- Hi everyone
I am quite new to this and hoping some of you guys will be nice enough to give me some insight and pointers.
There’s potential duplex that I am currently looking at.
It was first listed 3 weeks ago at $450,000 and is now listed at $399,000 – $439,000.
The front structure is an old (think 1970s) 2 x 1 brick house with access to develop behind.
It’s close to amenities, shopping centers, etc (about 5km), about 10km from Perth City and situated right off a busy road service road.
Land size is about 530 sqm and is currently zoned at R20/R40.
I have called the local council and they said that if I wanted to build on the block behind. The back house needs to be build so that the cars can come out on forward gear since it’s on a busy service road and the front house needs to be altered as well to allow for this.
Also, the agent did mention the property is part of a deceased estate but she doesn’t think the owner passed away in it.
I have done some quick numbers and this is what I came up with. We’re only going to loan half the costs so our holdings costs are quite low.
Feasibility Study
Front 400,000
Back 400,000
800,000Property Cost 410,000
Stamp duty 14,750
Surveyors Cost 15,000
Building Expenses 180,000
Reno Expenses 30,000
Holding Costs 22,500
Selling Costs 20,000
692,250Profit 107,750
I was wondering if my figures are wrong and if I needed to account for any other expenses and if I used the right sale prices (I’ve based it on previous sales on that street).
What’s the next step if I was to build on the block behind?
Thank you in advance.
Make sure council knows you by your first name! Familiarise yourself with their rules and regulations, and make sure the plans you send to them are both plans you're happy with and plans they'll approve. Their website should have the necessary documents. Read them! Get a town planner/consultant, so they can give you some pointers. I'm in a similar situation myself at the moment, and I'm learning the hard and long way of going about this. Make sure your builder also knows what they're doing and don't just take their word as gospel. Do the research yourself.
Other costs you haven't mentioned could include tax/CGT/GST, depending on your intentions – build a home to live in or for investment purposes. Speak to an accountant or the ATO. Either way, you're bound to hear different things from both
Don't know if your building costs are just strictly for building or include other things as well. Could consider items not included in the builder's contract (e.g. landscaping, paving, kitchen and bedroom floor coverings, heating and cooling, hot water system, etc). Maybe budget for other unexpected items or holding costs for a longer than anticipated period. Anything could go wrong in the meantime.
Hi MlK,
I think your figures are a little bit skinny. The building cost needs to add another $20k just to be on the safe side and the surveyor/town planning part is quite skinny, probably add another $5-10k for drawings etc just to be safe. Does your reno cost include the changes made to the front house? Have you accounted for clearing the site? Get the numbers right and you will be ok. After all calculations you should aim for minimum of 20-25% profit for a development. Keep it up try the number and remember there are plenty of deals in the sea if the numbers don't work.
let us know how you go
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeHey MLK
Make some allowance for headworks and underground power to both units.Double check that the width of the access way to the rear unit meets council requirements from the git go very first thing.Be generous with parking space in the front unit as the minimum dimension for reversing can be a pain in a large vehicle(larger than a Fiesta!!)Walk the boundary and check the condition and height of the fences as some councils are fussy about those two issues when it comes to subd's,you'll need to allow for a boundary fence between your units as well and any sort of demolition or clearing of the back lot will be another expense too. Check for white ants in the area and build your roof structure with treated timber or steel if need be which is a little more expensive but great big peace of mind ,and ensure the pre-slab treatment is done properly.Its up to you but some one like a Summit or Stratawise etc..in Perth could do your first one from scratch so that you get wet reasonably safe with a set contract while they do the show and tell for you to learn from.Still heaps to tell but..zzzzzz
Remember, Caveat Emptor! do your due diligence and if you miss out on this one there will be a better one down the track soon.
Good Luck and Go Hard….iball
Morning all from a newbie post!
New to WA & doing some dd myself for a PPR with development potential later on.
Be interested to hear some thoughts on suburbs…..SOUNDS CHEAP MLK????????
Bought the latest Residex Top 100…ugly numbers for Perth! Getting the full one this week.
Welcome any feedback & go easy…. I'm just a Gold Coast invester trying to cash in on the resource boom.Hi.
I could talk to the duty planning officer at the relevant council, to double-check that the size of block can fit the two units/homettes on it. A large surveying company can be useful, as they tend to know the council rules, plus can advise about sewerage connections/levels etc. which can be an issue on some sites. Also determine the council's rules relating to open space and its size, e.g. where we have done something similar a couple of times, we need a 5 x 5 m free and clear area (this is a new rule, so they do change. First time it was 25 squ.m for each bedroom). The width of the block/the shape of the block can be a deciding factor in relation to what you can build, and whether it is possible to have the parking needs fulfilled.
Take your time, there are lots of opportunities like this. Good luck,
G
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