Development potential site perth northern suburbs

Hi guys just starting out in this cool community forum

Still in the researching phase of the development process looking at the good the bad the ugly.

Came across this one on realestate.com in a new coastal suburb in the northern corridor of Perth.
It seems a few of the big builders are building streets such as this and replicating the model on each new suburb.

https://www.realestate.com.au/prope...roperty-residential land-wa-alkimos-201758526

Price of land: $420,000
Land size: 1033sqm
Zoning: R60 (titled for 4 seperate dwellings)
Can build 2 story

Can anyone see any potential in this kind of development?

There has been a similar row of 4 2 story homes built that are close by and are near completion so and the end advertised price is $396,400 built by The homebuyers centre.

https://www.realestate.com.au/prope...te.com.au/property-house-wa-alkimos-125627002

If anyone could cast there knowledgeable eye over this I would be very greatful.


Thanks guys
Steph

 

If you're looking at spending that much, id focus on something inner city in my opinion.

The builders doing these are not selling out in a mad rush, nor do they expect to, and the builders' margin of say 20% roughly is where your profits get may get chewed up.

Also some of the builders have done deals with the developers, like a joint venture or similar, and the land developer helps market and sell the individual properties too. Plus the building companies have 20+ sales reps and big marketing budgets.

Tough market at the moment in that northern coastal corridor. Who's knows what will happen in the future, but it's not somewhere I'd be considering at the moment for a big investment like this.

 

Hi Lyndon

Excellent feedback thank you
You are right about the northern corridor we have a IP up that way which we bought on a high in 2014. Has dropped significantly since building so that one is currently in negative equity with rents also being very competitive! But I'm happy to just chalk that one up as experience in our investment journey even the hard lessons are blessings

I agree that the big builders would be able to negotiate a better deal for a bulk buy of land.

Just interesting to see what's happening around perth and where the profits are being made.

Thank you Lyndon

 

No worries! I also have a rental property up there.

Still could be worth running the numbers and chatting to some lightweight construction builders that can build these.

If the blocks are 105k each and end sale price is 400k, can you get the subdivision, turn key build, holding costs, purchase costs, selling costs etc all done for roughly 220k? That would give you approx 20% return on each unit. Very rough feasibility there but I think even at this basic level it looks pretty slim!

 

That's the basic approx figures I got too!
What profit margin would a first time small developer like myself be hoping for?
Currently in the process of purchasing a few more IP's for equity and good cash flow prior to developing so trying to get a good idea on figures at the moment.

Thanks for your thoughts Lyndon