4 Townhouses development - Melbourne

Got it.

How did you get started in developing? At the moment I try to navigate the planning regulations as best I can but really don't know what else I should be researching to get my head around it.

 

Great job!

Mind if i ask a few questions...

Do these figures and profit include 10% gst?

What was total squares of all units / your build cost per square?

What was storm water retention cost?

What was driveway cost?

Where did you include your planning surveying and other consultancy costs?

Did you get builder to do everything infra included or did you sub these out yourself?

By the way not to be rude but your profit from the development was $176k and your profit from land escalation was $100k (roughly based on replacement cost). I think it's better to consider it this way as if a development takes too long profit can be rewarded but in reality a lot of the reward came from a rising market. This thought process will assist making money in a downward or sideways market.

Let me finish by saying well done on a good return any way you cut it!

Thanks!

 

It's actually 6.77 squares, the only single storey, the others are all double storey

mtr

 

I actually looked at all options, even selling approved plans and permits love this strategy, shorter time frame and less risk

I also considered the same for my Perth 3 villa development because the land had increased significantly, but ended up building.
Here is the link on this one from SS
Perth - 3 unit/villa development - Somersoft Property Investment Forums

However, I wanted to learn and go through the build process.

There are many ways to skin a cat, I have sold plans and permits. It's a matter of weighing it up and if the market is turning possibly better to offload

same as whether to sell, hold stock, it's dependent on your strategy, and what you are trying to achieve and most important market conditions

mtr

 

Agreed. As I am building out a dev in Melb I am interested in your builder and build costs.

Also you got a very good density on the lot did council encourage this? Was the lot in a special zone or just r1?

Can't wait to see the plans to see how you achieved the density. I struggled to get 2 houses on my 499m2 block with turning movements mind you I did go 3 bed single storey.

 

How is the turning circle for the cars getting in and out of the garage

Yeah I dont no about yours but some townhouse house developments I see the turning circle you have to do to get into the single garage is such a tight squeeze its a major turn off.

 

Council I am in enforcing one swift movement in reverse and then forward. No exception. Had to redesign to get it to work.

 

Yes I understand, am working on this with traffic engineer with my latest project

The beauty with developing is you just keep learning and hopefully get better at it.

I am from Perth and developing in Melb is a different beast from Perth



MTR

 

Thanks for sharing MTR, sounds like a great result for your project

540k build costs sounds amazing, especially given some are two storey. Are building costs in Melbourne that much less than Perth?

 

I'm interested in how you drive your projects being located in Perth. Is travel involved frequently? Or do you have a trusted team, with lots of pictures and phone calls?

 

Thanks for sharing, what is the net margin like after holding,selling fees, gst?

Good example of why it can be worth doing a project for less % margin if you can turn it around quickly.

 

Congratulations! Sounds like you're doing very well with properties both in and outside of Australia! Enviable position to be in!

When you first started developments did you have to have a large sum of equity/cash banked up first? Also I'm assuming this wouldn't be something you could do on the side while also working full time right?

 

Its all nice to show a rounded gross profit, but to show folks the real costs of this development, some more definitive numbers need to be given.

$449,000 Purchase costs - I assume this is purchase price, Stamp Duty and conveyance? Can you break this down for us?

$540,000 Building costs - I assume this is full turn-key build cost? Does this include driveways, landscape, fencing, letterbox etc? What are the sizes of all the units? m2 costs?

$110,000 Infrastructure/holding costs - I assume this is obvious interest costs as the build progresses. All hard costs of development. Can this be broken down?

1,099,000 TOTAL

Total Sale Price: $1,375,000 - Assume 2% agent selling costs ($27,500) and conveyance costs per unit ($800 each?), would bring the sale price down a bit, and the percentage down a few points.

