NSW Why hasn’t anyone purchased this?

147 Michael Street, Jesmond, NSW 2299
https://www.realestate.com.au/property-residential+land-nsw-jesmond-202637006

hello team

I am a total newbie when it comes to property development but wanting to get my head around it

for example the above listed property in jesmond Newcastle - I know the suburb well and has a very very right rental market and well suited for town houses

DA approved for 5 x 3 bed 2 Bach 1 car garage town house - comparable sales at $500k

so 5 town houses at 500k = 2.5m
Less expenses

Land purchase - $620k
Stamp duty - $15k
Construction cost - ???
REA sales fee- $65k
Solicitor - $2500
GST - ??
Accountant - $2500
Misc - $50k

because it’s already DA their would be no town planner costs etc?

just using this property as an example

thank you

 

Still costs involved with approvals and certificates after DA stage.

Do you have comparables for 500k sales recently?

Will need to see the plans, maybe there isn't money to be made, less risk to sell the land now than build 5 townhouses.

 

If you're confident in the end product price you'll want to clarify what it is going to cost to build.

DA approved can still mean substantial amount of work to be done prior to build; site costs, CC, etc. Need to add these in and things like holding cost/interest etc.

Need to think about everything end to end, for e.g. in your back of the envelope $2500 for solicitors 5x titles means 5x contracts of sale to prepare so 5x fees for solicitor means it is going to be more than that.

I'm going assume there is either something else going on with this one, or once everything goes into the feasibility of this one it isn't profitable enough hence why it is still on market. If there was good margin at this price point (which is very accessible) I would have assumed a local builder or developer would've jumped on it already. I can see it was sold in 2017 for $575K so you'd want to understand what has happened since.

 

From Newcastle City Council Public Notification Register 2017.

"17/01412 147 Michael Street JESMOND Erection of five attached two-storey dwellings associated retaining walls and landscaping $740,479 20 November to 04 December 2017"

 

Das alot.

 

Thanks for the replies

ok so.
740k to build
620 land
Stamp duty - $15k
REA sales fee- $65k
Solicitor - $12000
GST - ??
Accountant - $2500
Site costs 50k

so based on 500k comp sales this devepplemt is will not work unless can fit more on the block??

can someone tell me should if I only be looking at R3 zoned properties in the NCC area to develop
I want to find a block to build townhouses - I fully understand I have a lot of things to learn

Very new to this

 

Then best not to develop - get some hefty renos under your belt first.

 

Do you have capital?

A Business/Company/Trust to develop under?

Seems like the numbers stack up if it only costs 740k for the build, puts you at 1.5 total investment and 2.5m return, with those numbers it would be sold already.

 

This is always a good guide... but if you were to do an exercise on the value that is submitted with council for a development vs. the actual build cost you may find the reality can be substantially different. I think it might be something along the line of the value being linked to an application fee

On the above numbers I'd do it any day of the week... yet it is still sitting there on the market so further DD is required to uncover the why....

 

Numbers to add to the feasibility:

• LSL contributions
• GST (at least 10% of build cost)
• S94 contributions (probably outstanding)
• Surveyor/Legals for strata registration
• Fire services upgrade (if not near street hydrant)
• Landscaping/external works
• Project Marketing (if pre-sales see required)