Building townhouses in Melbourne

Hello brains trust!

I'm contemplating going into a joint project with a friend of mine where we will buy a block in Melbourne's west with the view to knock down and build 3 townhouses - selling 1, and keeping 1each.

The idea being
1. It's a long term hold
2. It's cheaper to do this than buy a finished product
3. It's our own customized training course.

What are we looking at in terms of build costs? i.e. What number should we be basing our feaso on for build costs?

 

Not trying to be negative, but I like to keep things real.

Are you sure it actually cheaper to do this?? Development sites are very much sort after by everyone, pushing prices over the top and therefore profits are skinnier as market has been hot since 2013. There is much higher risk when developing at later stages or close to peak?

Before you do anything make sure you get an expert to view the site, ie townplanner, just because you think you can build 3 townhouses does not mean you can.

Also getting DA can take anywhere from 6-12 months dependent on the Council and if you have to go to VCAT then I think the waiting list alone is around 6-9 months.

Then add another 12 months for the build.

At this point of the cycle I would be very wary about developing in Melb? Call me silly, but builders are busy, hot market, therefore building costs may be up around $1500-1800 per sqm?? dependent on the specifications.



Just keeping it simple
Stamp Duty
Site works
Holding costs
building costs
Infrastructure costs
Finance costs
Contingency, add 5%

Another important factor, don't reinvent the wheel, find out what is in demand and copy. Size, product, specifications.

This is the RISK what end values are today could be wrong by the time you complete the project, dependent on whether the market has changed.

 

As above. Say 60 squares @$15,000/ square plus other costs, open space contribution looking at over $1m including GST.

So make sure you have tax and legal advice re GST, JV etc. Need Deed of Partition to keep one each post subdivision