3 Unit Development - Epping (Vic)

[oc1]

Hi all,

This is my latest development with construction beginning next week. I’ll be building three 2 bedroom units. At the moment it’s vacant land (corner block) located in one of the subdivisions in Epping Victoria. I bought it in January this year and just settled a few days ago. It already had an approved Town Planning Permit – or DA as it’s known in most other states. Finance is approved based on 65% of end value. At the moment the numbers look like this:

Initial costs

Land: $308,000
Stamp duty/legals: $16,000
Council Application Fees: $1000
Land Surveyor costs: $3,500
Total Costs: $328,500


Construction

Total build: $250,000
Working drawings/engineering/soil report/energy report and Building Permit: $10,500
Subdivision (open space levy in Victoria): ZERO as it is new land where the original land developer pays
Interest: $13,000
Bank app fee: $2,500
Titles & legals: $2,000
Total Construction cost: $278,000

COMBINED TOTAL (LAND & CONSTRUCTION): $606,500

The units would have a combined value of about $840,000 in today’s market. I reckon these will take about 4 months to knock up if all goes well. They are about 70m2 each in living space and single story. Rents would be around $850 pw. I’m sure the figures will vary as they normally do.

I’ve attached pics/images of the land as it looks today and the floor plans. I’ll put up some more pics as it develops. The plumber is in next week to do the underground work, followed by the concrete guy right after that – weather permitting

Cheers, Oscar

 

[HD_ACE]

Looks like a very nice project you have with a decent profit to be made.

 

[GreenMedallion]

That looks like a fairly small parcel of land, what is the size of it?

 

[mattnz]

Very nice, got to love corner blocks!

 

[oc1]

That looks like a fairly small parcel of land, what is the size of it?

The block is 495m2, so not big at all. It's a very effective use of the land that's for sure
Being a corner block helped.

Cheers,
Oscar

 

[morty]

Hi Oscar,

It all looks great so well done.

I must say though I'm baffled by how cheap your build costs are. I'm a builder/developer myself in melb and $250k for 3 units is hard to get my head around. I'm assuming you haven't included things like floor coverings, a/c, appliances, landscaping, driveways or drainage etc in that price? If you have then I really need a lesson in costings from you!!

Regards
Morty

 

[westminster]

Great work - love the design and the figures.

Gotta love such a short build time - awesome!

 

[anson_he]

Hi OC1,

Are you going to keep the units for sell them? As you are a full time developer who sometimes keeps some units for longer term, can I ask you some simple accounting questions?

If you sell the brand new units after completion, you will pay GST for them. If you sell them down the track within 5 years, do you still have to pay GST and income tax instead of having 50% CG concession?

I am thinking to sell a couple of the units I built within last two years, my accountant is telling me that I still have to pay GST and income tax without 50% CG concession, is he correct?

 

[oc1]

Hi Oscar,

It all looks great so well done.

I must say though I'm baffled by how cheap your build costs are. I'm a builder/developer myself in melb and $250k for 3 units is hard to get my head around. I'm assuming you haven't included things like floor coverings, a/c, appliances, landscaping, driveways or drainage etc in that price? If you have then I really need a lesson in costings from you!!

Regards
Morty

Hi Morty

The $250,000 includes everything, including fencing landscaping and floor coverings etc. PM me, happy to look at your costings on your next project

Cheers, Oscar

 

[mattnz]

Are you project managing the build OC1 or outsourcing to a head contractor?

 

[oc1]

Hi OC1,

Are you going to keep the units for sell them? As you are a full time developer who sometimes keeps some units for longer term, can I ask you some simple accounting questions?

If you sell the brand new units after completion, you will pay GST for them. If you sell them down the track within 5 years, do you still have to pay GST and income tax instead of having 50% CG concession?

I am thinking to sell a couple of the units I built within last two years, my accountant is telling me that I still have to pay GST and income tax without 50% CG concession, is he correct?

Hi Anson, my understanding is that GST is pro-rata over 5 years. i.e. if you sell after 4 years you only pay 20% of the GST amount. Anything over 5 years and no GST payable. As for CG discount, depends on your structure. I operate under a trust and there will be a 50% CG discount after 12 from the date of the Certificate of Occupancy (in VIC). There are a few accountants on the forum, i'm sure they can clarify.

Oscar

 

[oc1]

Are you project managing the build OC1 or outsourcing to a head contractor?

Hi Matt,

I'm also a registered/licensed builder so i manage the whole process myself. I organise all the trades and materials for all my projects as well as developments for my clients.

Hope that answers your question

Cheers, Oscar

 

[mattnz]

Hi Matt,

I'm also a registered/licensed builder so i manage the whole process myself. I organise all the trades and materials for all my projects as well as developments for my clients.

Hope that answers your question

Cheers, Oscar

Thats a great service, especially when it provides an inexpensive build to the client. Understanding what costs money to build makes a huge difference in the design process as well.

 

[oc1]

Thats a great service, especially when it provides an inexpensive build to the client. Understanding what costs money to build makes a huge difference in the design process as well.

True. Most of the construction costs are determined at the design stage. Very important to get this right rather than leaving to chance.

Oscar.

 

[leicachamp]

Hi Oscar

What size are the units?

 

[oc1]

Hi Oscar

What size are the units?

About 7.5 squares each.

 

[morty]

Build costs

Hi Oscar,

Have pm'd you

Cheers

Morty

 

[Melbournian]

Hi Oscar,

It all looks great so well done.

I must say though I'm baffled by how cheap your build costs are. I'm a builder/developer myself in melb and $250k for 3 units is hard to get my head around. I'm assuming you haven't included things like floor coverings, a/c, appliances, landscaping, driveways or drainage etc in that price? If you have then I really need a lesson in costings from you!!

Regards
Morty

yeah i think that is pretty darn cheap too.
the cheapest i would say would be 140K a unit (turn key).

 

[westminster]

yeah i think that is pretty darn cheap too.
the cheapest i would say would be 140K a unit (turn key).

It's hard to tell from OC1s picture as they are quite small but none of the units have garages so there is a cost saving there. Each unit has a parking bay.

 

[Selinarra]

Hi Oscar,

Well done on the purchase, the initial figures and projected profit looks great!

I work in Epping and surrounding areas as a property valuer and know it (and the particular site you have purchased) quite well. The valuation figure looks pretty accurate and if anything, just a tad slightly undervalued (which is great for you).

The developer that you have purchased from does a significant amount of work in the area and he often requires the project to be sold back to him upon competition of the build. If you don't mind me asking, is this the case with yourself?

Cheers,

Selinarra