R40 - 776 sqm (zoning ratified)

Hi All

This is my block in Willagee, zoning endorsed/ratified in about 3 weeks time.

The block is flat, rectangular, minimal site works.

I am trying to work out how to maximise returns on this block to at least achieve 20%. Clearly the market has changed.

I have the option of building 3 villas @ 18 sqm, however, it just would not cut it in current market. Location is good, however I need to keep the figures conservative as there is no new product other than largish villas on 400 sqm block, around $620-650K depending on the specification and age of the villa.

Anyone suggest other options other than apartments, I don't really want to go down this road, my concern is this area may not suit this product and there are just too many apartments in Perth at the moment.

I guess I could do nothing and wait for the market to improve and look at what developers achieve in the area. I expect there will be developers building straight away. Some of the agents have mentioned that not many huge developers have jumped into Willagee and in the main its been residents buying sites, and mum and dad investors.

Any suggestions ?


MTR

 

What is the fsr, height restrictions, yield # no. of units etc for the site? Ie why build 3 villas when you can get away with a higher gross profit from 6 units?

 

Thanks Scott
I understand but currently in Perth there is an oversupply of apartments.

 

Can you do 2 level apartments which look like "townhouses"? Westminster did some in North Perth. You could do 6 with 80m2 of living plus double garage.

 

Can you do a simple retain and build? maybe push the approvals through and sell off the plan, or H&L?

Low cost - reasonably low risk. Fall back position being to finish the build yourself and either rent or sell one (or both).

Once the approvals are through you could even sell the retained, and reduce risk further?

No idea on the numbers - just putting ideas out there.

 

I think City of Melville don't want apartment facade.

Townhouse facade...Good idea, just comes down to whether these would work in this area. Inner City a different story, more research required on my part.

 

I never thought of H&L and sell OTP
There are builders currently doing this in the, will look at numbers
Thanks


MTR

 

I would be interested to see how the numbers look on something like this.

 

Perth as a whole may have some sort of apartment glut but really that is only in certain areas. I would expect that some small living would be popular in Willagee area but maybe not a traditional apartment

It will come down to a balance of finance and feasibility. 6 townhouse apartments might be great but do you want to go down the commercial finance route? Commercial finance isn't that bad but at 6 you most likely will have to do some presales.

The happy medium might be 4 large 2 storey apartments at 120sqm each. That would be 3 x 2s.

The other side of the coin if you want to standout from the 3 x 2 crowd is to run the number on a simpler set of four 2 x 2s with double carports. They are popular with the under 35s and downsizers.

 

Imagine something like 2 of these at the front and 2 of these at the rear. These are upside down living but just an example

 

And as you know we discussed the possibility that you might be able to do a triplex plus a Single Bedroom Dwelling on your block.

 

Do the 3 villas really not cut it? I would have thought a medium spec would have gotten your 20% easy - especially if you're one of the first ones in, and sell before others come on the market.

 

Thanks, Yes discussed this and I do not want to go down the road of commercial loan route.

Throwing it on the forum means I get many heads working on it... Nice.

I agree perhaps 2x2 could work very well, I very like these designs, simple, balcony etc. If I can hit a sweet spot in terms price point I think that would be my safety net, 120 sqm.
I will put together some numbers and throw them back on the forum, once I have a better idea on end values.
Thanks for the input its great.

Blacky
I will put together the numbers and post back on forum when I get back from holidays.
I suspect this wont work actually, only because the original/front property is only a 2 bedder so it wont achieve the end value. Thanks for feedback.

MTR

 

Yes, I am disappointed but I believe I am correct.
I have looked at so many comparable sales and really they are achieving anywhere from $550-650K on 400sqm+. My land component would be so much smaller.
I don't want to go with an average specification because I believe if you go with all the fruit it is what buyers pretty much expect these days.

I will also put together a feaso on this as well and post.

thanks
MTR

 

Scenarios I can think of that are less than 4 so could be done as resi lending if you can find a bank that will still do 4 under resi

1. side by side duplex - 4 x 2 etc single storey
2. side by side duplex - 4 x 2 double storey
3. retain and sell off rear block
4. retain and build
5. triplex
6. triplex with a single bed dwelling (you'd most likely have to go two storey on at least one triplex though)
7. claytons quad with the 465sqm plot ratio of four 2 storey apartments

7a. all 3 bedders
7b. two 3 bedders, two 2 bedders
7c. I think I have a 4 x 2 design that would fit under 120sqm​

 

What are your feasos on the few obvious options like? Be guided by the numbers, sounds like youre doing it backwards atm.

 

I like the triplex with a single bedroom dwelling idea. Having that extra unit could be enough to make the project feasible. Mostly single storey will mean cheaper and quicker to build.

Can you retain the existing house as a potential duplex sized lot for the future? You could then build 3 apartments on the rear lot.

 

MTR

I don't like idea of retaining front it's a 2 bedroom brick home, nothing special
I can always hold and build at a later date, but that is not the plan, I want to keep turning over $

also if you retain front I believe buyers will be turned off buying, unless it's a cute cottage inner city I think can be tricky. Thanks for the suggestion.

Building triplex and then one bedder, but they will be very small villas, back to the numbers I think.

 

I know what you mean? feaso was ok 20% when purchased, if end values around 600k

I think I am confused, market changing and no new development to compare, not confident that I have end values right

I guess that is why I am posting looking at options that may increase return.
I will meet with a draftee in the new year as well, see what he comes up with

 

If the location is where I think it is (campbell estate), then I still think it will clear the $600k mark.