OK people Some numbers

Hi all.

Well here are some final numbers for my project.
A subdivision of my existing property and build a 4 bed 2 bath double garage property on the back ( corner block )

council $5,200
Water $6,000
sewer $7,600
Sewer encasement $12,000
Junction $1000
Planner + extras $10,000
Total $41,800

demolish old garage $4000
new garage and driveway $22,000
Fencing $1,000
Total $27,000

New house $158,000 all inclusive
Carpet,blinds,grass etc $16,000
Total $174,000

Total for complete job = $242,800 Lets say $250,000

Expected value by comparable sales $ 345,000 to $365,000
rent $340 to $360
yield 7% to 8%

Existing property will hold value due to reno and it yields 8% plus due to granny flat.

Depretiation will make holding costs minimal even at 7.5% rates.positive on current rates.
It will be a long term hold.
Great central cbd location,tight rental market

What ya think. Will make the D to proceed by monday. I think i will go for it.

Cheers
 
How much could you have sold the new subdivided block for as a vacant bit of dirt instead of building and encasing the sewer?

cheers

RightValue
 
Devo

This is a personal decision but as rightvalue rightly pointed out if you can get the same profit by simply subdividing and selling off the land then there is no point in building.

Is the block big?
From the house price you've listed it seems like you are building a single storie house which means that there won't be much yard left over and this will impact on the price of the new property .
 
Reading Devo's post, I don't think the newly built dwelling will be sold. It is a long term hold if I've read correctly. If the figures and yield is accurate with depreciation on top, it looks sweet.

If however it was for sale, I agree with the others, always look at what your highest return is whilst minimising risk. Sometimes it is more profitable to sell with plans to a builder, rather than risk the construction and over-runs.

Sounds good Devo. Good luck
 
Devo,

I see you have council costs on your list, I presume this is for application etc, but what about infrastructure costs charged by councils to contribute to works in your council area. With sub-divisions some councils will ask for up to $35,000. Have you enquired about this and factored in a cost?

We have council approval for a dual occupancy in SE Qld (Ipswich), ..... In the approval letter from council they informed us that it will cost us $14,000 to contribute to concrete paths being constructed within the council area. This figure would have been more, but they had a discount period to attract development. It is payable when we start construction from memory.

It was just a thought as the majority of sub-division threads on SS that I read never seem to factor this cost in there figures.

Martin
 
Hey everyone. Thanks for the replies. My allowances are actual quoted costs from council/town planner. Any add ons should be minimal.

Minimum vacant block size in my area is 500sqm. This will be reduced to 400 eventually but at council speed this may be years. My finished block will be under 500 so the only way around it is to build as a dual occupancy then subdivide down to a minimum of 350 sqm. So i have to build basically.

And yes it is a long term keeper.

My original house design was a project builder 150 sqm single story but by the time changes were made to fit it on the price went up considerably. And yes there was not much yard.

The council,s rules regarding floor space ratio may be able to be pushed with our case due to a number of reasons from .4 to1 up to .5 to 1.
This allowed me to go a 190 sqm two story design that actually came in cheaper. Taking advantage of district views and increasing yard size.
 
I would go for it Devo. Seems like you have put plenty of thought into it and it will be a fantastic experience - but never a perfect one ;)

You are spending 250k to profit 100k - a fine profit margin. Even if a few things blow out and values drop you are still very safe.

One item you have not included are holding costs throughout the development period. :)
 
Where are you? That's a low contribution and large minimum lot size.

We have to pay $2400 contribution and the minimum lot here is 450 but our split off block will be a bit over 750sqm. Water contribution of $3200, all payable upfront before we even think about start building. They don't like dual occupancies here.

For us, selling the land alone worked out at $40k in the pocket and with a new house, over $100k. Land is relatively cheap here and houses are relatively expensive. But if land here cost more I suspect the council contribution would be a lot higher. Is the land component cost usually a big (more than 50%) part of a new build in your area?

We're not selling or renting ours out - a 4br house here is upwards of $250k (often running to $400k for a large brick one) and we really do need one for ourselves, so being able to build one for $100k is not something to pass up.
 
Im in the Shoalhaven. Minimum land size is under review but will take time.properties prices are still down a bit here but have bottomed. This same house im about to build would have been worth above $400,000 at the peak.

I could position the house to miss the sewer but its position on the block would not be right.and i could skip the new garage and build a carport but these would effect rent.
All in all i think there is enough fat to allow for the unforseen.
Holding costs are a consideration but not too bad.
I think this is a good project to wet my feet.
 
Go for it Devo!

It sounds like you've done your homework and as a few have already mentioned it would be a great way to gain some experience in the developing caper. I have done a few similar type developments and it's the perfect way to learn i reckon.

Good luck
Morty
 
Devo,

I see you have council costs on your list, I presume this is for application etc, but what about infrastructure costs charged by councils to contribute to works in your council area. With sub-divisions some councils will ask for up to $35,000. Have you enquired about this and factored in a cost?


Martin

Head works estimate for a sub division in north ward townsville - 27k
 
Minimum vacant block size in my area is 500sqm. This will be reduced to 400 eventually but at council speed this may be years. My finished block will be under 500 so the only way around it is to build as a dual occupancy then subdivide down to a minimum of 350 sqm. So i have to build basically.

Will Council allow you to do this. If the original house has a granny flat it is already a dual occupancy.
 
Will Council allow you to do this. If the original house has a granny flat it is already a dual occupancy.

This is one tricky area i hope council are sensible with. While yes if it was to stay a dual oc then they would argue it has three properties. The DA will include the subdivision therefore the end product will be two residence,one with a granny flat.Should be ok but im sure there will be questions. This is why i employed a local planner that deals with council all the time.

One other area is generally they dont like the second dwelling to be a double story with dual oc. We believe this is more directed at non corner blocks and council restricting d-story developments overlooking peoples backyards. Im on a corner so should be ok.

Last possible issue is floor space ratio. Subdivided block is .5 to 1. Dual oc is .4 to 1.
Same argument for us. It WILL be subdivided and the end product is much nicer allowing us to build a double story and giving more yard.

As you can see DA approval is far from a certainty but the planner thinks i should be ok. We will see soon enough because i am giving him the go ahead today to start the DA.
 
Keep us posted on how it turns out.

I, too, have a subdividable block with 2 x 3 bedroom houses. I have decided NOT to subdivide, as I am looking at never selling these and will incur extra costs (land tax & rates) if split. However, if I was to split them, one of the newly created blocks may be large enough to put a small granny flat on, therefore creating another income stream. I will be very interested in how it all pans out for you.
 
Keep us posted on how it turns out.

I, too, have a subdividable block with 2 x 3 bedroom houses. I have decided NOT to subdivide, as I am looking at never selling these and will incur extra costs (land tax & rates) if split. However, if I was to split them, one of the newly created blocks may be large enough to put a small granny flat on, therefore creating another income stream. I will be very interested in how it all pans out for you.

Yes i thought about doing the same to save on rates but i figured the valuations would come in significantly higher if i subdivided and this would allow me to finance more properties.
 
Yes i thought about doing the same to save on rates but i figured the valuations would come in significantly higher if i subdivided and this would allow me to finance more properties.

Well, there is that, but in my case I financed the heck out of them at the peak of the market and even if I split them, I wouldn't get anymore out of them for a while yet.:D
 
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