First time for everything, hey? (First time multi unit development)

Discussion in 'Development' started by FirstTimer11, 13th Mar, 2019.

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  1. FirstTimer11

    FirstTimer11 Member

    Joined:
    13th Mar, 2019
    Posts:
    7
    Location:
    Melbourne
    Long time stalker, first time poster, first time multi unit development.

    Here's my plan and would love to get some feedback! Please be as brutal as possible :)

    I bought this property back in 2009, currently rented for $320 a week. I want to increase the rental income and want to sub divide it now.

    Site: 700 sqm Single Residential Dwelling (3 townhouse potential - 1 x 4Bedroom, 1 x 3Bedroom, 1 x 2Bedroom)
    Purchase price: $ 390,000 (back in 2009)
    Current Evaluation: $700,000
    Conveyancing $ 1,000
    Stamp duty $16000
    Location: Sunshine West, Victoria

    Town planning + Construction Docs: $25,000
    Holding Cost: $45,000
    Construction Cost: $650,000
    Contingency: $40,000
    Consultants cost: $20,000

    Total Development Cost $1,187,000
    End value: $1,700,000

    My goal is to rent to out all townhouses for at least 5 years before I make plans to sell them, does this sounds like a good plan, or a plan that has too much risk over reward?

    If it does sound a like decent plan, what else am I missing in terms of my feasibility plan?
     
  2. lixas4

    lixas4 Well-Known Member

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    24th Jan, 2016
    Posts:
    782
    Location:
    Melbourne
    3 lot subs pay 5% (or another value as specified in clause 53.01 of the planning scheme for your council) of site value as a contribution to council - its called public open space contribution. Look up public open space contribution using the property chat search, if you want to know more.
     
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  3. FirstTimer11

    FirstTimer11 Member

    Joined:
    13th Mar, 2019
    Posts:
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    Location:
    Melbourne
    Thank you very much! Appreciate your time reviewing my plans, every bit helps!

    Got a few more quotes today for town planning + construction docs, definitely feeling excited about the project.
     
  4. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Perth
    I can't speak to Melbourne specifics but your construction amount does seem quite low for 3 townhouses. Is this based on a per square metre amount? If I was to use $1500 psqm then that is only 433sqm of construction for the three units which doesn't seem enough?. I'm thinking it would be around 200+150+100? Depends on if they are double garages, verandahs, alfrescos etc

    I tend to use a contingency of 10%
     
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  5. FirstTimer11

    FirstTimer11 Member

    Joined:
    13th Mar, 2019
    Posts:
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    Location:
    Melbourne
    hi Westminster!

    Much appreciated for your feedback mate! will definitely adjust my figures higher to be more realistic so I am prepared for it.

    Here's some rough specs that I was given by one of the potential draftsman : 183 + 127 + 162 and he reckons the build will be roughly $610k which prob equates to only $1300 psqm. I presume he gave me that number to entice me to get the project going :D

    I'll definitely need a medium quality build in the area with all the nice townhouses that are starting to build up.
     
  6. Scott No Mates

    Scott No Mates Well-Known Member

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    Location:
    Sydney or NSW or Australia
    What has your research given you with regards to the demand and type of townhouse required? Is it just a punt that 4, 3 & 2 are the best fit or would 3,3,3 be more suitable/higher demand? Have you spoken with a couple of local agents & property managers?

    Does the budget include the external works (driveways, landscaping, clothes lines, water tanks/basix etc)?
     
  7. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Posts:
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    Location:
    Perth
    It really depends if those sizes include garages, porticos, alfrescos etc as they don't seem quite right to be but they may well be. If the drafty has designed on similar sized blocks in the area then they might be spot on.
    You also need to know if that build price is just the construction or if it's turnkey (carpets, landscaping, window treatments, tiling etc etc etc)
    The other large item that can be significant is headworks (well we call it that in WA) but that is the new connections for power, sewer and water and a stormwater solution. It can be around $40k here in WA but Melbourne locals could give you a better idea.

    @Tufan Chakir any local words of wisdom?
     
  8. FirstTimer11

    FirstTimer11 Member

    Joined:
    13th Mar, 2019
    Posts:
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    Location:
    Melbourne
    Just wanna say, I am so glad I stumbled upon this forum!

    Thank you all for giving me insights for stuff to look out for, absolutely priceless, learning one step at a time.

    In terms of the configuration of the sizes, definitely 3 bedders are absolute preference in sunshine west, as most people living here would be families with kids. However, the feedback I have been receiving from the number of draftsman I have reaching out to, are all saying it will be difficult to achieve it. But I'll definitely keep pushing for it.

    In terms of the construction costs I am finding it hard to get a guage on it with the developers I have been seeing as they want some level of plans before they can give me an indicative range. But I'll have mmore time next week and hopefully will be able to meet with more builders and get a better idea of the costs.

    If you guys know any builders that develops in the Melbourne's Western suburbs I would very much appreciate the recommendations.

    Ideally I want to get to a point where I know what the best and worst scenario would like in terms of costs before I get too far into committing to a subdivision. I'll post more details next week on where I get to.

    Once again thank you all for chipping in their 2 cents to help me out through my journey!
     

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