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Developing in regional areas?

Discussion in 'Development' started by Beelzebub, 18th Jul, 2015.

  1. Beelzebub

    Beelzebub Well-Known Member

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    Just wondering what some of the issues might be with building a duplex style construction on a cheap block of land in a rural area? For example Ararat in Victoria has great rental yields at the moment. I'm wondering if you could buy a cheap block at say $50k and build a duplex on it?

    Would you have trouble financing this?
    Would you still be able to manufacture some growth from the development?
    Is it too expensive to build in these areas?

    I'm not thinking of Ararat specifically, but I am wondering peoples thoughts on doing projects in regional areas with high yields?

    Beelzebub
     
  2. Rockstar

    Rockstar Well-Known Member

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    I have done well developing in a regional area. Duplexing was quite uncommon when I began but I found the council to be very helpful despite the rumours of negativity about council DA's. I have found council planners to be very pragmatic and flexible in allowing sensible development that promotes economic activity as long as it primarily complies with the local planning codes.
    You will need to consult with council and research these planning codes carefully to detemine whether these small developments are permissible or not. Then crunch the numbers with a proper feasibility study that covers land aquisition, building costs, council contributions, subdivision, consultants, appraisals upon completion, holding costs, etc.
    All the best with it
     
  3. Biz

    Biz Well-Known Member

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    Valuations can be an issue.
     
  4. Be Developer

    Be Developer Property Developer Business Member

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    @Beelzebub

    Is there a market for such end product?

    In some cases, Regional developments can be expesive then metro.

    As @Biz Said, valuation can be headache too.

    Quick numbers

    $50k to buy land
    $250k to build single story duplex
    $20k professional fees
    $5-7k holding cost?

    Whats your expected re sale value?
    What's a rental market like?
     
  5. Beelzebub

    Beelzebub Well-Known Member

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    You can build a single storey duplex for 250K? I thought it would be heaps more than that.

    I would say $300 in rent and 280-310 in re-sale? Does that sound reasonable?
     
  6. Be Developer

    Be Developer Property Developer Business Member

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    I am just throwing rough numbers for calculation sake.

    I don't know that market and product it requires.
     
  7. Rockstar

    Rockstar Well-Known Member

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    Unlikely.
    eg: from Dixon Homes website Select duplexes in your area.
    Starting price a bit over 250k for 2 x 1 bed, 1 bath, 1 gar.
     
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  8. Beelzebub

    Beelzebub Well-Known Member

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    Yeh I didn't think so. I started getting pretty excited there for a second. Still, thanks for that website that helps heaps with getting my head around some preliminary numbers to see where and how this might work.