Desktop Duplex Development

Slightly confused on the extractable equity in this, I've always worked it as up to 88% of the total value not 88% of the equity you have ie 880 x .88 = 774. Then 774 - 720 current debt = available equity.

If you were to release 140k on top of the 720k then the lvr is 97%, surely no bank would allow that?

 

Fair enough.... it can a bit confusing.

720K is the total construction cost. Not total debt. 20% on the land & build cost + additional expense are already paid.

Total debt= $647,900 (land + building) * 80% = $518,320
New loan = 880K(end value) *88%= 774K
Difference = $256K

 

yes... Obviously you have done this few times

 

It should actually be 880k x chosen LVR
Then minus existing debt of 647k
Gives top up avail at end, assuming I've read the numbers correctly

 

127K than if my maths is accurate

 

Your in great hands with @Westminster !. Good on you mate. I'm sure Myf will smoothen out the rollercoaster of emotions along the way.

 

Sweet I missed the post on what equity you were contributing. So 202k equity in for 256k out at the end. 54k/202k = 26% cash on cash return.

I've just started getting my head around the numbers on all this stuff so good to have real world examples to work through.

Cheers

 

yes.. based on safe figures. Return should be more if there is no drama or any decline in end valuation.

Keep in mind, at the end of the day, these are all estimates.

 

Well done man - the first development is more about learning than making money and if you can make money from your first development then great. Not sure if this is your first development though but good luck and thanks for sharing the numbers.

 

Well.. We built our PPOR through a project builder six years ago. Focus was a bit different. 'comfort' was more important than numbers.
We also built a Granny flat in an IP. It was a lower cost development. Less risk involved.

This is the first real development where each item & time matters. Definitely this is not something I would try without a person someone I can trust.

 

I just realised that I haven't mentioned anything about the location.

It is in Clarkson WA.




Our development is located roughly where the mouse pointer is.




We looked at few things.
Distance from CBD: About 30 Min drive (37km) north of Perth - OK for a development - Tick
Public transport to CBD: Clarkson station within 1-1.5 Kms - Tick
Bus stop is near by - Tick
Shopping: Ocean Keys within 1-1.5 Kms - Tick
Schools: Two primary schools. There is new proposed school within 300 meters. - Tick
Land scarcity: Limited available land in the south (Perth) direction - Tick

 

My first IP was in Clarkson in 2004 , @devank and I lived in it to start with so I could paint it etc.

All of that land in your graphic was just bush, there was no trainline nor freeway. Exciting times ahead.

 

Things are happening fast once it is started... Few pictures attached (Thanks Westminster).

I got a water bill this week... now it feels more real

 

@devank

Good on you for taking a punt at property development. Having @Westminister onboard to run first development will certainly make it easier for you.

Good luck!

 

Beautiful sunny skies will be on your side for keeping the construction going at a good pace.

The house is getting a lot of attention by the nearby brickies and chippies. The 2 concrete slabs for the 2 houses next door were put in about 3 days after yours but will now sit there for around 6 weeks curing to be hard enough to have double brick on them. Yours will be a 2 storey structure by the time they get their first brick down.

 

Can I race him?

 

Sure but you got a head start and only doing single storey so not sure how it's going to work.

 

But I have to hunt down trades for finishing bits since mine isn't turn key

 

Looks awesome well done.

The experience you gained from this project will be worth more than equity, cash on cash ect…


Rinse & Repeat.

 

I'm the same Dave. Chose to do landscaping, driveways, blinds, windows myself.