Case study of a Triple occupancy outside Melbourne

This real life case study for a first time property developer started with an accurate site assessment which resulted in Town Planning Approval. The property is outside Melbourne.

Land cost: $200,000 ( $195K to be exact outside Melbourne where rental demand is very high)
Stamp duty: 5%
Legal fees: $1,500
Build cost, including subdivision costs, for two freestanding, two bedroom, two bathroom homes plus renovations to the existing house: $430,000
Total cost: $641,500
Actual end valuations for three homes: $980,000
Equity created: $338,500
Gross yield: 8% based on renting each dual occupancy home at $330 per week
If you are borrowing at around 4.5% then the project may be cash flow positive for you. This is when the rent and depreciation benefits combined cover the costs of interest, insurance, council, water rates and management fees.
Expected depreciation: $30,000 in year one (using the diminishing method)

• This topic was modified 9 years, 5 months ago by  #Planning Permit.