Hi all, Looking for fellow investors to assist in my feasibility assessment by sharing some "real life" examples (not necessarily doing my homework for me) of some subdivisions in Perth. The ones I have seen are just far too complicated for me (apartments, triplex etc). My scenario is either just chop the back off and sell the land or build on the back and sell the front. MS excel is my weapon of choice but of course it's only as good as the data I put into it. If you are not comfortable uploading here feel free to PM me. #cityofwanneroo Thank you
Be aware that you will likely need to complete a reno on the front house as well if you go this route. I tired 80s Wanneroo dwelling with a brand new one at rear will not be congruent. You will need to budget for this and choose the property appropriately. The sale of the land may work but have seen a few around and seem to take a while to sell. I would chat to some local agents about your ideas to get some feedback. I can refer you to some good ones as I have an office in Wanneroo (surrounded by real estate agents) and also reside in the area. Also would recommend you get your structure right by chatting to a property savvy accountant which I can also refer you to. Cheers.
The house is already purchased & tenanted so i am hoping to expand on the costs associated with developing and selling the back block as a survey strata lot. E.g Land Survey - $970 Management Fee (whatever you want to call it) $8,800 (WAPC preparation and submission/Application fee, Survey to create new strata plan, licensed valuation for Unit entitlements, council clearance fee, WAPC endorsement fee, landgate lodging fee) Draft Sketch - $0 Settlement Title Fees $1,100 Power Dome $3,400 (Preliminary Estimate) Electrical Connection $1,200 (Preliminary Estimate) Headworks (Watercorp) $7,000 (Preliminary Estimate) Additional Plumbing $1,500 (connecting lots to sewer - Preliminary Estimate) Vegetation Removal $1,540 (Tree Removal front of house) Site works (yet to be determined) Driveway (yet to be determined) Fencing (Partition off back of exisiting house) $1,424.50 Fencing (Fence off front yard of exisiting house) $2,300 (Preliminary Estimate) Council Open Space Fee - (Not sure if this applies haven’t investigated yet) Agent Selling Fees 2.5% (Estimate) Total Estimated Time Fram - 8 months.
What is the property worth today as is. What is the value of the vacant block when chopped off What is the revised value of the front hose pre reno What is the cost of the Reno What is the value of the revised house once Reno is complete? the costs in between can mostly be adjusted to some extend to get to a viable end point. Buying a block, then doing the feaso is a bit backwards. But I assume you have owned the property for a long time already? Blacky
I can't think of anything that you missing except for the chocolate and beer line item for sanity and stress
Hi Scaphella, Costs for the development look generous, but reasonable. However, that is only half the equation. I'd be interested to your best guesstimates to @Blacky's questions. I also agree with @Blacky comments that the minor costs can mostly be adjusted to achieve a viable point, if the deal stacks on a high level. I've had some experience buying land from council for visitor bays. It is under clause 4.15 of City of Wanneroo's District Planning Scheme. They usually apply a fee as a condition within the DA. I am not sure if that's what you mean by buying land from the Council. Here are two more points that might be worth considering: 1) Use today's value in your feaso, not what you paid for the land. Market conditions being what they are, it is possibly this is adversely impacting on the deal. The way I approach deals like this is that I take 'land value' independent of purchase price. In other words, if I bought a property 50 years ago for pocket change, I would still put in today's value into the feasibility. On the flip side, if you paid top dollar for a property, you should still plug in today's value into the land cost. A feasibility does not tell you how much money you will make, because it is based on the future, which is inherently uncertain. A feasibility is primarily a decision making tool. The decision you are making is whether you should take a certain course of action today. If you have lost a tonne of cash because of a purchasing decision- understand the error was probably in deal selection, market timing or some other element of the process. Learn from it, move on, and take measures to make sure you don't do it again. Believe me, we have all lost hundreds of thousands of dollars by making mistakes of this nature. Nothing you can do about that now, all you can do is plan the best way forward from where you are at. 2) The profit is generally greater when you build the house, rather than sell the block. I have assumption that building a house on the block of the land would lead to a higher profit, as it adds more value to the overall deal. This is probably not true in every case, but certainly in this instance I think it would be. This may also be affecting the numbers you are seeing in the deal. You see, the thing is, if you attempt to sell a survey strata block, you are essentially competing against other lots, and the fact that it you will have a survey strata lot (not a green title), and a battleaxe configuration (rather than street frontage) means you will only get a decent price if there is scarcity for land in the area (which there isn't really in Marangaroo). As such, you will likely be forced to price the property very low in order to make it attractive for a buyer. On the flip side, of course, if you have a very nice block with great frontage, orientation and location, it may very well be worth simply selling it as is, because you already have a competitive advantage. If you have a house on the property that is really well designed, you can offer other advantage to a buyer that could compensate or mitigate the downsides to get a better price for the product, and better profit out of the deal. Cheers, Angad Singh
The most important factor with your feaso is what are the end values today? and demand What are the market conditions for this product if you plan to sell? If you have to sell then its absolutely critical to not over estimate this in fact I would be making sure the numbers were conservative just in case you need to drop the price, if the profits are too skinny, don't do it. I would also consider that it may take longer to sell, add additional holding costs MTR
