Forums / Property Investing / Value Adding / My latest development – 4 dwellings in Melbourne

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  • Profile photo of oc1oc1
    Participant
    @oc1
    Join Date: 2012
    Post Count: 148

    Hey guys,

    This is one of my newest developments which is about to commence. It’s a 4 townhouse/unit development – 2 townhouses and 2 single story units located in a decent suburb of Melbourne. As a result it will have a pretty good finish. Last week the existing house was demolished so it is vacant land now.

    I bought this mid last year with an 8 month settlement and obtained the Town Planning Permit during this time . At the moment the numbers look like this:

    Land & Town Planning costs

    Land: $570,000

    Stamp duty/legals: $31,000

    Permits, surveyor, council application fee, engineering etc: $30,000

    Total Costs: $661,000

    Construction

    Total build: $625,000 (I’m a registered builder so my costs are naturally lower than a developer)

    Subdivision (open space levy in Victoria): $28,000

    Interest: $35,000

    Bank app fee: $5,000

    Titles & legals: $2,000

    Total Construction cost: $695,000

    COMBINED TOTAL (LAND & CONSTRUCTION): $1,356,000

    The dwellings today would have a combined value of about $1,840,000. I’m allowing 6-7 months to build. They range from 11-18 squares and rents would be around $1,730 pw. I’ve attached images of the house during demolition and after demolition. Blocks look so much bigger when vacant!

    The plumber is in next week to do the underground work, followed by the concrete guy right. I’ll upload images as it develops. Any questions feel free to ask.

    Cheers, Oscar

    Profile photo of wilko1wilko1
    Participant
    @wilko1
    Join Date: 2010
    Post Count: 510

    Hi Oscar

    What's the block dimensions looks like over 1400 sqm ?

    How did you buy the site, on the market or off the market?

    What were some of your negotiating strategies to get your long settlement?

    Planning to sell 3 keep 1 ?

    Thought i would continue on from your developing 101 post. Good information for people to read.

    cheers wilko

    Profile photo of alfrescodiningalfrescodining
    Participant
    @alfrescodining
    Join Date: 2012
    Post Count: 161

    Oscar, what is the $5,000 bank application fee all about?    Also, where is the development draining to? It looks like it slopes to the back of the property.

    Profile photo of oc1oc1
    Participant
    @oc1
    Join Date: 2012
    Post Count: 148

    AC, mine is a commercial loan. So the app fee is a % fee based on the total loan amount. If it was a 3 unit development then my loan would be residential and the app fee nominal.

    Oscar

    Profile photo of wilko1wilko1
    Participant
    @wilko1
    Join Date: 2010
    Post Count: 510

    Oc1, did you consider Commbank, they do residential lending up to 4 units on site before switching to commercial.  

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,010

    So do many many lenders and some lenders go higher than that.

    All depends on your equity position etc.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of oc1oc1
    Participant
    @oc1
    Join Date: 2012
    Post Count: 148

    Hi Wilko, no I didn't. Path of least resistance for me, so i stick to what has worked for me in the past and keep repeating.

    I always hear that Bank X can do XYZ. Rarely does it happen in my experience.

    Oscar

    Profile photo of alfrescodiningalfrescodining
    Participant
    @alfrescodining
    Join Date: 2012
    Post Count: 161

    Oscar, on your developments, do you have remote controlled garage doors?

    Profile photo of oc1oc1
    Participant
    @oc1
    Join Date: 2012
    Post Count: 148

    That's an odd question laugh

    Most of the time yes.

    Oscar

    Profile photo of MrWinfieldMrWinfield
    Participant
    @mrwinfield
    Join Date: 2009
    Post Count: 17

    Hi Oscar,

    if you don't mind me asking, how much of your own money will you need to put in for such a development? Will your firm be interested in JV for similar like developments?

    Good luck with it, i will be following your progress.

    Profile photo of wilko1wilko1
    Participant
    @wilko1
    Join Date: 2010
    Post Count: 510

    They only cost around 250-270 extra to add. I would 

    Profile photo of oc1oc1
    Participant
    @oc1
    Join Date: 2012
    Post Count: 148
    wilko1 wrote:
    Hi Oscar

    What's the block dimensions looks like over 1400 sqm ?

    How did you buy the site, on the market or off the market?

    What were some of your negotiating strategies to get your long settlement?

    Planning to sell 3 keep 1 ?

    Thought i would continue on from your developing 101 post. Good information for people to read.

    cheers wilko

    Hey Wilko, i missed this post. Block is about 1100m2. It hit the market and sold within a week – 3 offers plus mine where on the table. It helps buying unconditionally smiley.

    Cheers

    Oscar

    Profile photo of alfrescodiningalfrescodining
    Participant
    @alfrescodining
    Join Date: 2012
    Post Count: 161

    What about washing machines, do you usually include those?

    Profile photo of N@than[email protected]
    Participant
    @n-than
    Join Date: 2010
    Post Count: 241

    Hi Oscar,

    As you bought unconditionally I am guessing you did a bit of research as to the development potential beforehand? What did this involve? or did you just know from your past experience that this block could be further developed?

    Does unconditional mean without the subject to finance clause? Even though you were applying for finance?

    Cheers,

    Profile photo of oc1oc1
    Participant
    @oc1
    Join Date: 2012
    Post Count: 148

    Nope, never had. No reason why you can't though. A mate of mine who's building at the moment has included a washing machine on his current build. Can't say it's made a difference or not. I'd rather spend that money on landscaping.

    Oscar

    Profile photo of GerrardGerrard
    Participant
    @gerrard
    Join Date: 2005
    Post Count: 11

    Well done Oscar,

    What you have done is nothing sort of fantastic.  Wishing you well on your development endevors.

    Gerrard.

    Profile photo of alfrescodiningalfrescodining
    Participant
    @alfrescodining
    Join Date: 2012
    Post Count: 161

    Even if you plan to rent them?  Tenants don't expect washing machines?

    Profile photo of wilko1wilko1
    Participant
    @wilko1
    Join Date: 2010
    Post Count: 510

    No not really. It's depends if your renting them say as serviced apartments. Or independent single bed units. 

    I know a couple other guys who include them but they are building sets of 10-12 single bed for student accom.  

    Its like a fridge. You would expect tenants to bring their own fridge. You just have to provide the plumbing and waste pipes 

    Profile photo of alfrescodiningalfrescodining
    Participant
    @alfrescodining
    Join Date: 2012
    Post Count: 161

    Wilko and Oscar, you guys are legends. Thankyou.

    Profile photo of alfrescodiningalfrescodining
    Participant
    @alfrescodining
    Join Date: 2012
    Post Count: 161

    Last question I promise.   What about screen doors at entrance to house?  And blinds/curtains???

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