Our 1st Development

Thunder

Thunder

Hi all

After heaps of researching we?re embarking on our first development of 2 townhouses and thought I?d share our journey. Brave or crazy we?re not sure but here we go!:eek: Appreciate your thoughts.

We?ve purchased a small corner block (563sqm) in a regional city with an old house that has demo approval. Have been through set up of a trust structure, settlement and now working on prelim plans. Already hit a speed bump with our draftsman and dropped him like a hot potato. We?ve connected with a local builder and working with his drafty, so far so good.

The rough numbers estimated at outset:

Land $212k
Purchase Costs $32k
Build Estimate incl demo $495k
Working drawings $40k
Contributions $48k
Contingency $25k
Interest $38k
TOTAL $890K

SALE/VALUATION $1.2m
Project Profit $310k
Tax @37% $114k
NET PROFIT $196k

  • Our intention is to hold so tax is worst case.
  • I?m expecting the contributions to be more, call me sceptical.
  • Build estimate based on 2 x 186sqm (20sq) @ $1300. With the prelims in hand the sqm size is bigger than I expected would fit, so already looks tough but expect upside in the valuation at the other end.
  • Sale/Valuation based on a development 500 metres down the road, sold for $600k each @ 18 squares.
  • Target for this market and location is downsizers and professionals.
  • Conservative rent estimate is $515 pcw each so if we have to hold should yield circa 5%.
Attached are our draft plans, respect and appreciate your feedback.

Cheers,
Thunder
 

Attachments

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Hi Thunder,
My initial, inexperienced opinion is that your contingency is very low. For a first development I would feel far more comfortable with an 8-10% contingency.
Congratulations on taking on your first development and good luck!
 
Good luck with the project!

600K for a VIC regional Townhouse? Who said Sydney is expensive? :)

Few comments about the design.
1. Beams add construction cost. Is there any chance you can avoid it by aligning both levels?

2. Bed 1 - Why large WIR & Ensuite in the ground floor? It would suit family with grand parents. Is it possible to make it 'common' so that you can drop the 2nd toilet?

3. Stairs - You need to walk all the way to the Meals area to go upstairs. I personally don't like the triangle shaped steps. We got a square landing area. It actually stopped our kids rolling all the way down couple of times!

4. Laundry - It seems a little far away.

5. Upstairs Bath + toilet - Is it possible to make it 3-way bath room so that the vanity is still available even if someone is using the bath or shower. How can anyone wash their hands if the bath is locked?

Would it be better if you
- change the lounge + study into a master bedroom with attached en-suite + WIR
- Open up the Bed 2 and make that lounge.
?

Sorry to sound so negative... hopefully few points provide few alternate views :)
 
devank said:
2. Bed 1 - Why large WIR & Ensuite in the ground floor? It would suit family with grand parents. Is it possible to make it 'common' so that you can drop the 2nd toilet?
Click to expand...

With a target market of retirees / downsizers I think the main bedroom on the ground floor is a great idea. As it gets harder to climb the stairs they don't have to. This is what my parents have done & they're very happy with the design.

Agree a bathroom design with loo separate would save having 2 downstairs.
 
Wow a $212k block that you can divide, build and be worth $1.2? Holy smoke, that must be somewhere like Geelong and be a major regional town or seaside somewhere.

Your costings look about right for Melbourne but I'm wondering where demolition is included. If you are worried that council contributions might be more than I would probably have a better contingency %.

I quite like the design but I think for that price/end value I would expect a few things different
- no kite/triangle stairs
- laundry in the house
- I too would try and line up some supporting walls in the ground floor to the upper floor to try and save some money.

I do love a development thread so keep it going please!
 
Drafty fees are way too high, I think you need more contingency and you also need to take into account selling fees and gst but overall looks like an interesting one. Good luck
 
Where is the location? 212k for land with a finished end value of 1.2m? Call me skeptical but how is that even possible? New townhouses in airport west where I live sell for that so how could a regional get that price (without being an extravagant build ofcourse)?

Also where are subdivision costs? Are they included in your build sums?
Also the working drawings seem ridiculously high? I've got working drawings done for 3k.
 
gradeng said:
Hi Thunder,
My initial, inexperienced opinion is that your contingency is very low. For a first development I would feel far more comfortable with an 8-10% contingency.
Congratulations on taking on your first development and good luck!
Click to expand...

Thanks gradeng, I used 5% based on what I had read but you're right I should up this for the first development. ta
 
devank said:
Good luck with the project!

600K for a VIC regional Townhouse? Who said Sydney is expensive? :)

Few comments about the design.
1. Beams add construction cost. Is there any chance you can avoid it by aligning both levels?

