Am I doing this right ??

[Elmer Liu]

G'day eveyone, I have been trying to get into the subdivision/development game as I am trying to manufacture GC myself. I am based in Melbourne and I am looking at the western suburbs ( Deer Park, derrimut etc. ) at the moment for development opportunities as I couldn't afford the east.

I would greatly appreciate someone on this forum could check the cost model/template I created below. I have been using this to assess the potential deals that I have come across so far ( about 20 or so ), and only ONE seemed to be finically viable, however the deal was shot down by the bank due to the poor valuation ( $50k less than the estimated value after completion).

I am not sure if I am being too cautious finically or what. Sometimes I wonder if I will ever find a deal in my selected areas.
My plan is to develop and hold majority of them and use the equity to keep going while the properties are in CF neutral position.

Thanks in advance for everyone's help.

 

[Elmer Liu]

I would appreciate someone to shed some light on my question please. Please let me know if I have missed anything here.

 

[Big Will]

I am no property developer and the spreadsheet has a lot of information. Couple of things I noticed.

1. Your interest rate is 5%, for my budgeting purposes I use 7% even today.
2. Construction window (year) 0.5 - Does this include getting DA?
3. Gross Rental Yeild 4% - For Melbourne the average rental yield is 3.1% I would work off 3% for a Melbourne or Sydney property and 4% if it was Brisbane. That being said the websites say Deer Park is 4.5 so 4% would be a good way.

For the banks Valuation being lower by 50,000 than what you think, you will need to find out how they value properties and how you can improve the valuation.

 

[Elmer Liu]

I am no property developer and the spreadsheet has a lot of information. Couple of things I noticed.

1. Your interest rate is 5%, for my budgeting purposes I use 7% even today.
2. Construction window (year) 0.5 - Does this include getting DA?
3. Gross Rental Yeild 4% - For Melbourne the average rental yield is 3.1% I would work off 3% for a Melbourne or Sydney property and 4% if it was Brisbane. That being said the websites say Deer Park is 4.5 so 4% would be a good way.

For the banks Valuation being lower by 50,000 than what you think, you will need to find out how they value properties and how you can improve the valuation.

Thanks for your feedback..
1. With the interest rate, i know I haven't allowed any buffer, which I should.
2. Construction window doesn't include the time for building permit, however planning permit should be in place as I am only looking for sites with permits at this stage.

I am struggling to find a good site at this stage...