QLD Brisbane to grow over 10 % this year

Indeed it has gone nuts! When i was looking there it was already competitive at certain times so i am sure its all gone. I don't know what kind of LMR deals are left and how they stack up now. I actually regret letting one LMR deal go. I was looking at 3, purchased 2 and the third one i thought they wanted too much so i let it go for 25k (although it did need an easement through a neighbours land..)....now i wish i bought all three...

Btw i agree mate, when the council realises all the potential further profits they could make....things will get interesting!

 

Yep. I've got a site there. Mine's about one of the only houses left.

 

Have you done a rough feaso to see what the profit is like?

 

there seems lack in post relating to multi-unit development, especially for Brisbane LMR.

 

@RetireRich101 I am not sure about others, but for us, we worked out that If we started the development when we bought it, I think we worked out the return to be just decent (especially for a quick deal) around 15%. But we don't like that margin, so we decided to hold them and wait a little longer, anticipating the market would rise (continue to rise i should say) over time. I think we made the right decision. But as for others, i'm not sure why really..

 

Yes my rough calculation is about 15% margin in Brisbane LMR sites. This margin is same for the Logan LMR I am holding.. which is not worth the while to proceed now. However on approx on 5-6% yield on purchase price which doesn't hurt so much.
The development cost especially the infra fee of 22-28K per site does eat into your margin for MUD development, hence in some cases a splitter may work out better profit.

 

Yes - there is exactly a 25% penned profit for a 3.39M end product.

 

@RetireRich101 That’s is precisely what my numbers have showed mate, exactly what you just said, hence the reason why we started our splitter development. Also, if the development is within 10km of the CBD, in an area where OO are willing to pay a premium for new stock, then the numbers work even better.

 

An 850k gross return?

 

No, roughly 600k on 2.7M expenses.

But this is only for single digit dwellings - I'm gunning for an amalgamation and an extra 4 on my site.

 

@Bran is the amalgamation something that's on the cards?

 

Absolutely - the other party is waiting for me. I'm baulking though - there's a reasonable profit in it for me without doing an amalgamation. There are huge profits if we do, but its then no longer a 6-7 unit development, but 20-22 units, or 9m+. Far more than I know how to do or have the capacity to finance. I might also be able to buy the block and get a 1200m2 site to myself, but with the current DA/BA costs on top which are useless to me.

 

@Bran Why are you baulking..? Wanting them to reduce the price?

Have you thought of JV then? Or sell DA to deveoper if its worth it financially?

 

I will be able to afford (or at least recover eventually) from a 7 unit dwelling going bad, and can fund it myself down the track and offload the stock if necessary. I cannot afford a 21 unit dwelling going bad. Simple as that!

 

oh ok fair eought mate.

 

The other thing is that he is ready to go, and I cannot. I've got a 5.5% yield just holding it, so I'm in no rush. And I need equity. He is talking about a staged development - this obviously ties me to it

Plus at this stage of the cycle, by the time it's complete...

 

Do you feel it would be complete after the peak or..?

 

Get a joint DA on the site and sell with DA in place ?

That's where some of the high profile profits were being made in Sydney .

Cliff

 

I've never developed, built or even done a renovation. So I have no idea!

@See Change - a possibility, but its going to be a valuable block for ever, so I'd like to retain ownership, with whatever happens to it (and eventually hold the built units)

 

Done two subdivisions on north shore . Made very nice profit . Considerably over 50 % but it's hard work.

Much easier to buy and hold and watch from the sidelines as things go up .

Cliff