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How on earth did they make any money out of this?

Discussion in 'Development' started by wobbycarly, 6th Feb, 2016.

  1. wobbycarly

    wobbycarly Well-Known Member

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  2. SOULFLY3

    SOULFLY3 Well-Known Member

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    Hmmm,
    A mate is doing similar,
    Telling me theres 200+ profit in the build and retain at rear.
    Not when I crunch the numbers in my spreadsheet, makes you wonder hey
     
  3. S.T

    S.T Well-Known Member

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    I'm not selling anything
    Looks like the same house, just given it a good reno. Look at the roof, its old. Simple sub divide and sell off the back block.
     
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  4. MTR

    MTR Well-Known Member Premium Member

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    It goes something like this
    It must be a reno/make over and cut up block, otherwise you will be losing money.

    On figures mentioned
    $264,000 original home purchase price
    $13,000 stamp duty approx
    $ 20,000 strata rear block
    $ 30,000 ??reno
    $327,000 TOTAL

    Rear Block - $140,000

    $330,000 new original house price
    $140,000 rear block
    $470,000

    470,000
    327,000
    $143,000 (approximately 40% gross profit)

    I have not included holding costs, any site costs or selling costs in these figures

    This are rough estimates, I have no idea whether the reno required more $, $30,000 is very low base for a reno IMO unless you are doing all the work yourself and property in reasonable condition
     
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  5. Cactus

    Cactus Well-Known Member

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    I'm with MTR prob between $115-130k profit here. But you'd have to take a look at the capital growth that would have occurred in the area by osmosis/time without Reno and subdivision and you'd have to take off holding costs etc. you could also maybe take into account tax free PPoR. Still money has been made.
     
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  6. York

    York Finance Broker Business Member

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    Have a look at the satellite shot of the old house. The boundary line does not run perfectly parallel to the house. Actually the house is positioned very awkwardly. Yet the new reno house is running parallel to the boundary as can be seen in the photo showing beside the house. Although I agree that the roof tiles look the same as the old house, the house seems to have been 'twisted'. Very strange.
     
  7. Random Username

    Random Username Well-Known Member

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    The house is still on an angle to the fences, you can pick it from where the drive meets the house, and by an increasing width (to the rear) of the pergola in the last Agents pic.
     
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  8. Cactus

    Cactus Well-Known Member

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    It's also possible to lift a house and move it for a subdivision though I'm not sure of costs.
     
  9. York

    York Finance Broker Business Member

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    Ah..yep. I see it now. Thanks.
    I wonder why they built the place on such a weird angle?
     
  10. wobbycarly

    wobbycarly Well-Known Member

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    I noticed the roof tiles, but the angles looked to have been squared up. If it was a reno, especially while living in it, I can see there being a profit. Over 4 years, it would have to be a PPOR, otherwise the holding costs would kill it.

    Thanks for the insights.
     
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  11. Graeme

    Graeme Well-Known Member

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    I was window shopping 1960s and 1970s houses in Toorak today, and was actually wondering whether some of the redevelopment projects are actually viable.

    There was a house that I really liked, 34 Heyington Place, which sold for circa $3.8 million last year. "Land value" according to the agent. There was a demolitions crew outside this morning, so I suspect it's now a pile of bricks.

    38 Balermino Road is on the market for $7 to $8 million according to the agent. (No, I can't afford it, and no I don't like it.) I estimate it's about 600 square metres, and given high-end build costs of $3000 to $5000 per square metre, it'd be $2 to $3 million to erect something similar on the Heyington Place site. That'd bring the total bill up to $6 to $7 million, which means the margins could evaporate.

    OK, I might be missing something here, particularly as there appeared to be a few Aston Martin driving developers roaming the streets of Toorak. Then again, if prices are up by 25% or so in the last few years, that'll result in some big profits.
     
  12. Cactus

    Cactus Well-Known Member

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    What does a brand new townhouse fetch though? If 9-$10m then it's a no brainer.
     
  13. Graeme

    Graeme Well-Known Member

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    My guess for the figures would be:
    • Land cost: $3 to £4 million.
    • Build costs: $2 to $3 million.
    • Fees, holding costs, landscaping, etc.: $0.5 to $1 million.
    • Sales price: $8 to $8.5 million. (Rough price according to an agent.)
    If you get the costs right then you could walk away with a couple of million in profit, but at the same time it could easily be a break-even proposition. A price boom is very flattering to margins.

    I can't afford to play in Toorak, but there's a bit of me that thinks there's surely a better way to do things than to erect faux Provençal monstrosities. Perhaps I should put my money where my mouth is...