South East Brisbane development blog

Thanks Lara

Another Excel formula mistake, GST should be $200K (huge). It appears that I overcapilalise the project. I will re-calculate it after talking to estate agents.

 

Thanks MTR. RetireRich and Lara for your feedback and different views. These help me a lots. These are my more thoughts:

Most development project lasts at least 2 years due to the following factors:

+ service connections
+ site prepare
+ time to tender builders
+ builder delay
+ landscape
+ deal with estate agents
+ tile lodgement

In fact, my previous project started in mid-2010 and finished in early 2014. There are two market booms in 2010 and 2014 in Melbourne which given me better profit than I had expected. So, I would not expect this project finish before mid 2019.

The projected sale of $1m/dwelling is very conservative without a projection for the market trend. If market goes up in the next few years, it is a big gain. However, if the market goes down, there will be more loss. Therefore, to offset against potential loss due to future unpredictable market trend, it is better to start development when market grows enough to make profit. This approach will mitigate the risk.

Below are previous development in Melbourne milestones. Delays and 3 market booms helped capital gain realisation.

2006: Acquire the site
2007: The 1st market boom since the site acquisition
Late 2009: The 2nd market boom since the site acquisition
Mid 2010: Confident with the feasibility to start DA application
Late 2011: Town plan & subdivision approval, all services ready, 2 separate tiles
Early 2012: Worked out strategies sale /w DA or build, request builders tenders
Late 2012: Start construction works, contract signed. Construction started in Oct, and expected to complete in Sep 2013.
2013: Builder delay caused hand over in Dec 2013
Early 2014: Landscape works (3 months - delay due to my holidays)
Mid 2014: The 3nd market boom and development sold (regret because of selling it too early)

Another option is to rent out the 2 IPs after development. Average rent of 4beds is $695/week. 2 x 52 weeks x 695 = $73k . Morgage interest is about $1.5m x 5% = $75k, management fee $5k . Holding cost is about $8-10k/year but offseted by significant depreciation deduction. No GST is payable after 5 years. Sell whenever the price grows enough for considerable profit.

 

I missed out the following costs:

- Telstra telephone connection
- Gas connection (may included in builder cost)

Do you know which companies I should contact to for underground electricity pit and gas service in Brisbane?

 

Talked to 3 top estate agents in the area.

Two of them suggested Hamptons style house as the Hamptons style is selling very well at the moment rather than the very contemporary.

So, my direction of architectural design has changed

 

I don't understand why are you spending more time on this project now knowing it wont stack up for at least a few more years based on your feaso...am I missing something here..

 

Just get DA approval but not do any construction until next couple years.

 

Personally, I would wait closer to the time so you don't have your money tied up and also you may want to change specs depending on market conditions/sales/trends at the time but I guess we're all different in how we approach this.

 

how much rent can be achieved for existing house?

 

If the DA approval is going to give you an increased valuation and then you are going to possibly use that increased val to suck out some equity then that could make sense. DA's are not cheap and you could easily blow $10-$15k for something you'll never use.

 

$650/week. Almost neutral cashflow right now.

 

The architect has just emailed me the floor plan concept. They are different from the my original idea of floor plans. I am not much happy with his floor plans. Can you give me some ideas to improve his floor plans?

1. I think that my original plan for the master bedroom gives a feeling of more space. what do you think?
2. There is no vanity for powder rooms.
3. Space at porch is not utilised.

Here are the architect floor plans:




and my original floor plans below:

 

Photos in the previous post do not show. I have reposted the photos.
Below are architect's concept

 

and below are my original ideas:

 

Architect sent me the CAD and 3D design. I would love to hear forum members feedback. Thanks.

 

@Agent30yrs. @Leo2413 Hi guys, just was wondering what's the reason for avoiding the pitched roof?

 

I believe that @Agent30yrs. @Leo2413 prefer modern style houses. However, my house is a Hampton style with pitched roof that is most favoured by Queenslanders .

 

Hi @Observer, its not so much that I avoided it but rather we put a roof, build and spec style that fitted the demographic in that specific area as well as evidence of same in neighbouring areas. Most if not all of our choices were based on comparable demographic/area top dollar sales. So the people have spoken