Property Development in Kensington Gardens SA

Hi,

I have an 1,100 sqm block of land in Kensington Gardens (Eastern suburbs of Adelaide) that I am contemplating developing. There is an existing dwelling, so it would be a knock-down and rebuild. The intent would be to keep the properties as rentals.

Local council have indicated that the block can accommodate up to three dwellings / homes, and I am contemplating building 3 x 3BR two story dwellings each with a Community title (the requirement for a common driveway precludes Torrens title).

Having sought estimates from a number of builders the general consensus seems to be around $1M to build 3 taking into account end to end costs like demolition, sub-division, build and landscaping (I am allowing ~ $130K for these costs). There is an outlier who has quoted $770K but that is for 3 single storey dwellings that would be smaller. Another alternative that I have considered is creating two Torrens title blocks and building more substantial 4BR homes on each, with the cost being around $770K. I am a bit concerned that building two will not make best use of the available land, and (based upon my estimated rental income) the yield from two would be ~ 4% versus ~ 5% for three.

The cost per square metre of different options range from $1,400 to $1,850.

This project is an investment so I am very conscious of balancing overcapitalising versus building something that is not of a sufficient standard of quality to attract prospective tenants in that area.

I am intersted in thoughts concerning the foregoing from a cost perspective.

Thanks
tysmeister

• This topic was modified 9 years, 10 months ago by  tysmeister.