Develop calc seem right?

[VaSSagO]

Just starting to look at properties with development opportunity, assuming DD shows this would be suitable for a triplex does the calc seem reasonable?

http://www.realestate.com.au/property-house-wa-bayswater-110601065

Purchase Price: $650k
Acquisition Costs $35k
Holding Costs $35k
Demolition Costs $50k
Three new 3x2x2s $600k ($200k each including site works etc)

Total Cost $1,370k

Sale Price $1,800k (conservatively $600k each)

Profit $430k (31.4%)

I am just looking whilst I am waiting for the titles for my current project.

 

[thatbum]

$600k sale price of a 3x2 in that area?

I'm not sure about that as a conservative estimate. I haven't looked into it thoroughly though.

 

[Blair007]

I think that's pretty standard price for a property with that land size in that area.
I don't know about the town houses but 600k each does seem a bit high considering you could pick up a house on 1000sqm of land for 50k more.

 

[westminster]

Calcs seem fair - I would probably allow more for headworks - is deep sewerage available and on the block already?

I'd add in an extra $50-100k on that total price.

I'm assuming R25? if so then as the ad suggests you are under the required size requirements. You'd need 1050 sqm and so there is a risk that it might not be approved as a triplex.

At that size block you might be able to do 4 x 2 but that would be more expensive.

 

[Tools]

Surely demo can't be 50 large in WA?

Tools

 

[John_]

Was going to mention 50k for demo? 10-15K should remove that house.

 

[TMNT]

What about

Selling fees of 3%=54k
GST=175kish

 

[Scott No Mates]

Temper the GST payable by using the margin scheme.

 

[Tano]

Is the profit taxed at 100% Capital Gains if held less than one year?

 

[sanj]

this is an income generating exercise, CGT does not apply but income tax does

 

[Tano]

So the profit is taxed at your marginal rate of tax? Usually 35-40%

where Profit = Sale Price - Development Costs - Agent Commision (3%) - GST (10%)

And Agent Commision is on the exGST price of 1.8Million

Profit = $1,800,000 - $1,370,000 - $54,000 - $163,636 = $212,364?

 

[dboy_tomato]

Tano just curious to see how you calculated the GST to $163k?

Is this based on the margin scheme already?

 

[Tano]

Nope. I calculated wrong. GST is 180k. Thanks for spotting it.

 

[WesternRat]

Keep them all for a year or more - then sell two and pocket one for free. Rinse and repeat.

 

[Ausprop]

looks like a decent slope on that block - might need to chuck in $50k of earthworks and retaining?

got me stuffed why you would want to demolish such a charming house tho? and what's happening in that kitchen??

 

[TMNT]

Keep them all for a year or more - then sell two and pocket one for free. Rinse and repeat.

That's not going to change the figures that much

Same with thr margin scheme

Maybe 10 or 20% of the gst
which isn't a huge deal

over all the deal isn't spectacular unless you are keeping them all