VIC Townhouse project in Frankston

Hi, Running some feasibilities these days on a small development project in Frankston. Land 900+ sqm is selling around 900K. Cost to develop 3 X townhouses including permits/demolition/architect/council is another 1M (little above infact). So looking at recently sold TH in Frankston, doesn't look like there's lot of money in there. Can we put 4 TH (3 x bed) on 900 sqm land? around the monash uni/frankston heights area.

Thanks!
Akber

 

Hi @Akber
This is a town planner/ council question.

Cheers

 

@Harris or @sauber might be better placed to answer this....what @Harris doesn't know about Frankston is not worth knowing and @sauber knows what is happening re gentrification etc.

 

The answer is no. They won't allow it. Speak to FCC 1300 322 322 option 3 from memory.

 

You won't make money (good money) by buying, sub dividing and selling the 3 TH- unless of course the market moves another 10%. Frankston is a hot market currently and your numbers for 3x3 bed TH should look like this:

Buy $900k
SD - $45k
Consultants inc Architects/planners etc- $25k
Demolition - $10k
POS contribution - $30k
Misc - $20k
Build - assuming 3x2x2 (180 sqm) - $1600psm - $864k
Contingencies etc - $50k.

Total cost base - $1.95m

TH in Karingal selling for $650k each x 3 = $1.95m
Does not inc debt servicing costs.

To make money in this market, you either have to get 4 TH on that block, buy a larger block (economies of scale) or buy and rent it out and look at developing it in 3 years time.

The thing with development projects in a fast moving market is that the agents price-in dev margin when doing the appraisal for the seller and hence the ask goes up considerably.

Alternatively, look for blocks in central frank like 2 Queen St on 621 sqm (just sold for $900k odd) where you can get 6x2 bedders on reverse living and it will deliver around 20% margin in current market however your dev costs will go up because it is a larger project.

 

Thanks Harris. That's a great detailed response to my question... so the key is to hold and develop at a later stage unless I am able to find a block very close to activity centres.

Thanks again, really appreciate it.

 

Smart man love ya work buddy

 

The units in Frankston are going for 900K each now....not sure about the calculation

 

Are you serious? Units in Frankston for 900k? Who is buying these when everyone moves to Qld?

 

im unsure about this, 2 properties just sold in central frankston one at 1 million and the other at 900k.

 

I am asking for a friend. If I have around 1mil to buy an IP (long term buy and hold) in Frankston, what are the good pockets to invest? What if I can up the budget to 1.5mil? Thanks heaps.
@Harris and @sauber

And this is a question for me, I am looking to buy a future PPOR near the beach with a budget of 1.5m. I am searching from Mentone all the way down to Frankston South. I am falling in love with the beaches between Edithvale Chealsea and Seaford. However, schools and other key infrastructures there are not so good. Frankston has better infrastructure and schools but further away. Mentone is hard to get a good house at that price. What are people thought on this? Any advice/suggestion is greatly appreciated.

 

For 1-1.5mil ey.

Long term IP hold? Eventually live in??

I'd be buying back of Oliver's Hill area your still in FHSZ area. Kars, Yuille, Nolan, Williams STS

Or.

I'd be having a go at Long island area so Gould st Fitzroy st etc. But you'll be on the beach with no land I'd suspect for that price.

I'd not buy anything on the hwy cause if you plan to live in it. Nightmare to try and get out onto Nepean hwy. Always lots of camera cars there.

 

For an IP, I wouldn't worry about the 'pockets'. My Frank portfolio that I have been building for 20 years overall has risen the same % across all pockets. In fact, one of the worst pockets (Frank Nth) has given me the most growth out of my entire portfolio.

If I was you, I would find the largest land size I could comfortably hold within the budget and buy it! I love future sub div opportunities and over a couple of cycles, they would deliver far more % growth than any nicest house in the nicest pocket with a single dwelling, so to speak..

For a PPoR, as Sauber suggested, beachside pocket closer to Frank Sth. I would still go for a significant land component even with a PPoR to provide options down the track for dev opportunities potentially.

Frank/ Frank Nth are all still moving strongly. I suspect Frank Nth would be up another 5% last quarter, Frank approx 3% and Frank Sth a bit under that - figures should be out next week.

Do note multiple recent sales in beachside Frank at between $2.5m - $4m and others listed for ask price of $5m etc... it's come a long way.

 

Well I would not know who is buying this...but definitely someone who is looking for a good lifestyle and a long term growth potential...I was a bit surprised the unit went for over 900K, but good for them...

 

Hi Harris - keen to learn a bit more about the development at 2 Queen St. Looks like they’ve squeezed five TH on the block but even so from my viewpoint seems excessive on circa 630sqm of land in this part of Frankston.

Appreciate that it is in the FHSZ but what sort of demographic are buying these townhouses? They don’t seem family friendly given their size nor would they appeal to downsizers I wouldn’t have thought. Are you able to share any insights here?

Thanks!

 

8 years ago, I built townhouses in subdivision land project, cotsing me $300K each. Just got quotes for my new subdivision project, it costs me $800k/ each. I decided to drop off the project and enjoy the rental incease.

How do you make profit by selling $900K/unit with incease in building costs?

detached house in Frankston is not $600k - 900k, how can you sell unit for $900k?

 

Not sure where you are building but I haven't seen any Frank project with an $800k per unit total cost (land + build). Even so, if it costs you $800k per unit turnkey, you would want a minimum of $1m ask to get decent ROI.

I have built various projects (last one finished jun 2021 on Lindrum Rd in Frankston for 11 dble story town houses) and that cost me $450k per TH in land + build cost.

Even now the dev projects (there are quite a few sites available) are showing a max of $600k per TH which would sell in current market for $750k per TH.

I have a build-ready site (currently a rooming house on Queen St) with 880 sqm and its the main reason I went for 5 large-ish TH rather than cram 7 there- to attract a wider demographic. They are definitely more suited towards young couples/ FHB rather than downsizers. I know a couple of units in 2 Queen St were indeed purchased by young families. It is very central but I have put all build projects on hold given the market conditions.

 

Thanks Harris - my partner and I recently purchased on the bottom end of Stanley St (not in the FHSZ though) with the view of development in 2-3 years time.

It’s sitting on approx. 625sqm, would you recommend a dual occupancy (similar to say a 3 Bradshaw St Frankston) development or 3 townhouses instead? Would these smaller townhouses appeal to the existing demographic in that pocket of Frankston?