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site aquisition feasibility

Discussion in 'Development' started by Kieran989, 22nd Jun, 2015.

  1. Kieran989

    Kieran989 Member

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    Perth
    Hi guys,

    Wondering what level of detail developers would go into of a feasibility study at the site acquisition stage? Mainly concerned with smaller developments (retain and build, duplex etc)

    Love to hear how fellow developers first assess potential sites?

    How many other professionals would you consult with before purchasing a site?
     
  2. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    Sydney
    Talk to other developers familiar with that area as a start - MTR from this forum is a good start and she can give you unbiased and no strings attached advice. Im sure there are a few others on the forum that develop in perth.

    Re feasibility study consider the following:

    1. Turnkey construction (building + landscaping, fencing/retaining walls, driveway, stormwater and hydraulics, etc)
    2. Council and services contribution costs
    3. DA fees including architect, hydraulic engineer, survey fees (other services like arborist reports, sound engineer, dilapidation reports, etc)
    4. Holding costs
    5. Contingency
    6 Stamp Duty, Legals and bank fees (some lenders will ask for QS report if the construction is over $1mil even with resi lending)

    Also get the tax structure right so speak to a good accountant about this before you purchase. Whether you decide to hold or sell will dictate the purchasing entity name.
     
  3. Be Developer

    Be Developer Property Developer Business Member

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  4. HD_ACE

    HD_ACE Game-Changer Premium Member

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    Perth
    Its pretty simple really, theres 4 areas you need to know well.

    1: Site and aquisition costs. (Stamps, legals etc)
    2: development costs ( da, headworks, surveyor, wapc fees, holding costs, build costs, timeline etc)
    3: End values
    4: Selling costs and tax liabilities ( gst, income tax etc)

    Once you know all these you can work out the profit margin and calculate that against your own risk vs reward matrix.

    People to talk to before hand
    : other developers
    : surveyor
    : Town planner at your chosen council
    : drafty

    Theres companies that will do prepurchase feasibilities if thats what you need.

    Hope this helps
     
  5. Kieran989

    Kieran989 Member

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    Location:
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    Thanks for the input guys!

    Specifically what level of estimating will you put into the construction before purchasing a site? Would developers estimate based on m2?
     
  6. RetireRich101

    RetireRich101 Well-Known Member

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    Love to hear Developers' DD on dev site on storm water issues, assuming gravity flow is not to your advantage.

    Two options you may take for storm water when encounter an issue
    1. Buy or get permission from your neighbour
    2. Expensive stormwater system
    What if, your neighbour deny (1) and Council reject (2)?
     
    Last edited: 22nd Jun, 2015
  7. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    The above items are what I use pre-purchase.
    You tend to get a feel for the costs after awhile but per sqm is usually pretty good, it just depends on how much you want to include in the per sqm rate that depends on which one you use.
    $1500/sqm is pretty accurate for turnkey single storey with a mid spec
    $2000/sqm for double storey turnkey with a mid spec
    $2500/sqm for apartments with a mid spec

    Siteworks, council contributions, headworks etc can vary quite a lot from site to site and are best to over estimate.

    Always give yourself a 10% contingency buffer as well
     
  8. Kieran989

    Kieran989 Member

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    Do you base the m2 on the building footprint? or the new land parcel?
     
  9. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    On the size of the building. So if I have a 220sqm R40 lot then I know I can build around 130sqm single level villa which is $195k - the headworks and siteworks on top of that maybe $5-15k depending on the site etc etc
     
  10. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    Dang its so much cheaper building in WA than Sydney!
     
  11. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Not really Shahin, it is generally more expensive here and takes longer.