What Type of Property Should You Look For? (Part 1)

Property Development and Investment Melbourne – Personal Needs

You may have decided that you want to develop and invest in property in Melbourne but not sure which property type and what specifics to look for. Should you look for Industrial property development, commercial, retail or residential property development? (refer blog on property zones for explanation of property development types).

Everyone’s individual situation is different, but I thought I’d provide some information which could help steer you in the right direction.

Most things you may have read often talk about statistics on the performance of different property types, trends and analysis etc., and yes, all those indicators are important. Sometimes though this information can be difficult to digest and therefore come to a logical conclusion. The bottom line to me is it’s primarily about what people NEED.

Before we explore the statistics though, have you thought about what YOUR property development needs might be? For example, do you have a business and need a space to conduct that business?

PROPERTY DEVELOPMENT AND INVESTMENT FOR BUSINESS OWNERS

Let’s assume that you have been leasing a factory in an industrial area, operating a business for some years now, and your business has grown to the point where you need more space than you have currently, so you need to find a bigger space. But what ‘boxes’ does it need to tick?

How much space do I need? Do I need a certain property type? Where would it be best for me to conduct that business? What can my business afford?

After sourcing the relevant financial advice, one solution would be to find an established industrial property of the right size and location and either buy it or lease it.

But is this the best solution for you?

Why not look for a property with development potential so you can develop it to create additional equity (and/or make substantial savings) and receive better tax benefits?

PROPERTY DEVELOPMENT AND INVESTMENT FOR LIVING

You might also be at a stage in life where you are looking for a new place to call home, but don’t want to miss out on the opportunity to develop, invest and create some additional equity.

Well you can, provided you find a developable property that is suitable to your needs.

One of our clients is in that situation at the moment. They would like something new but prefer to be closer to the Melbourne CBD. They have a couple of areas in mind so the search begins.

So what are the options?

Recently Completed

Finding something recently rebuilt is an option, but they will be paying retail price for it. Also, because these re-builds are likely to be scarce, this option may end up being a compromise on what they really want such as location, orientation, size, layout, number of bedrooms etc.

Single Knock Down and Re-Build

Another option is to look for a site that is suitable for a knock down and re-build. This is more likely to satisfy their living objectives, but they won’t be making the most of the financial opportunity, if that’s what they would prefer.

Develop and Hold

Remember, if you follow more conventional methods such as the ones above, you will need your minimum 20% deposit plus stamp duty and legal costs, and that deposit will be locked away in the property. Alternatively you can head down the property development path which can both satisfy your living objectives AND provide greater financial benefits.

Subdividing and building more than one dwelling on a site would create equity, so you would make a saving on the purchase price.

This would result in smaller mortgage repayments for the one you decide to live in (or cash back in your hands), and if you decide to keep another one as an investment property, your overall capital growth is likely to be significantly higher than the conventional approach. Why? Because you now have two properties growing in value instead of one!

How much more growth? Well that depends on many variables which are based on your particular situation and objectives. Where do you want to live? How much space do you want to live in? What can you afford?

The good news is that we can help you answer some of these questions and make it happen. We could have a look at your situation and what your objectives are, and provide some scope on your development options to help you source a potential development site.

Should we then find something that could ‘tick the boxes’, we can assess its feasibility before you make a commitment to head down the property development path.

If you are looking for a property for your business or to live in, please give me a call on 0438 028 194 or email domenic@landeq.com.au to assist you with your property development options.