R700 000 Cash - How Do I Start?

Comments(8)

• 
  flynny6th November, 2003

  That is a broad question. Since you are in South Africa, maybe you should start by watching the large developers over there. You can learn a lot that way. Trends and techniques, although at times are universal, can vary drastically from region to region. More specific questions might help your cause, such as, what exactly are looking to do? Is financing an issue? Do you already have a market you are attacking...commercial space, residential or mixed use? Good luck.
  
  Matt

• 
  GFous7th November, 2003

  Start with identifing and quantifying your customer and his needs.
  
  FInd the property that will serve the customer.
  
  Identify the product that will serve the customer.
  
  Once you have those key elements ( What you want to build and where).
  The process will be clearer.
  
  Developing is a long, time consuming process. Certainly no short solutions or answers.
  
  Gregg
  
  
  [addsig]

• 
  Bearo7th November, 2003

  Matt & Gregg
  
  Thanks for the feedback.
  
  I want to develop a 5 Unit Townhouse Complex in Pietermartizburg, South Africa. There is a massive need for this type of housing.
  
  I am looking for the SYSTEM the chronological order that needs action & management to produce the end product which is: 5 Units Build and Sold for Profit!
  
  Please help again - or provide a referral.
  
  Awaiting your urgent feedback.
  
  Pieter

• 
  RepoMan8th November, 2003

  Bearo,
  I am not familiar with development in So. Africa but I can give you a rough idea.
  
  1. Find Land
  2. Find out what the zoning is for this land and if the governing authority will allow development of this type of structure.
  3. get property surveyed
  4. have plans drawn up by an architect
  5. file for permits
  6. I am assuming that by this time you have your contractors lined up and that the land is equipt with sewer, water, gas...
  schedual your contractors for each phase of the building and remember to call the inspectors after each phase for inspection.
  
  I am not sure if that was what you are looking for...but I hope it at least gets you in the right direction.
  
  Repoman

• 
  Stockpro998th November, 2003

  let me add that an easy way to do this is to get in on a development already underway. That way you can eliminate many of the steps in the previous post.
  
  700K doesn't go all that far and would be well used buying a lot in an new subdivision. That way (in US) you would not be dealing with zoning issues, water, electric, utility access as that would have been done for you.
  Get a blueprint of the type of building you want to put up and then get bids from subcontractors to do all phases of this.
  YOu will then have an idea of what your cost will be and whether your building in that area, style, and type (wood, brick) will be feasible or not.
  
  Good Luck!
  [addsig]

• 
  GFous8th November, 2003

  $700,000 goes VERY far in the development field.
  
  Keep this in mind. For the right deal and with the right (experienced) banker, you can borrow 80% of your A and D and 100% of your construction costs, with 50% presales.
  
  If your product sell out is $10,000,000; your vertical costs are $5,000,000, your land and soft costs are $2,000,000, your margin is $3,000,000, you can do this deal with about $400,000 ( twenty percent of $2,000,000).
  
  Pre sales are the key.
  
  I would say I would be looking for a deal about this size with $700,000. The extra funds will be needed because although you can borrow 80 percent of the A nd D, you may be out of pocket for a while until the A and D loan closes.
  
  The steps I mention in the previous post are the way I would go. Identify the market first, product second, then the land.
  
  If you start with the land you are backing into your market - most people do it this way becuase they found a great deal on the land. This is certainly not wrong - but if you market driven instead, the pre-sales come easier.
  
  Spending $10,000 on a feasibility study is worth it. The banks also like it and you will feel more confortable than going on "gut".
  
  A word on the land cost. Look for "cost per unit" don't worry about per acre or per square foot. You need to know what it will cost per your finished unit.
  
  If you want to just develop the land to sell to builders, this still apllies.
  
  Gregg
  
  _________________
  Gregg Fous
  Investor/Developer
  
  "If you wait for all your ducks to get lined up, you will never get into the water"[ Edited by GFous on Date 11/08/2003 ]

• 
  GFous8th November, 2003

  Sorry guys - I just realized we are talking Rands here, not dollars. (6.89 rands to the dollar) So this is about $100,000.
  
  [addsig]

• 
  Bearo10th November, 2003

  Gregg, Repoman and all the other.
  
  Thanks a Million Guys. I did not expect this bundle of information on my humble request.
  
  May you receive many blessings for adding value to your fellowmen's life.
  
  Thanks
  
  Pieter
  
  [addsig]