My Development Costs 2009

Hi All,

Searched this forum when I was doing research so thought I'd help out those first-timers like me.

I built 3 detached houses on a block, after demolishing a rat-hole. Each house was 180 sqm, with a double garage. Internal specs was good - downlights throughout house, reverse cycle ducted air con, upgraded kitchen, flick mixers. Porcelain tiles on floor, 300*600 rectified edge tiles on walls. Bathrooms and ensuites tiled to ceiling.

What wasnt built on, was paved. Small garden beds around edges. Used a very good paver (thompson landscaping), had a roller and 150mm base as didn't want drive-way sagging. In short, a quality development. At same time, shopped around for deals on everything.

One house at front. Two at rear. Front house torrens titled. Rear are community.

Built within 8km of Adelaide CBD.

Please find attached a list of my costs. Some appear 3 times as I had to split them between the 3 houses for allocation purposes.

Remember that the build was 2008 prices, but because the builder was less than I hoped for in and didn't finish until late 2009.

Hope this helps,

Bringontheboom

more info

Oh, I used a relatively cheap builder - one of the weeks group of companies (weeks peacock, weeks macklin, world concept homes) so that I could spend the money on the finish.

Weeks said 7 months to build. took them 15. more problems than i care to list, so would definitely not use them again.

Great info, any chance of sharing numbers for property acquisition, demolition and total realised value? Would love to see the end financial result!

significant timing blow out.

Thanks for sharing.

Are you planning on holding or selling? Did this affect any of your costs (e.g. spending more on driveways or curtains?)

Hi,

answers are:

property was $400k in 2006 for 1165sqm.

holding all properties for rental (hence the added expense on driveways - but which is also something of a pet hate - which I don't think any other developer would do). Currently neutrally geared, but will change when rates go up.

Demolition was a run-down two bed, brick house. Demolition is listed on the spreadsheet, but totalled about $8600 (was 8900, but they damaged some fencing so I knocked off 300).

End value was 1.52m

Timing blowout was a pain. increased my holding costs significantly. 2 lessons - 1. penalty clause or guarantee required in next contract. 2. planning application should have been in my name. It was in the builders, so when they messed up the application to council 3 times(!) and delayed the start by months and months, i couldn't get another builder as council wanted a new application. oh and the planning delays are in ADDITION to the 15 months build time!

As you can see, lots of trouble, mistakes and some unncessary spending. But was my first development and my intention is to show costs to the people doing research/feasibility.

cheers,
B

BringOnTheBoom,

Thanks for posting. Although you had the unexpected delays the figures appear to stack up very well. Good stuff. Mind posting an approx location or PM it to me? Looks like you know a cheap concreter? That communal drive way is really cheap!!

Most builders are now quoting 15 months so I don't think you have been to hard done by. The FHOG customers have been really blowing out building times. Would have been nice for them to let you know before hand but they just want the sale by the sounds of it.

What did you need to change during the approval process? Just a note to the beginners, If your project fits within the councils development guidelines you shouldn't have any hold ups at this stage. It's when you start pushing the 'boundaries' that you will get holdups through the changes to your application required. We have had two appovals through Port Adelaide Enfield lately and they took 4 days and 13 days respectively. Sometimes pushing the limits can provide you a better return even if it does take longer.

Thanks again for posting.

Gools

Hi,

Adelaide western suburbs - policy area 39 if you know the planning regs.

the original quote and scheduled start was before the increase in FHOG, but getting planning permission took 6 months plus.

The issue with council wasn't the houses/site coverage/setbacks etc (which i designed to the letter of the codes), but that the actual drawings, engineering and stormwater calcs were done incorrectly, several times over a 4 four month period, but the builder/their subbies.

e.g. visitor bays were on the plan, but not written on the plan. Stobie poles weren't shown. Although one site, builders submitted 3 applications, one for each house. stormwater calcs wrong 3 times (council send back each time).

So no issues with the council - other exp. developers get permission within 3 months. I know to control the actual application next time and not let the builder do it.

The concrete wasn't THAT cheap- LOL - it was just the first 6 metres of both driveway entrances (both 6 metres wide). The rest was paved in 60mm rectangular blocks (120*220mm).

sorry for short style, but quicker that way as my wife is shouting for me to come throug and watch a film!

Hi,

Great thread. I'm just embarking on a 6 townhouse develop about 5km SW of the Adelaide CBD, so it is of real interest to me.

I would second the view on pushing the limits. I am pushing coverage and setback limits, and as a consequence the council planning has taken a while, but I feel confident that I will end up with a better, more salable and more valuable product. Council inform me that I am on the cusp of approval, so here's hoping! Time will tell if my view is born out

Pjvdl, who are you looking at building with?
Sounds like a good sized project, all the best with it. Please keep us informed on your progress.

Gools

Thanks for the support Gools.

I have previously posted a few other details relating to the same project in http://www.somersoft.com/forums/showthread.php?t=59550, but will endeavor to keep the forum posted as the project evolves.

I have signed a preliminary services agreement with Regent Homes, and although they have been a little slow at times, I am inclined to go with them on the basis of what I currently know.

Prior to reaching this stage I requested preliminary estimates from many builders (both large and small) and Regent were the most responsive and (at this stage at least) seem competitive on price/value for money. I have also done a reasonable amount of due diligence on them. Other developers who have used them seem to be happy and, more importantly, keep using them for multiple projects.

My biggest concern is keeping the project margins at a level where the financial risk/reward equation makes sense. I have done a lot of planning to reach this point, but this being my first development, I am only aiming for (what I consider as an unblooded punter) a modest return. My figures show me that 20% may be possible after all costs (including holding costs, sale costs and GST) and before tax, but I will be happy with around 15%. My research on this forum and elsewhere indicates that many wouldn't touch a project with a return this small, but I am treating it as a learning exercise as well.