Any thoughts on this flimsy

Hi all

I just got the S32 on a property auctioning this Saturday, the sewer access looks pretty good to my untrained eye, running along the edge of the block, but I'd appreciate others' views on it.

This would be a two townhouse block.

Cheers
Jonathon
 

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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.
 
Thanks Player, it's 685m, fits in well with the local council's policies, and there are no overlay issues. (I already own property in the suburb, so I know the local rules pretty well)

Currently has an old dwelling that should be just about rentable.

Cheers
Jonathon
 
you folks have so many more opps than us in canberra, the age of the developed land , and the amount of properties, not fair.
 
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?
 
Any thoughts on what premium the corner block would attract over a middle block of the same size?

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 :eek: 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? :cool:

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. :)
 
You really need to ascertain your walk away bid (purchase price) based upon your feasibility.
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.

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.

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.

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.

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.

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? :cool:
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.

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 :eek: 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. ;)

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

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!

Don't like them that much. :rolleyes:

That's a 20 .6 % premium :eek: on the non-corner (improvements remaining equal)......

There's some anectdotal evidence to factor into future corner purchases, not ;)
 
The buyer and under bidder are a couple of local builders, I don't know if egos got in the way to add another $30k or so to the price, but they certainly seemed gun ho about the bidding at the end.
 
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