Highbury SA - Development

As promised updated thread on my Highbury SA development.

(refer to http://somersoft.com/forums/showthread.php?t=94688 for original somersoft thread)


Purchase:

‘Large corner lot opposite reserve’

Highbury SA – Tea Tree Gully Council

Approx 760sqm block with original 3 bed 1 bath brick house

http://house.ksou.cn/p.php?q=Highbury&sta=sa&id=375755&address=7+Observation+Drive%2C+Highbury

Numbers:

Purchase Price: $335,000

Purchase costs: $17,000 – Stamp Duty, Mortgage Transfer, Conveyancer, Bank

Development costs: $70,000 – Council Approval, Engineer, Architect, Arborist, Surveyor, Bank

Construction costs: $830,000 – Res1 ~$310k – Res2&3 $260k each

Total: $1,252,000

Resales Bank Valuation @ $1,450,000 – Res1 $530k – Res2&3 $460k each

Gross Profit $198,000 / approx. 16% margin

Resales OEV Fire sale @ $1,500,000 – Res1 $550k – Res2&3 $475k each

Gross Profit $248,000 / approx. 20% margin

Resales REA estimate @ $1,600,000+ - Res1 $600k – Res2&3 $500k each

Gross Profit $348,000 / approx. 28% margin

Comparable Sale – 17 Lindsay St Highbury - $770,000 – It’s the house next door.http://www.realestate.com.au/property-house-sa-highbury-120223477

Valuers had a bit of fun valuing the property, using comparable sales on main roads 4km’s away and community lot dwellings with common driveways built behind other houses. And house on the other side of Lower NE Road. They didn’t use 17 Lindsay next door, coming up with all sorts of different reasons. I could have spent some more time arguing with the valuers, but got enough to get the finance and borrow the money so all good.

DAC has approved the division, consent to subdivision is currently sitting with the bank should have consent tomorrow. Once consented the Development Plan will be lodged which will complete the division with new titles.

 

Wooo in for this one. Apparently you can't make money in Adelaide?

Are they cutting the site much or at all? What'd the footings come in at? Are they fixed price?

When are you going to site?

 

Retaining is included in the cost posted above, total retaining is around $22k fencing ~$8k these are the only two out of contract items not being completed by the builder.

Footings are fixed price in the contract, I already completed a soil test and footings report prior to approaching this builder.

Plan to be at site end of this month/start of next.

 

Brady,

Congratulations and Best of luck for upcoming project!

Will be looking forward to see build progress pictures!

 

I am guessing one of the reason would have been land size(next door)???

 

Yeah it's around 100 sqm larger land size and 120 sqm larger dwelling. Not suggesting that it's the same value, but it's a comparable sale. I even suggested to the valuer that land value would be approx $70,000 less and build $100,000 which is where the $600,000 price makes sense.

Land content doesn't mean to much when you're talking <400sqm most agents won't even advertise the sqm. It's the location, design and features of the property.

Other comparables used by the valuer many KMs away are large builds and varying land size in comparison. Doesn't make sense to not use next door, except using next door would have to result in higher valuation.

I struggle to see next door being worth $240k more, but valuation for now really doesn't matter. It's enough to get the project done and equity for future purchases.

 

The valuer probably valued the house next door building costs per sqm at around $1200 due to the unique design so the build cost would've been more like $150,000 difference (120 x 1200 = 144,000). Add in the land differential of $70,000 and that's 220k.

Either way congratulations on the project. I'm looking forward to keeping up with the updates.

 

Congats Brady. Interested..Was it a best offer ? other buyers as well ? or were you in the right place at the right time ?

 

Haven't heard much, what's the latest?

 

Waiting on council BRC - few little tedious issues, site cutting have been penciled in for 3 weeks from now. With retaining guys going in the week after.

 

Hi Brady thanks so much for sharing your project it has been a great read and again I have learnt a fair amount from it (Great motivation too).

I am hopefully going to make my first steps towards doing something similar next year and just got pre approval yesterday to start shopping. My question is & if I am understanding correctly that you got the bank to value your development plans prior to construction which I am assuming is part of the loan approval process. So does this mean that your are required to come up with 10-20% cash deposit based on construction cost provided from the builder? Or can you use the projected equity to fund the deposit for construction?

Probably a pretty stupid question but I am just trying to wrap my head around all the costs associated with a project like this.

Hope it all made sense! Cheers.

 

We're visiting some family in the same street tonight, will have a quick nosey on the way past

 

take photos @D.T. for @Brady

 

Best of luck with the development?I was wondering if you could answer a few question for me as I am considering doing something similar to your self. Firstly I want to say i'm a newbie to this so pleaseexcuse the silly questions. Myself and my friend are considering purchasing a house with a large block in the southern area of Adelaide. Our plan was to demolish the existing house and construct three dwellings on the site, holding on to one house each and selling the third house to help cover land purchase! The figures i had in mind was hopefully purchase house for around the 400k mark, construct 3 single story terrace type houses for 100k each and hopefully selling the third house for 350,380?? These figures are rough estimates and are probably wishful thinking.Do you think this is a viable option?Helpfull critism welcome....

 

Let me know if this is not ok @Brady and I'll take them down

 

Will be good to see what profit is left in this after its completed

 

Those are some big numbers. What kind of equity/savings/income does one need to take on a project of this size?

 

Great info @Brady , thanks for sharing. Looks like a nice street too.

Out of interest, what is the wall construction? I noticed Hebel to lower and "renda panel" to upper. What's on the inside of the perimeter walls and what is the construction of the internal walls?

 

I drove around that area on w.e.... I remembered someone on here was doing a development site in highbury.

Any updates ?

 

@Brady has been spotted in the wilds of Property Chat and will be coming to update his threads.