Development site in Ascot

[rooky]

I am offered a site in Ascot, QLD. It does have an existing 3 X 2 townhouse which needs to be renovated. There is council approval for 2 3X2 Townhouses at back. Site area is low 600 sqm.

Asking price is around 1 million. Construction cost is 250-300K for each townhouses and renovation cost will be maximum 150K for front townhouse.

My plan is to sell all 3 townhouses as soon as construction/reno finishes. I am using a buyers agent for this purchase. I am dealing with this buyers agent for first time. He is saying that all 3 Townhouses will sell for 750 to 800K.

If townhouses sell for 750 to 800K, then this seems good deal to me. But i am not able to form the view whether they will sell for that price or not.

Can anyone who is familiar with the area can provide more information?

Sorry, can't disclose the property address at this stage as we are still deciding whether to go for purchase or not.

 

[sanj]

You need to do your own due diligence to work out if those construction prices are accurate as well as the end sale prices. Also, include all costs as well as a contingency. to me at first glance it sounds like margins are too tight and not something I'd personally do. This is literally at first glance though so I could be entirely wrong.

You're talking total costs of somewhere in the region of $1.9 to $2m once stamp duty, holding costs and contingencies are included and it assumes turnkey of $300k for construction including subdivision fees and any site works and I don't know how accurate that is.

If it costs you $2m and is worth $2.25 what are you left with after selling fees and gst? Bugger all imo

 

[RyanMcHarg]

I have something in Hawthorne which is exactly the same development at the moment with comparable finished product costs, except the buy in price is $850K with approvals for an exisiting pre war house to be renovated to a 4 bedroom townhouse + and for a 4 bed and 4 bed townhouse for a total of 3 boxes, with your gross finished value being closer to 2.4 Million realistically with potential for a little more depending on the market. Similar demographic to Ascot (straight across the river in 4171).

There may be some slightly better value sites around if you have a bit of a hunt......

 

[RPI]

I am sure that won't last too long Ryan.