Hi Guys,
I am new to “value adding” in regard to property but have been interested in starting a project for sometime.I think I have found something within my scope / risk tolerance / and budget
The property is located in QLD for stamp duty related calculations ect ect.
I will use round figures for ease of viability calculations.
The property is approx 1000sqm meters for sale for approx 600k with an approved DA for subdivision into 2 equal 500sqm lots. The approx market rate for 500msq lots is 400k. The property currently has a house which would need to be removed.
I am looking for all the costs involved in doing the above deal. So far I have:
1. Stamp duty on purchase
2. Removal of house
3. Do the 2 new blocks need to be fenced prior to offering them for sale?
4. ?GST is it applicable on deals like this.
5. Interest on borrowed funds (cost of carry)
6. RE agents fees for selling the propertiesLike I said, I am new to the game and appreciate all input from experience parties.
Thankyou.
Check Council and government charges. In NSW there are development levies. GST would probably be applicable. Chek if you can use the margin scheme.
Fencing would not be required legally unless it was a condition of council consent
Cheers for the replies guys.
What is the cost in receiving a DA from the council. (just wondering from vendors point of view in regard to how much they have committed)
I have received the DA for the block (from the vendor) and it has the “infrastructure charges units” listed @ $40,895 for the (08/09) (ICU valued @ $1.63 a unit). So i am sure there is a CPI that will be applicable to that, But it is a starting point.
If the project was viable, And by viable i mean with 20% margin (100k profit) why would the vendor not proceed with the project?
SO thus far i have:
approx
stamps = $18,000
GST= $18,000
Infrastructure = $40,895
agents selling fees = $20,000
Demolition charges = $?????you might speak to an agent to get a feel for their commission & marketing costs. You aren’t making a commitment to the agent but they will form a useful part of your network.
Should be able to get someone to demolish the property for 10K maybe less depending on the state of the house. IMO you should get the fences put up so that potential purchasers know exactly were there property will be.
Also with the Infastructure works, I would get them re quoted by a couple of different companies so that you know what the go is.
Also settlement cost on 600k would be around the $1200 mark (differs with different settlement agents.
You will also have to get Site survey done dont know about the prices for these in QLD but we can usually get them for around $300
Hope this helps
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