OK, This time I really bought one!
I’ve just exchanged contracts on a Multi-Unit Housing zoned site in Sydney’s Northern Beaches for a tad under $700K. Its got an existing weather board house on it that will rent for about $530pw, but the real bonus is the zoning. Its zoned MUH and I've read the council development controls in detail so know that we can put 3 townhouses on it. I've also confirmed this with council. It was originally on the market at $770K but I managed to drag it down to $690K with a bit of clever negotiation and assisted by the flat Sydney market.
Up front I’ve got to say a huge thanks to JoannaK for helping me with the residual land valuation and also doing a fully worked development feasibility study for me! And all out of her own generosity to a fellow forumite!! That was absolutely invaluable in reassuring me that my own calculations stacked up and I was on to a winner with this one. I’ve also got to thank Peter147 for his input on the development potential and options too. He’s actually driven past the site with me and given me his personal thoughts (whilst he was driving my MX-5 for a bit of a joy ride I should add).
This purchase is the culmination of 18 months of research and a few well documented false starts. I’ve personally learnt so much from this forum in my time here and as a result am very comfortable signing away that sort of money for a deal that I know will reap significant benefit in years to come.
Here’s a really quick breakdown of the potential of the deal:
Land: $690K (including weatherboard house)
Stamp Duty: $27K
Consultants: $60K
Rates and Taxes: $20K
Develop 3x2 bed townhouses: $450K
Borrowing interest: $90K
Contingency Buffer: $100K
Valuation on completion: $1.8M
That valuation is conservative with 2 bed townhouses fetching $650K in this suburb, but I’ve allowed $600K. Even allowing for the contingency buffer I’ve still got the potential to realise a profit of $400K or thereabouts upon completion. These numbers are still a little bit rubbery but are conservative and I’ll post details on the actual development costs as I progress the project. In fact I’m considering a new “The Somersoft Development” thread, akin to Skater’s reno thread, whereby I share the whole development process from acquisition of the site to completion and leasing of the completed properties. Might leave me exposed to some pretty embarrassing mistakes being made public, but at least it should be a great source of reference material for anyone considering doing likewise.
Thanks also to all my “mentors”, you know who you are! Bill L, Pitt St, See Change, Jacque, TheFirstBruce, HandyAndy, Karina etc etc. This site IS its members, and all of you have been of enormous assistance to me in my burgeoning property career.
Cheers,
Mike.
I’ve just exchanged contracts on a Multi-Unit Housing zoned site in Sydney’s Northern Beaches for a tad under $700K. Its got an existing weather board house on it that will rent for about $530pw, but the real bonus is the zoning. Its zoned MUH and I've read the council development controls in detail so know that we can put 3 townhouses on it. I've also confirmed this with council. It was originally on the market at $770K but I managed to drag it down to $690K with a bit of clever negotiation and assisted by the flat Sydney market.
Up front I’ve got to say a huge thanks to JoannaK for helping me with the residual land valuation and also doing a fully worked development feasibility study for me! And all out of her own generosity to a fellow forumite!! That was absolutely invaluable in reassuring me that my own calculations stacked up and I was on to a winner with this one. I’ve also got to thank Peter147 for his input on the development potential and options too. He’s actually driven past the site with me and given me his personal thoughts (whilst he was driving my MX-5 for a bit of a joy ride I should add).
This purchase is the culmination of 18 months of research and a few well documented false starts. I’ve personally learnt so much from this forum in my time here and as a result am very comfortable signing away that sort of money for a deal that I know will reap significant benefit in years to come.
Here’s a really quick breakdown of the potential of the deal:
Land: $690K (including weatherboard house)
Stamp Duty: $27K
Consultants: $60K
Rates and Taxes: $20K
Develop 3x2 bed townhouses: $450K
Borrowing interest: $90K
Contingency Buffer: $100K
Valuation on completion: $1.8M
That valuation is conservative with 2 bed townhouses fetching $650K in this suburb, but I’ve allowed $600K. Even allowing for the contingency buffer I’ve still got the potential to realise a profit of $400K or thereabouts upon completion. These numbers are still a little bit rubbery but are conservative and I’ll post details on the actual development costs as I progress the project. In fact I’m considering a new “The Somersoft Development” thread, akin to Skater’s reno thread, whereby I share the whole development process from acquisition of the site to completion and leasing of the completed properties. Might leave me exposed to some pretty embarrassing mistakes being made public, but at least it should be a great source of reference material for anyone considering doing likewise.
Thanks also to all my “mentors”, you know who you are! Bill L, Pitt St, See Change, Jacque, TheFirstBruce, HandyAndy, Karina etc etc. This site IS its members, and all of you have been of enormous assistance to me in my burgeoning property career.
Cheers,
Mike.