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Back of the envelope costs to develop NSW

Discussion in 'Development' started by Ardi, 8th Aug, 2016.

  1. Ardi

    Ardi Well-Known Member

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    Hi all,

    Been looking for a while for purchases with "add value" potential as the few that I currently have do not have much scope to add value. A property has come up on my radar for a possible purchase, hold and lease out for a couple of years whilst getting approvals and demolish then develop.

    Does anyone have some rough "back of the envelope" type feaso costs, or able to help me out with some rough numbers to see if it is worth pursuing further?

    The way I am seeing it so far is that it will basically look after itself in the current market (depending on maintenance costs).

    Property is in NSW, R3 zoning, 780m2 and approx. 15m street frontage. Has a triplex on the same size block next door.
    The intention will be to build 3x townhouses (3x2x2 or3x2x1 if larger does not fit) and look to sell one or two and hold remainder.

    (All rough numbers)
    Purchase = $300k (Leased for $350 per week)
    Stamps = $10k
    Demolition =$25k (quote for removing asbestos house)
    DA and council fees = $30k
    Design, survey, TP costs = Have no idea???
    Build x3 (3x2x2) Medium spec Inc all site costs = $600k
    Holding costs for Build = Do you normally do on total costs or costs to this point of project?
    Agent sales fees (assume x2) = $22k
    Contingency = $50k

    End valuation going by comparable sales = $440k per town house

    As I say it is a fairly rough glance to see if I should look further into it. But considering that it has a property that is currently rented and is in a good location. I believe it will continue to increase in value as is either way.

    Any help would be greatly appreciated!
     
  2. gach2

    gach2 Well-Known Member

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    might want to use current value of property not purchased.

    You could sell right now and not worry about gst/income tax (maybe cgt) if there is a large increase
     
  3. Ardi

    Ardi Well-Known Member

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    Sorry, have not purchased as yet looking to buy. So that would be the current value.
     
  4. Ardi

    Ardi Well-Known Member

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    Also curious if 15m block width is too small in others opinions?
     
  5. Scott No Mates

    Scott No Mates Well-Known Member

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    What is the minimum frontage required under the DCP and any local controls?
     
  6. gach2

    gach2 Well-Known Member

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    curious to know where in NSW you can purchase triplex potential land that is leased for $350pw where the potential triplex (assuming low - med build since you have budget 200k per unit) could go for 440k each once completed.

    Something there is wrong or its great bargain (just saying its unusual not impossible)
     
  7. Ardi

    Ardi Well-Known Member

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    To be honest the build price is a total guess based off 3br house. Does this seem to lean for triplex?
     
  8. gach2

    gach2 Well-Known Member

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    not lean just not fat (high spec) - considering land is only costing100k per block i would not spend anymore (maybe even less 3/1/1 etc)

    just something there seems to good to be true in your calculations (maybe the 440k estimated sale price)

    But could just be an amazing opportunity.
     
  9. Scott No Mates

    Scott No Mates Well-Known Member

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    Optimistic demand? Sales price may be achievable but how long will it take?
     
  10. Ardi

    Ardi Well-Known Member

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    S
    Council has 3m setback for two story from side boundary and 6m from front. By the time setback and driveway are taken into account is this too narroelw for a good floorplan?
     
  11. Ardi

    Ardi Well-Known Member

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    440k is going off recent sale from agents, these were the closest to a new townhouse in the immediate area. Looking at the ones for 440k they are on a 1000m2 block so i imagine i will fall short of this as they will likely be smaller.

    Maybe if i aim closer to 410k to be safe?
     
  12. Player

    Player Well-Known Member

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    Sounds as though your feasibility is going to be way off even for a back of envelope exercise.

    You cannot compare a town house (projected sales price) with a new house on 1000 sqm of land. I doubt reducing your anticipated sales price by 30K will compensate for the lack of land compared to the 1000 sqm ones.

    By the way wherever this is, if there are no comparable sales of brand new town houses for you to work off, are you going to be a pioneer in the area? Are town houses common there or do people expect detached house on a quarter acre block? Will there be a market for the product you are looking to develop?

    You don't have to divulge the exact address, however someone earlier asked you for the area you are looking to develop in. Without that your request for assistance in pricing the construction cannot be given in even an approximate manner.

    Perhaps the following link will help with regional versus capital city mark-ups:

    Construction Cost | Building Cost | Cost of Construction | BMT

    There's also an app or calculator on the website you can look at also.
     
    Ardi and York like this.
  13. Ardi

    Ardi Well-Known Member

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    Sorry i should have been clearer in my previous commet. My comparison was another triplex (3x2x2) that were sold for 440k new. These had been built on an existing block that was 1000m2.

    So my assumption is that having around 220m2 smaller block will result in a lower sales price.

    Location is north coast nsw.
     
  14. gach2

    gach2 Well-Known Member

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    on a triplex how big the block is will not make a big difference (sometimes nil)

    Though larger blocks have larger buildings
     
  15. Ardi

    Ardi Well-Known Member

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    Sounds good, i was just concerned that with the amount of land available might result in the town houses being a bit too small thus a lower end val.
     
  16. Ardi

    Ardi Well-Known Member

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    On a block that is 780m2, 15m width and requires a 3m setback from the side boundry (if two story) and 6m from the front.

    Once a driveway goes down one side, is this block too narrow to fit a usable floorplan?
     
  17. MrFox

    MrFox Well-Known Member

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    Its not too narrow. 15 m or 50" is standard size block of land. 780 m2 though sounds more like a 2 unit site.
     
  18. Ardi

    Ardi Well-Known Member

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    No worries, thanks for getting back to me.
    Had 4 offers put on it last week so might have missed the boat. Going to have a look at a couple more places in this area this weekend.