WA Post a Bargain - Perth

Yes, that is sad when customers who don't pay up forces businesses to go bankrupt.

 

Anyone willing to take this one on?

2 Wellington Street, EAST PERTH WA 6004 - Land Development Property For Sale - 2013441443

Works out to be about $450/sqm in East Perth, which is incredibly cheap.

Sort out the archeological bones burial issues, subdivide and sell off part of the land for apartments development, and renovate existing building into commercial.

 

That would be awesome as F!!
Totally impractical but just wonderful. I'd want to convert the existing building into resi (apartments etc) - I'd love to live somewhere unique like that.

 

@Westminster @MTR

For that spot in Willagee, whats the catch? Surely if you're buying 3 for 1.18m, and they rent decently, it would finance itself while you looked for a buyer.. why does the builder need to sell so cheap and why hasn't it sold yet? Assuming you can pawn each for 450k+ as soon as the tides turn.

 

If u need capital growth in order to make a measly profit margin after selling fees, holding cost and gst then it's a horrendous project .

No catch, just a crap proposition

 

There isn't a very good profit in it but it would appeal to someone perhaps looking for a holding project.

The builder broker isn't selling it per se. I think he's listing it on behalf of a client and is trying to sell it as a package as the client will get more money than if it was just sold as land. It has presumably already gone to tender so they are confident in the construction price.

 

Whenever we go to Mullaz we bring a k-mart cricket set. Amazing how a $25 toy makes my son the most popular kid on the beach.

I think the same thing. Sits out the front depreciating and rusting away 99% of the time. Mind you have a similar issue with a racecar that people do not understand but at least I use it most days and its a ton of fun.

 

@Westminster Do you think this is a good buy this one still? @Perthguy @sanj

 

It would take due diligence to work out what is included in the deal to assess the total development cost and therefore predicted profit. I posted it as it was an interesting deal that would require further thought to see if it matched people's criteria.
It's probably not a awesome deal if someone wanted to sell on completion but it might suit someone who wants to hold.

 

As @Westminster says it will take some work to assess the site. Is there demand for the product they are proposing to build? How good is the design? What will they cost and what will they be worth on completion? Is there demand for rentals? How is the supply and what are prices like? I don't know if it is a good deal but it does have potential for a build and hold to rent out.

 

I assuming you are refering to the Willigee one? not the South Perth one?.

From what I could tell from reading the add they are selling 3x villas off the plan.
Total cost is about $400k. each.

This may be ok, however, it depends on whats included in the build. Is it a full turn key? or just a shell?
What are the finishes like?
Whats included for the pre-start?
And does all the above suit the market?

From what I understand of that market (not much) It looks to me like they have got it to this stage, and are proposing to sell for about the profit they would make if they built. I would say that after buying cost, holding cost, finishes (landscaping etc) the end result will be pretty slim. And that is befor we account for selling costs, GST and profit tax (or CGT as applicable).

Worth carrying out the DD just to find out - but tread carefully IMO.

Blacky

 

Just curious .... anyone playing in the Perth market, have you recently had any experiences with valuations? are they coming in on target or lower?? I expect very tricky at the moment and they will in the main come below expectations.

 

MTR - We had out vals come back for our Jolimont project. They are right on our numbers. However, below what we believe is actual market evidence.
We believe we remian conservative - and it seems the valuers are doing the same.

In saying that units up the road have come (back?) on the market at very discounted rates. This is a large 69unit development. They sold a stack of them off the plan (All except 6 from what I can see), and If I didnt know better have put 'clearance' rate prices on the remaining ones, as the development is now fully completed. They have made their money and just want out.

Prices were selling in 2015/16.
$745k for 2x2
$615/630 for 2x1
$470/$490 for 1x1

These are now selling
$595 2x2
$375 1x1

Blacky

 

Thanks that's about 20% drop in value

 

Yes - it is.
However, I dont believe it to be reflective of the actual market.
I think the developer has just slashed the costs to move them. At $575,000 these are under real market value (I believe) by probably 10%. Rental values are $550/week at present giving a 5% gross return.
Real returns in the are are closer to 4%

Blacky

 

They are probably those golden little gems which are good to pick up when everyone wants the development sold and onto next project.

 

I'm always sceptical when DA approved sites are on the market - either the seller has built the profit into the sale price, or the numbers no longer stack up.

Comparatively, you can pick up a 3 unit block in willagee for, say, $480k Inc stamp duty.
4 Dunford Street Willagee WA 6156 - House for Sale #124725994 - realestate.com.au
(Block is inferior to the HBA corner block though)

You could build 3 units with good quality finishings for total completed cost of about $1.15m...

 

What are end values on these? In today's market

Bottom fallen out of this market

 

not sure about that,
But on my 10sec inspection Im failing to see a profit if your TDC is $1.5mil on a triplex in this area.

Blacky

 

$1.15m (that was my back of envelope estimate for land and construction cost for 3 single story units) is less than $1.5m.

@MTR I would have guess end value about $480k.