I have seen land available for 147 – 150k per block. If I Built a house on these blocks it would cost me $130 approx for a good 4 bedroom home with double lockup and ensuite (from a good builder). On the market properties of this kind are going for $330,000 If I do this package and sell it for 310k for a quick sale and do it 5 times how much do you think I would gain in the end after fee’s from all parties?
Thanks
Aslam Sargeant
Hey Sargeant
There’s no profit if you buy each block for $140-$150K….you’ll need to buy 1 large allotment for that price and then subdivide and build 2 homes on it to make a healthy profit. Thats if i’ve read your post correctly and you’re buying each block for $140K and building 1 house on each.
Assume 12-18 months holding costs for the council approval, subdivision processes as well as construction and time to sell. And factor in possible interest rate rises and strategies in place in case you can’t sell. I know in Adelaide one of the biggest and most reasonably priced building companies have a 12 month waiting period so need to consider this as this could significantly increase your holding costs etc.
What profit margin is satisfactory is really up to you……we evaluate each deal on a case by case basis but don’t forget that in the free audio that Steve McKnight has on this website with Martin Ayles talking about a couple of his projects, he even did one development where the return was only $30K and that was acceptable for him but may not be for the next person so it depends on what you’re comfortable with. Probably if you’re starting out, i’d aim for a margin double that at the very least to allow for being new to it all. Hope this helps.
Cheers,
Kim
Kim Anand
[email protected]“Money Can’t Buy you Happiness but it Does Bring you a More Pleasant Form of Misery”
Hi,
Doing th sums myself, I think you are taking on a big job without getting paid for it.
Consider the following: buying costs, stamp duty, holding costs, selling costs, and mostly capital gain costs, because you would be selling in less than 12 months ( hopefully).
If you are doing it for the experience and are prepared to live there for at least 6 months after completion, it may be worth it.cheers & good luck
Gio
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