Quick and Easy 10 Point Checklist for Your Next Custom Build

September 15, 2014 Sam Saggers

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Quick and Easy 10 Point Checklist for Your Next Custom Build

One of the best strategies for turning a great profit is land development, however if you’re not careful it can be easy to overcapitalise.

What To Look For

Land

A key factor of a successful development deal is getting a good discount on the land. You can do this by applying the same principles as you do to existing properties; look for good market drivers and make certain that the market calls for such a development.

When putting together a deal look for land that is anywhere from 300 to 600 sqm approximately and then work with a proven builder who can deliver a good product at a price per sqm which will come in below benchmark sales in the area.

House

Your build should be appealing to a homeowner as well as a tenant. Should you choose to sell you want to be able to emotionally snag a buyer to make the deal and you can only do that if your build is well designed and constructed rather than a “cookie-cutter” home.

Market

Some economic drivers to look for:

  • New schools
  • Good roadways and public transportation
  • Universities
  • Hospital and medical facilities
  • Major employers
  • Shopping and entertainment

TIPS

  • To find benchmarks in the area look for recently built property (e.g. a McMansion), which is pushing up prices for the area.
  • Look for publicly listed companies such as Mirvac, Lend Lease, etc. when researching established communities.
  • Build in a location with a high owner-occupier to investor ratio. Homeowners tend to be more static than renters, lending stability to the neighbourhood. When the area experiences a downturn, owner occupiers are much more likely to stay put and weather the market, whereas investors often sell at the first sign of trouble.
  • Most of the time we look for areas where the ratio is 90% or above, however even 70%+ can be a good choice depending upon the location.

To streamline the development process, use the checklist shown below. It’s the same one both we and our clients use time after time to achieve a great result.

Checklist for custom builds

  1. Buying new maximises depreciation/tax and gross rental returns.
  2. Look for new areas where benchmark sales have occurred, lifting values in the area for all.
  3. Look for proven land estates with existing amenities and above average mid to long term growth.
  4. Build with resale in mind, without over capitalising.
  5. Build in an area with 5 or more pillars of economic support.
  6. Build within 5 minutes of infrastructure.
  7. Must have a minimum rental yield of at least 5%.
  8. Pair with a proven team of builders with extensive past experience.
  9. Choose estates with a minimum 70% owner occupiers.
  10. Valuation and sales/marketing commissions must be competitive.
  11. Custom Build in Action

    Over the last 10+ years we have put together thousands of successful house and land deals for our clients. They were successful because we took the initiative to do what was necessary to get a good price.

    As an example – have a look at what PRE team members did to secure some great deals for some of our clients last August in the Western Sydney marketplace.

    To gain access to more information on development as well as many other proven strategies for growing your property portfolio, click here to access your FREE Positive Real Estate Membership.

    You’ll be inspired to get out there and get to work, creating wealth for your and your family.

    You’re under no obligation and can cancel at any time.

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