Small Property Development

When conducting Small Property Development there are a few things that need be considered and...

Small Property Development

When conducting Small Property Development there are a few things that need be considered and thorough research conducted.

Research the local area, what have other local small development done, ie updating kitchens, bathrooms, installing aircon or heating. keep your development to a minimum and don't get attached to the property, you won't be living in it! Unnecessary renovations  and colour schemes won't help sell the property! Keep it simple!

There are three types of Small Property Developments

• Cosmetic
• Minor
• Major

Cosmetic work 

Cosmetic Property Developments  includes day-to-day work such as:

• Installing or replacing hooks, nails or screws for hanging paintings or other things on walls
• Installing or replacing handrails
• Interior painting (keep it simple)
• Filling minor holes and cracks in internal walls

Minor renovations

Minor Property Developments include:

• Renovating a kitchen
• Changing recessed light fittings
• Installing or replacing wood or other hard floors
• Changing internal walls
• Sustainability measures (such as a clothesline or reverse cycle air conditioner).

Major Property Developments 

Major Property Developments include: 

• Structural changes
• Waterproofing
• Changes affecting the outside appearance of the property, such as an access ramp
• Work that needs approval under laws (for example, council approval).
• CCTV Installation 

Approval for Major Property Developments 

Failures to comply with your local Councils terms and conditions may carry serious consequences. 

Regulations are put in place for the benefit of the community. Council will monitor any unauthorised changes to Development Applications or illegal building works.

Builders, home owners and developers caught carrying out illegal works without the required consents will be prosecute, or in more serious cases injuncted through the Land and Environment Court.

Illegal building works are those undertaken without the issue of a valid Construction Certificate. This also includes building work where a Construction Certificate has been issued and certain conditions under the Development Consent have not been met. 

Where illegal building works are identified Council will:

• Issue the builder with infringement notices
• Issue a “Stop Work” notice
• Offer builders either the option of demolishing the illegal works or submitting a S96 application for a current Development Application, to modify the consent or a Building Certificate application.

It is safe to say that when developing property for a quick turnaround only cosmetic or minor renovations should be conducted, unnecessary development that requires council approval can slow down the  process and potentially cause the development to become expensive.

For further advice contact us on 1800-699-325

Purchasing The Right Property 

Choosing the right Small Property  Development isn't as easy as it...

Purchasing The Right Property 

Choosing the right Small Property  Development isn't as easy as it seems, Navigating the law, taxes, funding, grants, research and much more can be a stressful experience even for the most seasoned investor, The Giumelli Group has over 18 years of experience and will take the heartache out of Small property Development.

Here are 7 tips to purchasing a Small Property Development

1. Adequate research 

Will it provide the gains and returns you require? It is in the best location to attract quality tenants?

2.  FAIL TO PLAN! PLAN TO FAIL! 

Set goals, determining where you want to end up, and then devising a cohesive plan to get there.

You need to focus on your overall strategy. Work out what you want to achieve with regard to income – are you chasing short term yields or long term capital growth

Determine the type of property you need to buy in order to meet your income goals

With a carefully thought through outline of your investment journey, you will end up exactly where you want to be.

So plan your action and then action your plan.

3. Take your time!

Two of the most common mistakes of Small Property Developers who never make it beyond their first property are too impulsive or overly cautious

Impulsive!

Small Property  Development isn't a get rich quick scheme, Research is key, seeking a professional Small Property Developer  such as The Giumelli Group will ensure the right research is done and informed decisions are made

Overly cautious

Attending every seminar, reading all the books and watching all the DVD’s, is a waste of time and money if action isn't taken.

Find a happy medium – learn as much as possible and be comfortable with your investment decisions, surround yourself with likeminded Small Property Developer and seek help professionally.

4. Financing 

Use other people’s money!

Going through a broker before applying for a pre-approval can be beneficial if you’re not sure you’re financially ready to invest.

