3 unit development in Glenroy

[imbi3]

Just to initiate some discussion between members and for learning purposes for someone like me who is still new to property development

I found a block of land in Glenroy VIC with approved plan for 3 2-bedrooms unit. Approx. 10 squares each. Unit 1 and 2 have garages. Unit 3 only carport. The property has an old house which needs to be demolished. Location is close to Jacana station (rather than Glenroy which is zone 1)

The numbers:
Asking price $400k-430k
Construction costs approx. $120k per unit. $360k total
Subdivision 5% from construction cost $18k
Demolition $10k
Interest $30k

Similar units in the area are selling for $330k-$350k

Thoughts/general comments about the area/project? I don't know why the vendor doesn't want to do the development themselves. Assuming $320k/each to be conservative, the margin is pretty slim although someone may be able to get in and out quickly given plan has been approved

 

[Aaron_C]

You've pretty much answered it yourself - margin too slim for someone to buy it. Usually builders buy these low margin sites since they have access to cheaper prices. Vendor probably lacks the financial capacity to do it themselves.

 

[John_]

850k cost
975k sale price @ 325k each

Leaves you with $125k for tax,agent selling fees.

Plus thats if you build with no hiccups and sell.

 

[westminster]

Just to initiate some discussion between members and for learning purposes for someone like me who is still new to property development

I found a block of land in Glenroy VIC with approved plan for 3 2-bedrooms unit. Approx. 10 squares each. Unit 1 and 2 have garages. Unit 3 only carport. The property has an old house which needs to be demolished. Location is close to Jacana station (rather than Glenroy which is zone 1)

The numbers:
Asking price $400k-430k
Construction costs approx. $120k per unit. $360k total
Subdivision 5% from construction cost $18k
Demolition $10k
Interest $30k

Similar units in the area are selling for $330k-$350k

Thoughts/general comments about the area/project? I don't know why the vendor doesn't want to do the development themselves. Assuming $320k/each to be conservative, the margin is pretty slim although someone may be able to get in and out quickly given plan has been approved

Too slim and missing contingency and open space levy to council.

The Vendor doesn't do it themself as they can make more money by selling with development plans than selling without.

I also hear Glenroy has a lot of problems - I'm not a Vic local but I'm sure it was Glenroy which was have some race wars - look up old posts about Glenroy.

 

[imbi3]

Or if someone could get presales to mitigate the selling risk...I have seen some people selling off-the-plan units via property seminar. Although the agent charges higher commission but they were able to achieve slightly higher prices (this was later confirmed by the valuer)

 

[MTR]

Just to initiate some discussion between members and for learning purposes for someone like me who is still new to property development

I found a block of land in Glenroy VIC with approved plan for 3 2-bedrooms unit. Approx. 10 squares each. Unit 1 and 2 have garages. Unit 3 only carport. The property has an old house which needs to be demolished. Location is close to Jacana station (rather than Glenroy which is zone 1)

The numbers:
Asking price $400k-430k
Construction costs approx. $120k per unit. $360k total
Subdivision 5% from construction cost $18k
Demolition $10k
Interest $30k

Similar units in the area are selling for $330k-$350k

Thoughts/general comments about the area/project? I don't know why the vendor doesn't want to do the development themselves. Assuming $320k/each to be conservative, the margin is pretty slim although someone may be able to get in and out quickly given plan has been approved

How is the market in Glenroy, clearance rate at auctions etc.?
I think I would always stick to zone 1, that's my plan, easier to sell

I would personally like more fat in the deal. I guess you are paying for the plans and permits, why not do this yourself and perhaps end up with better outcome.

 

[MTR]

Or if someone could get presales to mitigate the selling risk...I have seen some people selling off-the-plan units via property seminar. Although the agent charges higher commission but they were able to achieve slightly higher prices (this was later confirmed by the valuer)

My understanding is if you sell OTP you generally give a discount off the end product??

 

[Mindmaster]

This is a 2 bed unit very similar in size to the ones on your plans that the agents think they can get $360-395k for

http://www.realestate.com.au/property-unit-vic-glenroy-113975475

Looks like it has quality finishings which would up the build cost and it is close to the train station which is a bonus you may not have.

 

[oc1]

Just to initiate some discussion between members and for learning purposes for someone like me who is still new to property development

I found a block of land in Glenroy VIC with approved plan for 3 2-bedrooms unit. Approx. 10 squares each. Unit 1 and 2 have garages. Unit 3 only carport. The property has an old house which needs to be demolished. Location is close to Jacana station (rather than Glenroy which is zone 1)

The numbers:
Asking price $400k-430k
Construction costs approx. $120k per unit. $360k total
Subdivision 5% from construction cost $18k
Demolition $10k
Interest $30k

Similar units in the area are selling for $330k-$350k

Thoughts/general comments about the area/project? I don't know why the vendor doesn't want to do the development themselves. Assuming $320k/each to be conservative, the margin is pretty slim although someone may be able to get in and out quickly given plan has been approved

A few things:

Subdivision (Open Space Levy) is based on land value, so $21kísh
Survey fees, working drawings, engineering, title fees etc all add up too.
Are you selling these? GST
Overall, like the guys have said, a little tight. Still, this is a great way to learn.

Oscar