G'day.
I'm 21YO. I have a property worth approx $310K and a mortage of $210-earning $1200pm on it, and am looking at purchasing a property in the $240-265k range 3br (leased at $250pw) 900m2 of land and wish to build townhouses on it-i believe the area is zoned as to allow for 75% of land able to be floor space if my calcs are correct. approx 675m2 to play with? what is the average 3br-4br townhouse floorsize?
how do you suggest to go about this sort of investment?
are there builders out there who do cut deals wheras they recieve one or two properties as payment for the rest?? or am i bettwer to keep the property rented at $250 and improve slowly, then in 5-10years after more savings and equity is available build my major plan?
how do loans work for construction of townhouses/villas?
btw does anyone know the approximate cost per 3-4br townhouse is? i was thinking $1000-1500/m2
Cheers
DavidWhat exactly does the LEP say? Does it prescribe an FSR of 0.75:1 or must you have 25% of the area as open space with no cap on building area? Does that include circulation space for cars/pedestrians? Provision for visitor parking? Provision for private open space? You may find that the building area will get hammered when you allow for all of the above (if they are required).
Using very simple numbers ie yours:
675 m2 @ $1250/m2 = $843,750 (construction cost) + $265,000 (xtg house/land) + (SD/Legals) $13,250 + (landscaping) $15,000 = $1,137,000 + $454,800 gross profit (20%) = $1,591,800+ $159,180 gst = total sale price of $1,750,980Your net profit will be much less by the time you take into account interest on the loan, legals for strata plan/sales, sales costs, design/DA/CC/council contributions etc.
How much do you expect to sell these town houses for? ie if you have six the price will equate to close to $300k each – that is more than you are paying for the house & land – is that realistic?
David
You would be lucky to finance 65-70% of cost on a maiden project of this size so thing financing will also be an issue.
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Where is the property?, seems cheap for a 6-7 unit site.
scott the LEP stipulates FSR of 0.75:1 i am heading to a council meeting next week in regards to density and height restrictions. I believe if they are 3-4br units they will sell for $380-400K. its located in wollongong.jazz77.
thanks for your advice and discussion
Kind Regards
David
I look forward to the outcome. Good luck.
Hi there David, i’m also sorta considering doing the same as you, only less ambitious. Only going with a max of 4units. Will be doing more research in this matter in the coming months. Please feel free to update any info you have on this and i will also do likewise. Cheers and good luck!
thanks alot for all your comments you have all been most helpful
Scott No Mates wrote:What exactly does the LEP say? Does it prescribe an FSR of 0.75:1 or must you have 25% of the area as open space with no cap on building area? Does that include circulation space for cars/pedestrians? Provision for visitor parking? Provision for private open space? You may find that the building area will get hammered when you allow for all of the above (if they are required).Using very simple numbers ie yours:
675 m2 @ $1250/m2 = $843,750 (construction cost) + $265,000 (xtg house/land) + (SD/Legals) $13,250 + (landscaping) $15,000 = $1,137,000 + $454,800 gross profit (20%) = $1,591,800+ $159,180 gst = total sale price of $1,750,980Your net profit will be much less by the time you take into account interest on the loan, legals for strata plan/sales, sales costs, design/DA/CC/council contributions etc.
How much do you expect to sell these town houses for? ie if you have six the price will equate to close to $300k each – that is more than you are paying for the house & land – is that realistic?
I think 1250 per m is way too high. If you can't find a builder to do everything for 800 per m then you're getting ripped. Especially right now where the competition is so high for work. that alone with add more than 300K to your bottom line.
atm, im still discusisng purchase price with agent…he's asking far tooo much for the block…considering the house condition, I believe the agent doesn't realise the re-zoning specs…
il keep trying
thanks for everyones help on this matterCheers
AlfistaI am also new to this concept of developing and given the possibility that both demand for rental stock and therefore capital growth look set to grow, now is a great time to get involved.
I have 2 hints. Firstly, our local council seems to have a similar LEP and they suggested a very basic rule of thumb, that is divide lot size by 200 for number of 2 br and by 250 for 3 br. (then you have to work out the detail.
secondly. find a way that differentiates your properties from all the others. It may not mean that you get a higher sale price, but it could mean that you sell faster. BTW always sell off the plan at todays prices too!!!
Brett
Better still Brett, you lock in tomorrow's price (ie price at the time of settlement) today – why lock in today's price in a depressed market?
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