Brisbane Subdivision 1 into 2 feaso

Discussion in 'Development' started by Grazer, 8th May, 2019.

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  1. Grazer

    Grazer Member

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    Hi All,

    I'm building a feaso template for subdivisions and would appreciate input.

    31 Buzacott St, Carina Heights, Qld 4152

    The house is in Carina Heights, government housing which is being sold off. 800m2, wide frontage, high side of street, quiet road, no flooding. The house is quite long and thin and looks like it can be moved.

    The plan would be:
    1. rent while getting plans sorted
    2..split
    3. shift and lift
    4. sell both

    At their asking price of $720k, worst case looks like a $70k loss, and best is 30k net profit. I would have to be looking closer to 600k to guarantee a profit.

    Input appreciated

    See attached
     

    Attached Files:

  2. Brady

    Brady Well-Known Member

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    Not a market that I follow, but generally speaking stay clear of any project that worst case you're making a loss.
    Worse case you want to have small profit, absolute worst break even.
    If there is potential for a loss, walk away.
    Especially when profit is $30k net
     
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  3. Grazer

    Grazer Member

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    What kind of return do you look for before it interests you?
     
  4. Brady

    Brady Well-Known Member

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    20% gross, allows for 10% movement with still 10% profit or worst case sell no profit, not at a loss.

    Sometimes will look at return on investment, 100% is nice.

    Not sure how you could consider something when the potential is $70k loss > $30k profit
    The loss potential is far outweighing the profit potential.

    If you had of said range being $70k loss > $300k profit might be worth more thought...
     
  5. Grazer

    Grazer Member

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    I agree this is no deal, was just looking for feedback on the model.

    Any recommendations on how to get better accuracy of end values for land?
     
  6. 11907

    11907 New Member

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    I would allow longer for your holding cost time. You have to sell at the end of the job and if you need op works approval that can add a couple of months. Just look at all the land sales in the area to get a better idea of what they sell for. It is the big number not to get wrong tho. Look for more profit than you have but I’d be surprised if you can find 20% on low risk 2 lot subs unless you get some good capital growth in the 12 months it takes you to finish and sell.
     
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  7. Brady

    Brady Well-Known Member

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    If it was that easy everyone would be doing it :)
     
  8. Coxy89

    Coxy89 Well-Known Member

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    On your GST calc I think you miss adding back in GST credits for the build costs so that will reduce some GST paid.

    Also what's the consensus on margin? When people talk 20% profit I associate that with a Gross number not net as per your spreadsheet.

    Achieving a 20% net margin on a splitter would be difficult I'd think