Gross Profit: $276,000 25% - Depending on the above questions answered minus tax, GST, what will the net figure be?


pinkboy

 

Pics or it didn't happen

But seriously, thanks so much for sharing; my coffee hasn't quite kicked in yet, but for now, here are my first few ("why did I ever share this info on a public forum, and why does this annoying girl think I have all day to answer her questions") questions :

1. I'm looking to get started, so most of my questions about the development process revolve around the first few bits. Which bank did you use, did they encourage you to sell OTP, did you have any issues with financing (Eg bank refusing to release next stage of construction loan, did you capitalize interest and/or have any issues with that, etc)...

2. When beginning the project, how did you find the land - through the RE sites, or was there somewhere else you looked? It seems like you got an incredibly good location! Thomastown has really taken off in the last year.

3. Starting the project, did you use a town planner or deal with council yourself? Who would you say were the critical professionals in getting 4 townhouses on the block? How did you find your architect? And builder? (Through referrals?) Was the build cost presented as fixed price? Can you tell I'm nosy? Did you have any issues with your builder? One of my biggest fears is the classic "builder gone bankrupt" issue....

 

Its not the same as building in Perth, they don't use double brick.

$540K turnkey, everything, apart from the demolishing of the property, yes I thought a good price.

Also timeframe is amazing, in Melb builders can be sued for liquated damages if they take longer than the timeframe stipulated in the contract.

In Perth we are at the mercy of the builders. My 3 villa Spearwood project took 9 months to build, where as this project in Melb will only take 7 months.

MTR

 

Hi SN

I will answer what I can share

I have some photos, but I am located in Perth the project is in Melb, I did not get to take happy snaps too often. I also decided to wait until settlement and therefore I will provide the real estate link which will provide all the details/designs.

I used RAMS lo doc resi product because at the time I had some serviceability issues, which is now resolved. I would recommend them if you have issues with servicing, but you will need to have a company/trust set up for this and your accountant to sign off on this.

The land was sourced by a member on the forum who at the time was operating a business where he sourced sites and put together plans and permits and progressed this through council.

Thomastown - land has gone up significantly but then Melb market has been strong in general for the last 2 years. End values of this product have recently started to rise.

I think the trick with developing is probably purchasing the land at the right price, very difficult when the market starts moving and you have competition.

The build costs must be fixed, I believe this is a bank criteria.

As I am in Perth - I used a building inspector/registered builder to provide a report at each critical stage of the building, it was extensive and cost me around $250.

I have learnt a lot from this project.
With my next project I have employed a different designer and I have a gun town planner on board. I am also hoping to use this builder, but will be shopping.

MTR

 

What was the demolishment cost, and where in your figures is this reflected?

pinkboy

 

I think I have answered all these questions in previous posts including tax I will be paying. Except agents fees - 2% correct. Purchase costs, of course includes everything and build is turnkey of course, other than demolishing costs which has been included in the total $110,000.

I use margin scheme with GST. Accountant does this one for me as its a bit tricky. I am meeting him shortly.

We had a meeting last year on this project and I think its pretty close to what we expected.

MTR

 

Sanj

Absolutely, there is more than one way to skin a cat.

I actually was planning to sell this one with plans and permits, however the builders interested were trying to screw me down and at the end of the day I decided I would achieve a better result building, not to mention I have learnt a lot along the way and this was part of the process for me.

I am no big time developer just someone who is giving it a go, I would not be doing this if I was not inspired by what @Westminster was doing and others on this forum

MTR

 

Thanks, I appreciate the time you take to write these things up. I'm getting the same feedbank re: build costs needing to be fixed for financing. I might hit you up via PM if I think of some more questions.

@pinkboy When I first wanted to get into developments, I was discouraged by some people who showed me %-wise cost breakdowns. At the end of the day, the total $ return in developments is a nice one; numbers will differ as developers get more experience and @MTR has mentioned openly how many projects she's done. @MTR has no obligation to share anything at all, I find a lot of value in her sharing her experience. Even if she deleted all numbers, I would still find her posts useful; I think you need to know what you're looking for in order to find it.

Agreed there are many ways to skin a cat.