When looking at a development site, how do you seasoned developers create a feasibility report ?
what is the best way to go about it? what costs do i need to take into consideration? and what should i watch out for?
Sort of hard to get it down on paper when there are so many unknowns when looking at a potential project
thanks in advance
ok well this is how i do my workings.
property 300k
demolish cost 8k
stamp duty 14k
architect 15k
construction cost 280k (2 units)
selling cost 20k
loan/solic. cost 1k
intrest @ 7% 41kTotal costs 679k
the resale price would be 360k per unit (worst case)
Ok developers this is how i work out my costs. Leaves me with 41k in pocket.
still have to pay CGT and GST
this deal seems pretty skinny to me. Remember this is a 12 month project)
what do you guys think of it ? comments pleasehi pp
that does seem very skinny. I would be going for >20% returns on a construction. Do you use any feasibility software to work out your profits?
We buy properties in Adelaide. Immediate Cash Settlements, No Real Estate Agents, No Fees.
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phone 0412 437 582nope none at all.
do you ?
any that you could suggest ?Why demolish, can you just dual occ.
Monopoly, my favourite game
To ensure we don’t leave out any costs we use a program called feastudy http://www.devfeas.com.au.
Of course it is only as good as the numbers you put into it. It tends to spit out an 18 page reports with lots of “what ifs”‘- a sensitivity analysis
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auOriginally posted by Property Passion:When looking at a development site, how do you seasoned developers create a feasibility report ?
what is the best way to go about it? what costs do i need to take into consideration? and what should i watch out for?
Sort of hard to get it down on paper when there are so many unknowns when looking at a potential project
thanks in advance
Before we even do a feasibility we assess the site for its development potential.
You will find a checklist you can download at http://www.metropoleprojects.com.au under investor’s learning centre
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.authat’s the one we use too pp
It estimates a % profit at the end.
We buy properties in Adelaide. Immediate Cash Settlements, No Real Estate Agents, No Fees.
[email protected]
phone 0412 437 582pp you need to calculate what your GST would be in reality, talk with your accountanat, it could potentially be more than your profits, leaving you with a loss.
Personally, I would run not walk away from this deal!!!!! The margin is not only skinny, it may be backwards
Sorry to be so synical
We buy properties in Adelaide. Immediate Cash Settlements, No Real Estate Agents, No Fees.
[email protected]
phone 0412 437 582Rick the house im thinking of isnt too attractive, timber house built 1950’s, BUT of course might still be an option, id have to have a closer look at the house itself.
Dr.X dont worry about giving me the truth if thats your opinion, thats what im here for, to listen to you all your opinions and make my own conclusion.
Mike, going to check out those links when i get the chance.
Thanks all
costs if i keep the existing house.
property 300k
reno (existing house) 20k
stamp duty 14k
architect 15k
construction cost 140k
selling cost 20k
loan/solic. cost 1k
intrest @ 7% 33ktotal cost 543k
resale value is what im unsure about.
existing renovated house 300k ?
new unit 360k
resale value 660kprofit 117k
does this look better?
my only consern is the value of the existing home after the 20k reno.
comments please dont be shy![biggrin]
[biggrin]The property was 300k house and land.
After dual occing it, you have your unit to sell at $360k? and house at $300K?Sounds almost reasonable. I think a lot depends on how they look together, the house and unit. Are they Torvill and Dean together – or Sir Les Patterson and Maria Sharapova ???!
I have found that often the value of a house and land is not compromised too much by taking some of the land away.
Probably also depends on the surroundings too. Lots of new stuff, or mixture?
Neighbours?
A lot less unknowns with your second plan -making them “known unknowns” to a certain extent.Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
The property was 300k house and land.
After dual occing it, you have your unit to sell at $360k? and house at $300K?Sounds almost reasonable. I think a lot depends on how they look together, the house and unit. Are they Torvill and Dean together – or Sir Les Patterson and Maria Sharapova ???!
I have found that often the value of a house and land is not compromised too much by taking some of the land away.
Probably also depends on the surroundings too. Lots of new stuff, or mixture?
Neighbours?
A lot less unknowns with your second plan -making them “known unknowns” to a certain extent.Giddo
http://www.standrewsplace.com.auKNOWLEDGE IS POWER
the units would look quite nice once completed, planning on rendering the existing home to match up with the new one i will build
the area has a mixture of new and older homes.
Aspiring property developer
Giulio Taranto
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