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! 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
Cheers,
Thunder
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! 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%.
Cheers,
Thunder