02 Aug When it comes to finding sites that stack up, it will take time, effort, and commitment 🏘
In pocast episode 58, we discuss where to find development sites that stack up. Listen here.
A common problem Hilary encounters with clients is one that all of us successful developers have experienced – finding sites that stack up.
When it comes to finding sites that stack up, it will take time, effort, and commitment. It’s not for the faint-hearted and it’s not always easy. If I think back over the countless sites I’ve developed in my time, a majority have taken the effort to find.
If you came to our JV’s unpacked event in Sydney, Brisbane, or Melbourne in June you might remember Hilary’s talk about successful people.
I call it the double numbers game. You must plough through plenty to have success which can leave you thinking ‘there are none’. In reality, there are always sites. Heck, just this month amongst our mentoring students alone we’ve had …Liam, Terri-Anne settle and Connie was granted approvals. Kaz is mid-construction and Tanya is crossing T’s and dotting i’s before submitting to council. And that’s just off the top of my head!
That’s not to mention the thousands of people who have done my course and are out there achieving successes I don’t even know about.
So back to the numbers.
The first set of numbers will be the number of sites you will need to look at. The second set will be the number crunching to ensure things stack up.
Even if you engage a buyer’s agent you will still need to conduct your own due diligence as the average buyer’s agent will not be as clued up as you when it comes to property development sites.
My happy hunting ground has always been what I call the upper-middle of the market price on value. Let’s say the bottom of the market is the lowest 30% of the market and the top end of the market is the top 20%. That leaves the middle of the market as the remaining 50%. It’s like a bell curve.
Now, go to the top half of the middle, that 25% of the market. That’s where I’ve done best.
There is no money to be made on the bottom 30% if you’re building. Occasionally a larger subdivision will work. It’s a graveyard for people who get it wrong and try and develop there because they think everyone can afford to buy.
There are good profits to be made in the top 20% but it is the most volatile, being the first to rise and the first to dip. Most of the price dip in Sydney and Melbourne has been in this sector. The buyers are discerning, wealthy owner-occupiers. You must get the design perfect and the standard of finish high. And they don’t like buying off the plan. They are ego and emotional-based buyers who want to see and touch.
The top of the middle is good for owner occupiers who can pay a bit more and wealthier investors more interested in capital growth than cash flow. It’s where you can squeeze a margin and the financiers like that sector.
So, off you go – get back on the horse. If others can, you can.
Bob & Hilary.