Hi Everyone,
In a similar vein to this post, I’m looking at the feasibility of subdividing & building in Adelaide, though with my own money and either on my own or with one of the groups who will ‘hold your hand’ through the subdivision and sale process. I’ve opted to use a town planner in this estimate instead of a ‘hold your hand’ company as I’ve read that they can be just as useful at arranging who I would need.
Background on me: 24, live in Adelaide, own 1 IP in Brisbane, steady job of 3 years with the ability to borrow 500k+, looking to have around $100,000 in cash before undertaking a subdivision (roughly 12 month away at this stage).
As an academic exercise I’ve picked this block:
http://www.realestate.com.au/property-house-sa-clovelly+park-114486383
It’s 800sqm, 59’ (20m) by 147’ (49m). Ideally I would find a block with a more decrepit house on it but it will do for this exercise.
The house is in:
Marion City Council
Residential Zone
Policy Area 13- Northern (see pg 196 of council development plan)
Low scale, low to medium density
Pg 205 of dev plan tell me that detached housing needs 375 sqm and 12m frontage (no-go)
OR semi-detached (torrens title?) needs 320sqm with 9m frontage.
Row building has smaller sqm and frontage needs but haven’t sold well in the area as far as I’ve seen.
Is close to public transport, schools, a park or two.
Here are my numbers for a basic 1-into-2 subdivsion:
Purchase Price: 360,000
SD: 14,830
Transfer Fee: 2,524
Legals/buyers agent/tests: 3000
Demolition Cost: 25,000
Removal of trees: 3,000
Holding Costs:
Loan Size: 324,000
Interest Rate: 6.5%
Holding Period: 12M
Loan cost: 21,060
Emergency Services Levy: 800
Council Rates: 1288
Insurance: 400
Subdivision Costs:
Town planner (to run the subdivision process)
Fees: 5,000
Surveyor:
Unknown: 2000
Council Costs:
Lodgement fee: 57
Development Authorisation: 57
Planning assessment fee: (development cost x 0.125%) What is the development cost?
Schedule 1A Application: 48
Building assessment fee: 1000 (assume 300sqm)
Other: 500
Connection of services
Phone: 299
Power: 15,000 (thoroughly confused, can anyone help me narrow down this cost?)
Water/Wastewater: 15,000 (can anyone help to narrow this down?)
Sewerage: 15,000 (is this the same as wastewater?)
Crossover: 1,000
Driveway: 5,000 (is this reasonable in a small duplex?)
Fences: nil
Title registration: 500
Total costs: 490,701.35
Land Sale: 245,000 each
Sale costs (3%): 7350
Total Income: 475,300
GST: 13,000
Profit/(loss): (28,401)
So as an investment this doesn’t seem to work very well. I acknowledge that the purchase price is too high to be profitable, but short of buying for $250k I don’t see how this can work.
There are probably 50 blocks around Clovelly Park/St Marys which have been subdivided 1-into-2 so the economics must stack up. Would it work better if I opted to build the houses too?
Can anyone see flaws in my numbers?
Many thanks,
AndyM
In a similar vein to this post, I’m looking at the feasibility of subdividing & building in Adelaide, though with my own money and either on my own or with one of the groups who will ‘hold your hand’ through the subdivision and sale process. I’ve opted to use a town planner in this estimate instead of a ‘hold your hand’ company as I’ve read that they can be just as useful at arranging who I would need.
Background on me: 24, live in Adelaide, own 1 IP in Brisbane, steady job of 3 years with the ability to borrow 500k+, looking to have around $100,000 in cash before undertaking a subdivision (roughly 12 month away at this stage).
As an academic exercise I’ve picked this block:
http://www.realestate.com.au/property-house-sa-clovelly+park-114486383
It’s 800sqm, 59’ (20m) by 147’ (49m). Ideally I would find a block with a more decrepit house on it but it will do for this exercise.
The house is in:
Marion City Council
Residential Zone
Policy Area 13- Northern (see pg 196 of council development plan)
Low scale, low to medium density
Pg 205 of dev plan tell me that detached housing needs 375 sqm and 12m frontage (no-go)
OR semi-detached (torrens title?) needs 320sqm with 9m frontage.
Row building has smaller sqm and frontage needs but haven’t sold well in the area as far as I’ve seen.
Is close to public transport, schools, a park or two.
Here are my numbers for a basic 1-into-2 subdivsion:
Purchase Price: 360,000
SD: 14,830
Transfer Fee: 2,524
Legals/buyers agent/tests: 3000
Demolition Cost: 25,000
Removal of trees: 3,000
Holding Costs:
Loan Size: 324,000
Interest Rate: 6.5%
Holding Period: 12M
Loan cost: 21,060
Emergency Services Levy: 800
Council Rates: 1288
Insurance: 400
Subdivision Costs:
Town planner (to run the subdivision process)
Fees: 5,000
Surveyor:
Unknown: 2000
Council Costs:
Lodgement fee: 57
Development Authorisation: 57
Planning assessment fee: (development cost x 0.125%) What is the development cost?
Schedule 1A Application: 48
Building assessment fee: 1000 (assume 300sqm)
Other: 500
Connection of services
Phone: 299
Power: 15,000 (thoroughly confused, can anyone help me narrow down this cost?)
Water/Wastewater: 15,000 (can anyone help to narrow this down?)
Sewerage: 15,000 (is this the same as wastewater?)
Crossover: 1,000
Driveway: 5,000 (is this reasonable in a small duplex?)
Fences: nil
Title registration: 500
Total costs: 490,701.35
Land Sale: 245,000 each
Sale costs (3%): 7350
Total Income: 475,300
GST: 13,000
Profit/(loss): (28,401)
So as an investment this doesn’t seem to work very well. I acknowledge that the purchase price is too high to be profitable, but short of buying for $250k I don’t see how this can work.
There are probably 50 blocks around Clovelly Park/St Marys which have been subdivided 1-into-2 so the economics must stack up. Would it work better if I opted to build the houses too?
Can anyone see flaws in my numbers?
Many thanks,
AndyM