Any thoughts on this flimsy
- Thread starter Jonathon
- Start date
Hi Jonathon,
Corner block is nice. Easement along rear boundary is fairly common. More importantly, what are the dimensions? Site area?
Have you checked with council about their (approxiamate) requirements for your desired development and any overlays that may affect your intent for two townhouses?
Is it vacant now, or does it have an old box/dwelling for some rental income on it whilst you go about getting plans and permits issued? If not, consider holding costs on bare land and the potential for banks to be very choosy about your numbers. Your faesibility should be yielding in the order of 25-30 % to be safe.
Corner block is nice. Easement along rear boundary is fairly common. More importantly, what are the dimensions? Site area?
Have you checked with council about their (approxiamate) requirements for your desired development and any overlays that may affect your intent for two townhouses?
Is it vacant now, or does it have an old box/dwelling for some rental income on it whilst you go about getting plans and permits issued? If not, consider holding costs on bare land and the potential for banks to be very choosy about your numbers. Your faesibility should be yielding in the order of 25-30 % to be safe.
No worries.
Good luck with it Jonathon.....hope the purchase pans out favourably for you
Thanks, the auction is on Saturday, but I've set myself a fairly low limit so I'll only pick up the block if there aren't too many other developers keen on getting it. It'll be my first development, my other properties are long term buy and holds, so I'm not keen on blowing all my profit on the purchase price, especially as I'm fairly realistic about not necessarily making much of a profit on my first development.
The house next door sold 2 weeks ago for $610k, pretty much same size block and house, but not a corner. You can still stick two townhouses on it, but one will be the rear house, so a different proposition to this corner block, where the subdivision will have its own street frontage.
Any thoughts on what premium the corner block would attract over a middle block of the same size?
But you guys pay tax-deductible stamp duty!!!
Jonathon, in Adelaide it is dictated a fair bit by the shape of the block because of the setback requirements on the side block. Depends on the local council requirement. So if it is a narrow block then the price premium is greatly reduced because it doesn't actually allow much building footprint once you take into account the open space requirements.
Gools
Jonathon,
In addition to Gools post above, I cannot give you a quantifiable percentage figure to add as a premium over and above a site locked by dwellings on either side.
I also like corners for the flexibility and street appeal.
You really need to ascertain your walk away bid (purchase price) based upon your feasibility.
Whether you are selling one or both, or keeping for the portfolio, you need an idea of gross realisation of end product on todays sales data.....do not try to second guess the future (corner based prices if possible) and IMHO allow 25-30 % return. Banks will not accept the traditional 18-20 % return in this credit climate.
To this end irrespective of whether you keep for yourself as rental stock or wish to onsell, you still must not over-pay (regardless of whether it is a corner or not). Your numbers are crucial.
Also depending upon your desired exit strategy with the development, you need to check with your accountant regarding the margin scheme for GST and if (at auction) the vendor is willing to apply the margin scheme to the contract should you so desire and are the successful purchaser.
Also, bearing in mind your anticipated purchase price and intended future development plans, have you got any reasonable idea of your likely finance position from a bank or broker?
Haven't really answered your question in any quantifiable manner and actually asked more of you, however hopefully this assists with your investigations and diligence moving forward.
In addition to Gools post above, I cannot give you a quantifiable percentage figure
to add as a premium over and above a site locked by dwellings on either side. I also like corners for the flexibility and street appeal.
You really need to ascertain your walk away bid (purchase price) based upon your feasibility.
Whether you are selling one or both, or keeping for the portfolio, you need an idea of gross realisation of end product on todays sales data.....do not try to second guess the future (corner based prices if possible) and IMHO allow 25-30 % return. Banks will not accept the traditional 18-20 % return in this credit climate.
To this end irrespective of whether you keep for yourself as rental stock or wish to onsell, you still must not over-pay (regardless of whether it is a corner or not). Your numbers are crucial.
Also depending upon your desired exit strategy with the development, you need to check with your accountant regarding the margin scheme for GST and if (at auction) the vendor is willing to apply the margin scheme to the contract should you so desire and are the successful purchaser.
Also, bearing in mind your anticipated purchase price and intended future development plans, have you got any reasonable idea of your likely finance position from a bank or broker?
Haven't really answered your question in any quantifiable manner and actually asked more of you, however hopefully this assists with your investigations and diligence moving forward.
Yep, totally agree, still haven't quite landed on a figure, but I have no emotional attachment whatsoever to this particular spot, so walking away won't be a problem.
Completely agree - my day job is actually financial modelling of corporate transactions, so if anything I'm guilty of over analysing the finance side of everything I do.
The vendor isn't registered for GST, so the margin scheme doesn't apply to the original purchase..unless I've completely missed something in the operation of the margin scheme? In any event, the intention with these at present is build and hold for at least a while.
Shouldn't be a problem with sufficient equity available to only need 40%ish funding if I can't get 80%, but serviceability isn't an issue so there shouldn't be any problem in any case. Worst case scenario I just hold it for a few years as a rental.Also, bearing in mind your anticipated purchase price and intended future development plans, have you got any reasonable idea of your likely finance position from a bank or broker?
Haven't really answered your question in any quantifiable manner and actually asked more of you, however hopefully this assists with your investigations and diligence moving forward.
Absolutely does, thanks mate. Questions like these are always very useful to get the mind thinking.
Jonathon,
In addition to Gools post above, I cannot give you a quantifiable percentage figure
I also like corners for the flexibility and street appeal.
So did plenty of others, this corner block went for $736k this arvo, $126k more than the identical but not-corner block next door 2 weeks ago!
20 % premium
Don't like them that much.
That's a 20 .6 % premium on the non-corner (improvements remaining equal)......
There's some anectdotal evidence to factor into future corner purchases, not
Don't like them that much.
That's a 20 .6 % premium
on the non-corner (improvements remaining equal)......There's some anectdotal evidence to factor into future corner purchases, not