Development potential

Agreed there is some really bad pockets around and can be a turn off. But IMO the area will go through gentrification within 5 -10 years. Housing commission are slowly selling the homes and moving the unemployed refugees further north to Broadmeadows. I would keep an eye on this trend and if it is in a decline I would probably double down and buy another lot and a nice pocket of the area as close as possible to H Heights.

 

We are now at advertising stage for 4 units. Neighbours feedback has been pretty positive so far. Here is a couple of snapshots:




Ground floor:
(north <= left on the plan)

First floor:

 

Some pockets of HW have really boomed in the past 12 months. I have seen development sites selling for over $1,000 per sqm.

Looks good! That's the type of development I wanted to do in HH but we ended up selling instead.

 

Hey @PacMan

For the area and the lot with it's easements that's a pretty good design.

From an aesthetics point of view if you get the chance the area above the garage doors and the bedrooms on the 2 rear units needs something. I know you can't have larger windows but you could articulate the bedrooms and have them overhang the garage area by 300-500mm without incurring any that will be expensive structurally. That wall at the moment is just too flat and meh.

 

Completely agree with you. That's a nice hint. Council has advertised subject to both front and back units with more articulation.

I'll show you the plans in more detail on Friday hopefully.

 

Last couple months you would have been lucky to find development sites for 1,000 per sqm.

Did you sell yours with plans & permits?

 

I'll bring my crayons

 

We didn't get that far. Still made a good return though.

 

That will give you an edge

 

look great
just another one, have you considered selling DA, have you looked at the numbers and not build?? This can sometimes work well with less pain and still good profits and shorter time frame, less risk???

 

This what I am speccing up now for a townhouse build in Perth. This is for a long term hold to rent. So looking for durable finishes rather than cheap. For example, no carpet in high traffic areas, stone vanity tops, extra tiling etc. I believe this approach makes sense. Cheaper, less durable finishes can look shabby quickly and the place will rent for less due to the shabby presentation

 

how much did those renders cost you?

 

Yes I have considered it but margin is much higher if we develop and hold it.

We want to hold it mainly because of its location being 12km from CBD and the net incomes increasing year on year. Also seeing more young professionals moving in to the area. To me all of these are signs of gentrification.

But I would like to know why others do not choose this strategy? Is it mainly because they want to be an active investor and keep getting much higher Margins on equity. Or are there other underlying reasons to it ? I would love to hear your opinion if you are a long term developer who likes to sell instead of holding stock?

 

There is no right or wrong just what suits your scenario.

I have been selling all my developments because I want to reduce debt and because I believe we are close to peak and the rental returns don't cut it for me.

I am also reinvesting some profits into US market where cash flow returns are higher and developing property is much shorter timeframe

 

My idea is along the same lines. Durability will be important if we are going to be renting it long term.

I have opted for high ceilings though so that in the future if and when we decide to sell it. It would make it easier to compete with new stock possibly after a cosmetic renovation and adding a few wow factors here and there.

 

Architect is a friend so he has given very good rates. Renders were actually free in this case as he said they didn't take too much of his time.

 

Yeah nice. I think high ceilings help with rentals too. Just because people are renting doesn't mean they don't want a nice home to live in.

 

Only problem I see is construction costs going higher than our borrowing capacity.

But I will let @Simon Moore loose some sleep over that one.

 

You have to send the wife back to work full-time

 

Final day of notice was yesterday and we have received no Objections. I did visit few of the neighbours before we advertised which I do believe had a positive impact. Council to decide in 4-6 weeks from now.