House & Land Package 1+1 = 2.2+ – Small Lot, 4 Bed, 2 Bath, DLUG

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When new land estates are released there are two things I look for. The first is 'pre-sales.’ All sellers seek sales momentum. They will also want or need sales to typically keep the financier of the project happy. They might even need a certain numbers of sales to officially start the project.

The second is people. People are sheep. If a new estate is on the fringe of existing housing, as most are, and it's slightly different or pioneering in some way, then there’s usually no sheep lining up. More often that not, they will hold back, stay away or most likely not even notice.

So, if you know your market (demographics and activity) and you’re the first sheep to the shed then, well, you get a nice sharp clip and come out looking fresh first.

In 2000, Stockland released an estate called Kawana Island. I knew it was coming as I did some consulting to them on other projects, but I always watch the big guys for market leads and opportunity. Because let’s face it, their research budget is bigger than ours. The estate turned a mangrove swamp into an inland island by creating lakes to access fill (soil) in order to build up the sites to be sold. It was west of Nicklin Way, but only four streets to the beach and was to include extensive community spaces such as a walkable waterfront, which was new. I was a believer, just look at what happens to land that close to the beach at any beachside region; it wasn’t rocket science!

I got excited and expressed interest in five lots (See also Believe? Get in Early #3) and told everyone I knew to get on board; no one listened at first. The dry sites (non-waterfront) average cost was $70,000 approx., while the canal front block was $170,000. My initial plan was to build on all dry sites and hold the homes long term as rental properties while possibly flipping the waterfront site down the track as its supply was far more limited. As the estate grew, so would the average land price in each release along with our valuations while getting rental from the homes. In other words, as the sheep lined up, demand increased which would increase prices. This, and other market dynamics such as the introduction of GST, saw the land prices double and double again in just a few years. There was one catch though; the bank and valuer weren’t as convinced, and so to secure funding for all these I had to sell a beachfront home I had bought for $308k just 2 years earlier (See Pacific Dreams), getting $450k. It was a nice win, but it’s now worth around $1.5 million.

I also had to reduce from five to four sites, and hence passed this one onto a client who had become a close friend. I ran the project as if it was my own, except he moved in and several years later he pocketed a very tidy sum. Win-Win.