Hiya Folks
I'd like to share my journey of a 3 villa development in Beckenham, WA including the feasibility numbers so that those contemplating a similar development in this suburb would have an idea of the cost involved.
The Development Site:
The site a 3x1 1950s dwelling on 964 sqm was purchase in Oct 2003 for $160,000 and currently zoned R35 making it a 3 unit site. It has been rented since 2003 and still is for $320 per week.
The dwelling is showing its age and requiring more and more repairs and maintenance on it. The decision was made last year to put 3 units on the land to execute the cash flow stage of our strategy.
The property was valued recently at $400,000 (land $330k & dwelling $70k). There is nothing out there similar for $400k more like between 475 to 500k. This was performed by licensed valuers and not estate agents doing a drive by style inspection. I have no idea how they can grossly under estimate the value of this site. It will impact on my financing position as i'd probably have to chip in some money.
Development Goal
We are building three 3x2x2 villas plus a media room with mid level specs. Each villa averages about 185 m2. We are intending to hold all 3 villas for cash flow.
Feasibility:
* site cost 400,000
* holding cost 25,000
* rates 2,000
* design plans 6,000
* contour survey 1,000
* geotech 1,500
* storm water design 1,500
* slab design 1,500
* engineers roof design 1,350
* 6 start energy report 1,000
* finance app fee 500
* DA & building license 3,800
* site works 120,500
* construction cost 638,000
* subdivision cost 3,500
* contingency 37,925
* consulting 3,000
* selling cost 45,000
TOTAL COST $1,293,075
End Value $500k @3 = $1,500,000
Gross margin 13.8%
I've not factored in net GST of approx 20k and under normal circumstances this project will not go ahead as it has not attained the 20% gross margin threshold.
For those considering Beckenham or any other site which has clay soil you must somehow get a good estimate of the site cost before purchasing the block. The geotech engineers wants the ENTIRE site to be dug out by 1m and replaced with clean sand and they have designed 18 soak wells
Out of the $120,500 for site cost the soak wells are $35,000 and earthworks $45,000 the rest are for demolition $17,000, water corp headworks $15,500 and western power dome $6,000.
At the moment, the plans are in council and DA is not far off.
My journey begins.
I'd like to share my journey of a 3 villa development in Beckenham, WA including the feasibility numbers so that those contemplating a similar development in this suburb would have an idea of the cost involved.
The Development Site:
The site a 3x1 1950s dwelling on 964 sqm was purchase in Oct 2003 for $160,000 and currently zoned R35 making it a 3 unit site. It has been rented since 2003 and still is for $320 per week.
The dwelling is showing its age and requiring more and more repairs and maintenance on it. The decision was made last year to put 3 units on the land to execute the cash flow stage of our strategy.
The property was valued recently at $400,000 (land $330k & dwelling $70k). There is nothing out there similar for $400k more like between 475 to 500k. This was performed by licensed valuers and not estate agents doing a drive by style inspection. I have no idea how they can grossly under estimate the value of this site. It will impact on my financing position as i'd probably have to chip in some money.
Development Goal
We are building three 3x2x2 villas plus a media room with mid level specs. Each villa averages about 185 m2. We are intending to hold all 3 villas for cash flow.
Feasibility:
* site cost 400,000
* holding cost 25,000
* rates 2,000
* design plans 6,000
* contour survey 1,000
* geotech 1,500
* storm water design 1,500
* slab design 1,500
* engineers roof design 1,350
* 6 start energy report 1,000
* finance app fee 500
* DA & building license 3,800
* site works 120,500
* construction cost 638,000
* subdivision cost 3,500
* contingency 37,925
* consulting 3,000
* selling cost 45,000
TOTAL COST $1,293,075
End Value $500k @3 = $1,500,000
Gross margin 13.8%
I've not factored in net GST of approx 20k and under normal circumstances this project will not go ahead as it has not attained the 20% gross margin threshold.
For those considering Beckenham or any other site which has clay soil you must somehow get a good estimate of the site cost before purchasing the block. The geotech engineers wants the ENTIRE site to be dug out by 1m and replaced with clean sand and they have designed 18 soak wells
Out of the $120,500 for site cost the soak wells are $35,000 and earthworks $45,000 the rest are for demolition $17,000, water corp headworks $15,500 and western power dome $6,000.
At the moment, the plans are in council and DA is not far off.
My journey begins.
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