lizzie's townhouse development

[Aaron Sice]

why design your house around a once off situation RE?

think about the convenience for all the days and night you DONT have a drunken mate stumbling up the stairs...

 

[sue78]

Do you mind sharing the numbers? how much do they cost each total? rental? and CG?

 

[lizzie]

sure ... i don't know the full numbers yet as the building quote hasn't come in.

but so far:

purchase $305,000
legals, stamp duty, bank fees, council fees, surveyor costs, architect etc (ie, capital expenses) $32,000
holding costs to date (rental income less rental expenses, r&m) $15,000

build (approx) $600,000
holding costs while building (interest etc) $30,000

total spent will be around $1mil (incl tax refunds and contingency expenses)

anticipated value 4 X $320,000 = $1.28mil

anticipated rent 4 x $300 = $62,000/yr + depreciation claimable of around $48,000 - rental expenses of $5,000 - interest repayments of $75,000 = cashflow neutral

so, as long as i can fix interest at less than 7.5% i'm happy.

 

[Aaron Sice]

that's a good build price in WA standards...

 

[lizzie]

be interesting to see how different the guesstimates are from the actuals!

regardless - the final will be hovering around the neutral. maybe a little negative, maybe a little positive - but either way it will be pretty close by the end, and will only get better.

 

[Swany]

Looks like a great project lizzie....

I'm a Newcastle boy so if it's Ok I wouldn't mind having a drive past at some stage.

Also I've been gathering info from both Valley and Masteron homes and was wondering if you have used them in the past? Is this the best way to build these days?

Swany

 

[sue78]

The build price is expensive because it's 2 storey but that's what you have to do I guess.

I think renting it out isn't a problem at all. Just hope that themarket will pick up by completion and the value will be as projected or more.

 

[Player]

Is Depreciation Optimistic ?

...........................

.............anticipated rent 4 x $300 = $62,000/yr + depreciation claimable of around $48,000 - rental expenses of $5,000 - interest repayments of $75,000 = cashflow neutral..................

Hi lizzie,

Good luck with the project. It's funny how what we end up doing is not always what we thought would occur at the time..... Referring to another thread where you were looking for municipalities with user friendly town plans.

I, too am looking forward to following this thread and learning about how you manage this project from a distance.

Just a query (above) you state depreciation of around 48,000, I'm assuming 12 K per box. If your build is around 600,000 (150 K per box) isn't the depreciation figure a bit on the high side for first year?

QS members on this forum may wish to clarify also, however with a build of 150 K per dwelling, I would have though something around the 7,000 mark for building and fixtures/fittings may be more on the money.

Not nit-picking by the way, just wanting to clarify the maths in my own mind, as with investments everything is a numbers game for me.

Again good luck with it

 

[lizzie]

Referring to another thread where you were looking for municipalities with user friendly town plans.

Just a query (above) you state depreciation of around 48,000, I'm assuming 12 K per box. If your build is around 600,000 (150 K per box) isn't the depreciation figure a bit on the high side for first year?

QS members on this forum may wish to clarify also, however with a build of 150 K per dwelling, I would have though something around the 7,000 mark for building and fixtures/fittings may be more on the money.

sometimes we just need a kick up the pants to clarify which direction to head in. the last request (before the fire) from the tenants to remove and relay an uneven and cracked slab of concrete was just the last straw. it would've cost me another couple of thousand to do which i just don't feel like spending on a knockdown. and at the same time they mentioned the roof was leaking in the laundry (more money to spend) - two months ago i had to spend $700 on a new section of fence and every month the handyman has had to go out and fix or replace "something" - so i am fed up of drip feeding money into a dead corpse.

there will be a number of items that can be written off in the first year. i may have calculated depreciation a little high but i was using as an example the $21,000 depreciation that came in on my ppor for a 15 year old house (granted we had reno'd the bathrooms and laid new flooring throughout).

as i said - the end prices will be interesting to compare. but even if they are out $50-100,000 that will put a max of $7,500 interest (less tax of 30%) onto the yearly figures.

 

[Rockstar]

Hi Michael and Lizzie,

My first duplex was around 140k build price for each unit. The first year depreciation amount was a fraction over 8k for each.

Regards, Ian

 

[Swany]

Doh....
I'm a bit slow. After reading your post again lizzie I see you are using Valley Homes as your builder

So curious as to why not use thier pre fab designs and tweak the finishes to get a better end product?

I kinda figure it's possible to see what the finished product is likely to be and construction time less.

Cheers

Swany

 

[lizzie]

i'm using valley because they have been recommended by two of my developer friends who have done projects thru them.

i went the more expensive path of getting architect plans because i didn't particularly like any of the duplex units they had (pokey bedrooms, narrow living areas etc) and fit four on the block required some serious tweaking anyhow.

although - next time i might just get the valley homes inhouse guys to do the plans. these architects are darned expensive!

 

[Player]

Lizzie,

just another thought to help your on-paper deductiions.......have you looked at getting a QS to do a schedule for "scrapping" before you demolish. May give you a nice lump sum write off in the first year also.

 

[aaarghhh]

build (approx) $600,000
holding costs while building (interest etc) $30,000

Does you buiild quote include landscaping, driveway, paving/concrete and turf?

 

[lizzie]

Lizzie,

just another thought to help your on-paper deductiions.......have you looked at getting a QS to do a schedule for "scrapping" before you demolish. May give you a nice lump sum write off in the first year also.

nice thought - hadn't thought of that one, although it really really is a dump!

 

[lizzie]

Does you buiild quote include landscaping, driveway, paving/concrete and turf?

supposedly - but i will reaffirm the prices when they have gone thru the construction plans and given a full quote.

hubby's suggesting we then put it on the burner for a few months and wait for the builder to start chasing us, then ask for a requote as he believes building prices will come down.

not sure about that ... have to see what they come back with first go.

 

[evisional]

Hi Lizzie

Can you post a copy of written assessment oulining how the proposal satisfies the requirements of Clause 55: Neighbourhood and Site Description?

 

[asdf]

Well done on getting DA. Good luck with the builders. Hear a few of em are struggling for pipe line work later in 09 so you'd think construction prices will be coming off. But their suppliers still think we're in a construction boom so materials are actually still going up! Somethings gotta give and its more likely the builders margin to win the tenders.

Interesting to see how its all going to unfold in 09. The big boys have stopped development, laying project managers off and putting sites on hold indefinitely. Shonky developers are running out of equity... fast and the lenders will be running out of patience when their 09 bad debt provisionings are all filled up by June.