4 Townhouses development - Melbourne

Just thought I would post my project/numbers, 4 (2 bedders) Townhouses, in Thomastown, North Melb, around 17 km from CBD. This project will be completed in late February 2016.

All the town houses have now been sold OTP and prices varied dependent on size, front townhouse always sells for more. They are all unconditional, but I will post the link once they have settled. Buyers were a mix of FHB/investors.

Block size 650 sqm, walking distance to the rail. Location was excellent.

$449,000 Purchase costs
$540,000 Building costs
$110,000 Infrastructure/holding costs
1,099,000 TOTAL

Total Sale Price: $1,375,000

Gross Profit: $276,000 25%

The slab was poured in July 2015 so it has taken around 7 months to build this project assuming completion is in February 2016, and builder is on target.

If an investor wanted to repeat this project in Thomastown the profits would be reduced today because the land value has possibly gone up $100,000.

I consider this project very low risk because if the market turned and I could not sell anything the rent and depreciation would make it cash flow positive.

MTR

 

Corner block?

 

Nicely done. How big are the townhouse?

 

No, not corner, I wish I would have made more money, each with their own frontage. Hard to get I think

 

What is the block dimensions?

 

If you are going to do it again, what would you do differently?

No photo?

 

Thanks for posting this MTR, I have been interested in building a TH development for years now and we've previously owned a number of stock standard 5% yield IP's.

I'm tempted to start looking for something like this in QLD on a cheaper area as the 7% yield has eluded me so far.

 

Awesome result, well done.

Do agents there charge normal comm for OTP or more / less?
How much in tax will you get slogged for?
Any photos to share?

 

thanks

they varied largest 12 sq to smallest 6 sq
target market - FHB

mtr

 

I will share link on settlement, which will include design etc, only 1-2 months away

I buy in a Trust so I pay 30% and use margin scheme for gst. I have a good accountant which helps.

My strategy is to sell everything at the moment, however my next project in Melb will possibly be hold 2 sell 2.

I don't like paying tax but it's part of doing business. I build 2 per year and should generate at least 300k net, minimum, this for me helps with generating profits.

Unfortunately the tax man is my partner, damn it


MTR

 

I am located in Perth, I love Melb market, infrastructure costs are much cheaper than in QLD, that's why I don't develop in QLD

 

Nice profit, well done. Do you have another development planned already?

 

Photos shortly

Continually learning, I am relatively new to developing, started 3 years ago onto my fourth project, they have generated minimum of 20% profit

Don't over extend, have huge cash buffer in place

Build what people want

Target markets where there is a demand

Manage risk, start small

don't stress about what you don't know or understand, pay for the right people to guide you

As I said still learning, I expect there will be plenty of tweaking moving forward


MTR

 

have plans with council on another project in Melb East, larger townhouses, larger site, targeting FHB market and downsizes/baby boomers

mtr

 

Sorry not sure what you mean about infrastructure costs? What are the fundamentals you look for at when determining where you are going to develop?

 

6 sqm is smaller than my ensuite

 

Great job M

 

I got 3 offers on this one and accepted the best offer from FHB.
Actually it's not bad IMO, we are talking lower price point, what people can afford. Clearly there is a market for this in this area


MTR

 

Any Government fees associated with subdividing lots, electricity, water etc

 

Sorry are we talking 6 squares - 55 square metres?