Property Development

dm012345

Is there potential in the below to develop. Fully aware its tough to shift apartments etc but they would provide a good rental yield currently a shortage of rental properties in the area. Rents 800PM for the 2beds and 700pm for the one bed. Include one month vacant rent €60.5k. Would hope to get perhaps 40k off the 250k. Build for anything under 1m would give you a minimum circa 5% return. I have zero knowledge on building costs for such a development but to hazard a guess would be thinking 650k which would give you about 7% return.



http://www.daft.ie/1669644

daheff

Do you want a subscription to Nama developers monthly for Xmas???

in all seriousness..you say you "have zero knowledge on building costs for such a development "

I'd say get this information sorted before you even think about investing here.

dm012345

Hi daheff,

I am throwing it out there to see is there opportunitys for small time developers to make some money again without the crazyness of days gone buying leveraging one job off another. There are signs of opportunities in the property market again, recent alsop catalogues has opportunites for yields of 15% if can purchase the properties close to reserve.
Ofcourse daheff if I was taking this project forward there would be a serious ammount of due diligence needed, just trying to get a feel for where people see the market going there's alot of talk of foreign investors taking a serious look and that houses are begining to shift. Looked at two houses recently which had dropped significantly from their peak prices, went in with usual low ball offer, estate agent gave their spiel about number of interested parties etc one of them I left alone the other I thought was serious value at asking so eventually I was offering 5k below asking with estate agent adamant that two parties where offering in excess. Both props now sold, ancedotal I know but there does seem to be movement. Agents seem to be taking the approach of significantly reducing prices to entice interest and then ramping up thru the negotiating process.

RATM

I think you are mad even considering developing property in the current market and I say that as someone who has a circle of friends who are experts in the field, some of who have sold their own houses a few years ago and rented similar properties in the same localities- i.e. they know what way the market is headed, namely down.

The risks you would be taking on for a measly 5% return are far too great. Also the Nangor Road area is one that has no lack of vacant properties - plenty of empty units in Parkwest and surrounds.

I know €250k for an acre might seem like a bargain but trust me it is that low because no-one wants it.

There are some inklings of value in buying one bed apartments in good areas and renting to couples- in some cases a gross yield of 10% is achievable. If I was getting into the property market that would be the way to go but actually building something int eh current climate when there are someone in the region of 300,000 empty units in the country is insane. Don't forget that the banks are never going to recover debt on some of these developments so that means they'll have to write them down which means firesales. So in the case of the Nangor Road it is perfectly feasible that you could build apartments and then find yourself trying to sell them for €140k/2bed all the while the bank is selling similar properties up the road in a firesale for €99k- you just can't compete with that and nor should you even try.

Before you comtemplate this further I would advise you to read the forums on the propertypin.ie and perhaps register and ask the same question over there- they have lots of people on that forum who have been calling the market correctly since it was established and if our NAMA developers had of listened to them then we wouldn't be in the mess that we are.