Hi
Just looking for a few peoples opinion. We are new to the investing and developing scene and already we have sourced out a property that we believe could be perfect for development. The property is around 6000m2 and with a DA it could have the potential to build up to 8 dwellings. We also know the owners of the adjoining block which is also around 6000m2 and after discussing them our ideas they would be happy to sell. So with a total of approx. 12,000m2 this is a HUGE block, as the surrounding blocks are averaging around 800m2. With a DA on both properties we have a possibility to house of 10-12 dwellings. This is our first project and maybe we are trying to big to quick. Can anyone give us some information if we are onto a winner or aiming to high?? Or is there anyone we can talk to about this??
thank you for any information….
KNDSpeaking from theory (not experience)
1) Cost it.
– Targeting what people desire in this area. So perhaps as you indicate, 12 x 1000m2 blocks. With house (3-4 bdrm)Work backwards
– What would the expected final product sell for (x12)
– What would it cost to build
– What will it cost to buy and hold land (12-18 months for DA, and then a further time frame to build – say 18 months)Is there a demand for houses in the area. Amenities? Transport? etc
This is not going to be a cheap excercise. Or a quick one. You need to do the numbers so that you can show the bank the profitability of the excercise. Unless you have a lot of money just sitting around then it is probably a commercial loan (higher rate) and they may want pre-sales.
here is some guesses at costings for you (based on 10 houses)
1) Land 2,000,000
2) Build 3,000,000
3) Holding costs 450,000 (150k+ per annum for 3 years – very rough )
4) Other 50,000 (Lots of things here, council, surveyor, architect – easily a lot more)
Total Costs 5.5M
Dividing by 10 gives you an idea of what you need to sell each house for just to break even.
– You might find a better option is to do the sub-division, and sell off the blocks individually
Good lucj with it all.Cheers
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