I am looking at investing into a property with possibility of developing on the land. The property in question is zoned 2(b) has a 20m frontage and block size of 726m2, i have been told by numerous people in the business that i could easily fit 3 3bedroom townhouses on it, selling value of the townhouses $400,00 – $450,000. What would be a reasonable price to assume for the building costs? The land is selling for $420,000, is this too risky ie profit margins not high enough? This is my first time regarding property development, what hidden costs are involved in a venture like this. Any help would be greatly apreciated.
Pez, I'd recommend that you met up with one of the Council's town planners to discuss the possibility of getting an approval – I note that the block is smaller than what many councils will allow for 3 dwellings to be built ie many require about 900m2 as they have strict conditions regarding the provision of private open space, landscaping, occupier and visitor parking etc. It would also be pertinent to ask the planners what development contributions are required for the creation of the additional lots (ie costs for the provision of additional council services – health, libraries, parks etc).
Also ask about headworks charges (water, sewer etc), Look about for stormwater pit, how close are you. Any power poles in front? Bus Stops? All these can cost money if they need to be moved. Any easements etc on the land? But as Scott suggests, a good place to start is with the council.
Also, do a thread search on this site as this has come up previously and you may be able to make a list of questions to take.
Mick
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