Applying for multiple pre-approvals can be damaging, every time you apply, lenders will check your credit record. If there are multiple inquiries, a red flag is sent to the banks  which may prevent your application.

There are multiple ways to find financial backing, don't be afraid to explore your options, don't be "loyal" to a particular bank, they all compete and they all want your money, seeking advice on who to borrow from is important though, The Giumelli Group has over 18 years of borrowing experience

The best advice The Giumelli Group can give any beginning property investor when it comes to financing your property investments is to seek help from a qualified, professional mortgage broker.

Going it alone can be daunting and time consuming and obtaining the right type of finance can save you thousands in the long run.

Setting up the wrong financial structure can be just as detrimental to your investment endeavours as selecting the wrong type of property.

5. NOT DOING YOUR HOMEWORK 

Understanding property markets takes time.

So don’t think you can attend a seminar or two, or read a couple of books and have a handle on exactly what to buy.

You need to know the neighbourhood you intend to invest in

Make yourself completely familiar with any given area by pounding the pavement and talking to the locals, real estate agents and property managers.

Find out all about the amenities, vacancy rates and historical values of properties in the area.

When you know the area, get to know the street you intend to buy in and the property you intend to buy. You can never know too much about your Small Property Development!

6. Developing THE RIGHT PROPERTY 

Know your market, is your Small Property Development in a suburb that predominantly attracts families or young, single professionals?

The demographic of an area will make a big difference when it comes to what type of property you buy.

7. BE THOROUGH 

Have you really done every little bit of research into the investment?

Do you know why the vendor is selling?

Knowing the vendor’s motivation can make a big difference when it comes to negotiating a good price.

During the initial inspection look for clues as to the vendor’s personal situation, it might sound a little callous, this gives you an opportunity to buy a bargain, as well as giving the seller a chance to move on with their lives.

Have you had the relevant inspections done to uncover any structural defects or signs of pest infestations?

The fees for these are tax deductible and paying say $800 for this type of peace of mind can save you thousands in the long term.

Focus on your goals!

In order for you to achieve your goals, you must first articulate what your goals are. More importantly, you need to set a deadline as to when you want to achieve them.

Small Property Development Funding 

Before you commence any development project, it is crucial...

Small Property Development Funding 

Before you commence any development project, it is crucial to first establish how much you can borrow and how you will be able to manage all associated costs of the Small Property Development.

As a Small Property Developer you will have to understand finance and what the banks look for when lending for Small Property Development Projects.

Lenders look after their own interests first, so when deciding whether to finance your Small Property Development they will assess the risk, Starting with your ability to repay the loan, and then on the viability of the Small Property Development itself.

Banks  don’t  lend based on the security of the project alone; they will also look at the track record of the people behind the Small Property Development.

Until  a good reputation with the bank and a sound track record in Small Property Development is established , lenders will assess your Small Property Development team.

It is important to submit your loan request in a professional manner, including a detailed feasibility study to show that you have allowed for all contingencies.

Generally your Small Property Development loan will be structured so the lender provides up to 70 to 80 per cent of the final cost of the project, rather than its end value and they will expect you as the developer, or your equity partners, to provide some funding, known as the Loan to Value Ratio or LVR.  

This means if your total development cost is $1.5 million, your financier will expect you to contribute $300,000 to $450,000 of your own equity into the project. 

Small Property  Development loans offer  6 stages of  payments to be finalised at the end of each building stage:

1. Deposit
2. Base
3. Frame
4. Lock Up
5. Fixing
6. Balance of development funds supplied on completion of the project. 

Small Property Development finance is different to ordinary investment finance as usually you can borrow the ongoing interest as part of your finance package, so  do not pay interest during the construction phase of your project, but the interest is capitalised, the interest is added to the amount you owe at the end of each month and the next month you pay interest on the interest. 

When marketing and on-selling you Small Property Development Interest repayment would commence. 