2. Bed 1 - Why large WIR & Ensuite in the ground floor? It would suit family with grand parents. Is it possible to make it 'common' so that you can drop the 2nd toilet?

3. Stairs - You need to walk all the way to the Meals area to go upstairs. I personally don't like the triangle shaped steps. We got a square landing area. It actually stopped our kids rolling all the way down couple of times!

4. Laundry - It seems a little far away.

5. Upstairs Bath + toilet - Is it possible to make it 3-way bath room so that the vanity is still available even if someone is using the bath or shower. How can anyone wash their hands if the bath is locked?

Would it be better if you
- change the lounge + study into a master bedroom with attached en-suite + WIR
- Open up the Bed 2 and make that lounge.
?

Sorry to sound so negative... hopefully few points provide few alternate views :)
Click to expand...

Thanks devank, not negative at all, happy to hear any feedback.

The master suite downstairs is very popular with the older retirees and the comps I'm basing on all had this type of design. They don't like stairs, triangular or not:D. In fact it was 2 couples in their 70's who paid the $600k price for 2 townhouses around the corner. Local RE agents said master downstairs is a must have.

On the topic of beams, thanks for the nudge I'll go back to the builder for a chat. We had discussed but yep they don't appear to line up.:rolleyes:

The laundry I'm not keen on in the garage and thought about making it a euro facing the lounge. Both the builder and RE reckon this is fine for buyers with half the local builds being done this way now, and the euro into the lounge a no no. I decided not to sweat this one.
 
speary said:
Have you considered the effect of GST in your costings?
Click to expand...

Ummm:rolleyes: sort of! Okay so tax is my kryptonite. I suspect we'll end up holding for more than 12 months, maybe more than 5. In that case we'll have the CGT exemption and plenty for GST with the budget I've allowed. The numbers are with the accountant now and we'll make a decision on sell/hold.

Thanks I'll add it in.
 
LeoT said:
Hi thunder,

Contributions 48k for two TH?

Really? seems like a lot..
Click to expand...

Hi LeoT, rediculous but it's on par with other builds nearby. There is some other smaller numbers mixed in there, but a fair chunk of that is the water contribution.
 
Ace in the Hole said:
Working drawings for 2 x townhouses - 40k :eek:
Why so high?
Click to expand...

Thanks Ace, good question. I've wrapped a few things up in that number, essentially that's what I'm estimating will cost us to get to the construction stage. In addition to the drafty's fees it includes subdivision, engineers, building surveyor, site re-estab, soil test, drainage plan etc etc.

We've already saved by switching the draftsman.
 
westminster said:
Wow a $212k block that you can divide, build and be worth $1.2? Holy smoke, that must be somewhere like Geelong and be a major regional town or seaside somewhere.

Your costings look about right for Melbourne but I'm wondering where demolition is included. If you are worried that council contributions might be more than I would probably have a better contingency %.

I quite like the design but I think for that price/end value I would expect a few things different
- no kite/triangle stairs
- laundry in the house
- I too would try and line up some supporting walls in the ground floor to the upper floor to try and save some money.

I do love a development thread so keep it going please!
Click to expand...

Thanks Westminster, love your work so appreciate your comments.

The location is....:p yeah not telling:D It is a large regional and our block is well located on the CBD finge close to great facilities and transport. I just about choked when I saw the comps and there's several examples so I don't think $600k is a stretch. Of course we didn't hesitate to jump in.

I put in $10k for demo in the build costs, its a tiny 2br weatherboard, I could blow it over.

See my reply's above re contingency, beams, laundry and stairs.

Thanks;)
 
sanj said:
Drafty fees are way too high, I think you need more contingency and you also need to take into account selling fees and gst but overall looks like an interesting one. Good luck
Click to expand...

Thanks Sanj, will def pop in a figure for selling if we decide to go down that path ;)
 
Thunder said:
Thanks Ace, good question. I've wrapped a few things up in that number, essentially that's what I'm estimating will cost us to get to the construction stage. In addition to the drafty's fees it includes subdivision, engineers, building surveyor, site re-estab, soil test, drainage plan etc etc.

We've already saved by switching the draftsman.
Click to expand...

So pretty much for the DA :)
 
Thunder said:
Thanks Westminster, love your work so appreciate your comments.

The location is....:p yeah not telling:D It is a large regional and our block is well located on the CBD finge close to great facilities and transport. I just about choked when I saw the comps and there's several examples so I don't think $600k is a stretch. Of course we didn't hesitate to jump in.

I put in $10k for demo in the build costs, its a tiny 2br weatherboard, I could blow it over.

See my reply's above re contingency, beams, laundry and stairs.

Thanks;)
Click to expand...

Amazing! well done mate!
 
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