for the two sections for free, with our only special cost being to build a bridge over a less than one metre wide and 50cm deep creek with around a 8 metre span to avoid a 1 in 100 year flood plain.
The site is glorious in its simplicity. It has only been made “too hard” by people lacking vision and a solution. Remember that Section + Solution = profit and go out with a new string to your bow – be armed and dangerous.
Enjoy your weekends.
I love property, and really enjoy being able to go along to properties with an eye on how much value can be created, or otherwise simply walking away after a quick chat to the agent or vendor.
Through being at the cutting edge of the property market day in day out, I have found that in today’s market to succeed, you need to be doing something a little bit different to most. You need to add value to the property you purchase – ie. create the deal. In developing where I make my profit can be in a number of steps:
1) profit at purchase (but below value)
2) profit on renovation (do-up)
3) profit on development (obtaining consents, planning)
4) profit on construction (building the plan)
The profit is realised at the sale (if you are trading) or on getting a new registered valuation (if you are keeping it). Sometimes I am happy to buy at retail as I can make enough money from the other aspects. It is always about the overall project, and your buying rules. Getting 3 of the 4 prongs has worked well for me.
Property yields are dropping all around the country a the moment. Talking with the Auckland Property Investors Association President, Andrew King last month, the average Auckland gross yield has dropped below 5%. As a result to keep actively investing you need to create the deal.
We are working with many investors at the moment who are increasingly seeing development as the way forward. Whether you are trading properties or doing a development to create equity and/or cashflow – look at the wonderful opportunities you have with land.
Basically to see my favoured strategy I recommend going to www.fuzo.co.nz, and take a look at the House Trap documentary (TV3) that I filmed last year on minor dwellings with Kevin Biggar (Trans-Atlantic Rowing race winner and he walked to the South Pole of Antartica by foot too).