Different types of lending for the stages of a project: 

1. An acquisition or development loan to cover the purchase, development application and pre-construction costs.
2. A construction loan to cover the building of a project
3. An investment loan if you are retaining your project as a long term investment.

The Application 

Each of following points should be explored in detail in your application: 

1. Site description
2. Zoning
3. Design Concept
4. Resume of your property manager and major consultants
5. Costing
6. Feasibility study
7. Projected sales figures
8. Net result
9. Timelines

SOURCES OF FUNDING 

Banks remain the major source of funding for Small Property Developers and while most banks are more than happy to lend to experienced Small Property Developers,  however the  recent economic crisis in the global market has caused many of the major players re-evaluate their lending criteria.

Causing  private lending  and joint venture funders become a popular alternative for some Small Property Developers. 

WHAT LENDERS LOOK FOR

1. When assessing your development, Small Property Development  Project lenders look carefully and critically at the security you are offering, their primary considerations are;
2. The fire sale price, the result if they had to take possession as mortgagee and sell it? 
3. The end value of the dwellings you are Developing, if it higher than the median price in the area this is  lower quality of security as the property may be more difficult to sell.
4. Zoning  - Residentially zoned land is highly regarded as it is the easiest to sell. Rural properties would be seen as less secure
5. Lenders are hesitate against small apartments.

After all, a development can look wonderful on paper, but unless it ticks all of the right boxes with the banks, it will never even get off the ground.

Small Property market on track to slow in 2018 as prices fall in capital cities - Fact or Fiction? 

The national median house price dropped 0.3% in December, because of falls in Sydney and Darwin! 

Australia’s Small Property market is showing signs of slowing down, with national home prices down in December quarter and expected to remain softer throughout 2018.

The national median house price index fell 0.3% in December, weighed down by major falls in Sydney and Darwin and modest weakness across Melbourne and Perth.

The fall contributed to an overall slowdown in national home value growth for the year, with prices rising 4.2% in 2017 compared with 5.8% in 2016 and 9.2% in 2015.

Sydney prices retreated 0.9% in the month of December to be 2.1% lower over the quarter, tracking at just 3.1%;

Small Property values in Melbourne fell for the first time since February 2016, with Small Property value at 0.2% lower in December, but they were up 0.9% over the quarter and 8.9% for the year, however the housing market has been more resilient to negative growth compared with Sydney due to factors such as stronger population growth, lower affordability hurdles and a higher rate of jobs growth.

Hobart was the best-performing capital city in 2017 with Small Property prices rising 12.3%, almost five times higher than the city’s decade average annual rate of capital gain.

However  Small Property  prices still remain low relative to the larger mainland capital cities

 We’re likely to see negative growth rates across previously strong markets, more cautious buyers, and ongoing regulator vigilance of credit standards and investor activity.

However Western Australia's have been dropping for  decade now but it is predicted to end in 2018 with Small Property price rises.

Since the mining boom of recent years a reduction in new home construction has caused the market to pick up and many residential areas seeing strong activity, job growth, continuing low interest rates and recovering demand for office space are also contributing to improve the situation.

The investor market will be stronger, driven both by local investors trying to time the market and interstate investors seeing Sydney and possibly even looking for an alternative.

There is still an oversupply of rental properties, keeping rent low, however this has likely peaked and rents will rise in the coming months as students seek accommodation in Perth.

There are now profitable times ahead for the Perth Small Property market!

However you need to be aware that in 2018... Negative Gearing is DEAD, Buy-Hold-And-Hope GONE, and Positive Cash-Flow No Longer Works. 

Discover the NEW Way to PROFIT FROM PROPERTY that's LOW Risk, HIGH Return... and Does Not Require you to Negotiate, Buy or Develop a Single Property by Yourself!

Contact Giumelli Group today and inquire about our Palladium Program today,  by using our Palladium Program structures it removes the risk, enables you to profit sooner and you can leverage your money further across more instead of doing it on your own. Use Trent's decades of development experience to your advantage!