Profitability as Builder/Developer on 405m2 lot Brisbane

Hey guys,

Just trying to see if anyone here has has built on a 405m2 lot here in a middle ring suburb (Brisbane splitter block) and made money out of it??

Do the figures stack up to give a decent margin in the end?

Land in the area im looking (9-10km from Brisbane CBD) at is roughly $400000- $425,000 to buy the land.
(Say $450,000 with stamp and legals)

Would construction costs as the builder myself be roughly $300,000 for something 4-2-2, double storey, rendered, Medium to high end in finish?
($300,000 inclusive of council application,services?)

Im confident a well built, high finished product can get $850,000 in this area.

Just how much can really be made after stamp duty, tax etc, realtor comms.

Tweak my figures If you think they are off, understand your not going to get rich of one home but is there $50,000-$100,000 in it at least?

Cheers

 

house would be 270m2 internal, 20m2 patio for people who have accurate $/persqm rates. cheers

 

I'm doing a couple of splitters . One is around 8km from the CBD. Land was approx 600k 2 years back for entire site, so 300k a piece. I am doing upper medium to low high spec and build cost will be around 1m for both . Internal around 280sqm. Don't see how 300k build for your site will yield something medium to high spec including a pool unless your really saving alot on margins as the builder .

Also looking at your rough figures. if TDC is approx $750,000 and sold for $850,000 that's 13% return on TDC. Not including others costs . Doesn't stack up at all to me on those numbers.

Best of luck .

 

Stamp duty and CGT/income tax are the real killers for these deals. There is definitely money to be made but a large portion of it will be chewed up by the transaction costs. Buying the land at the right price is critical.

 

Don't forget the interest and opportunity cost on your capital, as it will take likely more than 12 months for approvals and to fully complete your build, esp as owner builder. I would think that an extension/reno might be lower risk..

 

+1.

 

There are a number of builders in the Brisbane area who do just that. They buy the land, build the house and then sell it. Their profit is a combination of the "builder's margin" on the construction, plus the uplift on the resultant property at sales time. The key thing is to buy the land as cheap as you can get, and become an area expert in one or two areas to understand the comparables. The biggest additional costs to the house construction are add-ons like pool and full external BBQ/kitchen area, etc, and hence need to consider if these are necessary or not. For higher spec homes 2.7m ceilings up and down is better than say 2.7 down, 2.4 up. It is possible to achieve the gross numbers you are talking about. As mentioned, this is the typical approach undertaken by many builders in Brisbane.

For the north-side of Brisbane, if you want to talk to a sales agent that deals in the sale of these type of projects all the with developer/builders, recommend you have a chat with Matthew Jabs Matthew Jabs

 

I have been doing small subdivisions & splitters in Brisbane for the last 10yrs full-time and I think you would be surprised at how many cowboys out there are taking losses. There actually has never been lower profits in splitters despite what is bandied around. Most of those who are currently making a profit do so because the rising market has been covering their mistakes of paying too much. Now that the market in Brisbane is more or less in a side-ways trend (for houses & land within a 15km radius of the CBD) a lot of these "developers" are going to be taking more significant losses. The agents who sell these sites are completely aware of this however they are not the cause - it's the "developers" who don't do correct feasibilites.