Hi Guys,
Time for a bit of a closing update on this thread...
Well, they're all tenanted now. We got:
Unit 1: 3 bed townhouse ($700pw)
Unit 2: 3 bed + study downstairs unit ($850pw)
Unit 3: 3 bed upstairs unit ($795pw)
So, works out to be about $10K a month which is what I originally estimated at an average of $800pw each. The townhouse let us down a bit due to the compromised floorplan downstairs to meet council's adaptability requirements. Made it very hard to layout a comfortable living and dining space. But the tenants have made the downstairs bedroom their living area and I added a TV point to that room to accommodate that requirement.
Cash flow is good now. We generate $120K pa rent from them and have loans of around $1.75M for interest costs of around $100K pa. Even after land tax and other outgoings we're neutral~ish.
To assist cash flow, I just had my Depreciation Reports done by Scott at The Depreciator. He's a member here and has a great team working for him. I couldn't recommend his work or professionalism highly enough. He's absolutely brilliant at what he does and a pleasure to deal with. He also does Somersoft discounts too if you need one done. I personally had AJ do my reports and she's a star too!!
The reports came back at around $15K pa depreciation on each unit so that will help my negative gearing to the tune of $45K pa. Paper loss resulting in another $15K odd cash in my pocket every year. Happy days.
Profit wise we weren't as high as we'd hoped, but still OK. It ended up costing around $2.3M and valued at completion around $2.7M. Still, given all the hiccups and that $100K of that cost was incremental interest servicing, we're still happy with the outcome. Given a lot of the incremental cost was borne out of my cashflow and cash buffers, we've still ended up with nigh on $1M equity in them at completion, hence the good ending cash flow position of them ongoing.
We're in the process of refinancing them to resi LVRs and rates at present. They've now been strata'd which improves their valuation by the bank for refinance purposes. If we lift the LVR to 80% we can get about $350K odd out as LOCs if we need it to kick off the next project. But for now, we'll leave it in there to improve cash flow. We've already got about $300K in the bank to do the new build in Bardon as proceeds from out North Narabeen former PPOR sale.
The tenants love their new digs too. They're forming a real little community there and get on well with each other. The tenants in the downstairs unit are really house proud and have weeded the entire common areas as well as their own. They've gurneyed the common area path and generally keeping the whole place looking top notch. We're helping all tenants where we can with little things to make them more livable. We installed clotheslines outside in both the downstairs yards at a cost of $1300 odd. Small cheese in the scheme of things but goes a long way to improve the livability and raport with the tenants.
We're just working through the defect period with the builder now and hopefully that will all be closed out shortly.
Its been great blogging this build from go to whoa. Its had a lot of hickups along the way, but we got there in the end. The one biggest learning I got out of it is the importance of tenacity, drive and never giving up. Development is not for the feint hearted, and this one was curlier than most. But even the toughest journey can still bear fruit.
On to our new home build in Bardon QLD now. Just kicking that off in earnest at present and will keep you posted how it goes in its own thread.
Thanks for the support and feedback along the way. Its been a hoot!
Cheers,
Michael
Time for a bit of a closing update on this thread...
Well, they're all tenanted now. We got:
Unit 1: 3 bed townhouse ($700pw)
Unit 2: 3 bed + study downstairs unit ($850pw)
Unit 3: 3 bed upstairs unit ($795pw)
So, works out to be about $10K a month which is what I originally estimated at an average of $800pw each. The townhouse let us down a bit due to the compromised floorplan downstairs to meet council's adaptability requirements. Made it very hard to layout a comfortable living and dining space. But the tenants have made the downstairs bedroom their living area and I added a TV point to that room to accommodate that requirement.
Cash flow is good now. We generate $120K pa rent from them and have loans of around $1.75M for interest costs of around $100K pa. Even after land tax and other outgoings we're neutral~ish.
To assist cash flow, I just had my Depreciation Reports done by Scott at The Depreciator. He's a member here and has a great team working for him. I couldn't recommend his work or professionalism highly enough. He's absolutely brilliant at what he does and a pleasure to deal with. He also does Somersoft discounts too if you need one done. I personally had AJ do my reports and she's a star too!!
The reports came back at around $15K pa depreciation on each unit so that will help my negative gearing to the tune of $45K pa. Paper loss resulting in another $15K odd cash in my pocket every year. Happy days.
Profit wise we weren't as high as we'd hoped, but still OK. It ended up costing around $2.3M and valued at completion around $2.7M. Still, given all the hiccups and that $100K of that cost was incremental interest servicing, we're still happy with the outcome. Given a lot of the incremental cost was borne out of my cashflow and cash buffers, we've still ended up with nigh on $1M equity in them at completion, hence the good ending cash flow position of them ongoing.
We're in the process of refinancing them to resi LVRs and rates at present. They've now been strata'd which improves their valuation by the bank for refinance purposes. If we lift the LVR to 80% we can get about $350K odd out as LOCs if we need it to kick off the next project. But for now, we'll leave it in there to improve cash flow. We've already got about $300K in the bank to do the new build in Bardon as proceeds from out North Narabeen former PPOR sale.
The tenants love their new digs too. They're forming a real little community there and get on well with each other. The tenants in the downstairs unit are really house proud and have weeded the entire common areas as well as their own. They've gurneyed the common area path and generally keeping the whole place looking top notch. We're helping all tenants where we can with little things to make them more livable. We installed clotheslines outside in both the downstairs yards at a cost of $1300 odd. Small cheese in the scheme of things but goes a long way to improve the livability and raport with the tenants.
We're just working through the defect period with the builder now and hopefully that will all be closed out shortly.
Its been great blogging this build from go to whoa. Its had a lot of hickups along the way, but we got there in the end. The one biggest learning I got out of it is the importance of tenacity, drive and never giving up. Development is not for the feint hearted, and this one was curlier than most. But even the toughest journey can still bear fruit.
On to our new home build in Bardon QLD now. Just kicking that off in earnest at present and will keep you posted how it goes in its own thread.
Thanks for the support and feedback along the way. Its been a hoot!
Cheers,
Michael
