Personal Project: Bayswater WA mini-apartments

I've decided to write an ongoing post similar to what other 'somersoftians' (westminster :)) have done in the past to share some information and help build knowledge for everyone.

After some quick negotiations on Friday I am happy to announce I am the new owner of (subject to Due Diligence):
http://www.realestate.com.au/property-residential+land-wa-bayswater-200796683

The Development Plan:
The block is 450sqm with a zoning of R40 (plot ratio of 0.60). This will allow for 270sqm of build area, from this size it is enough space for, 4 apartments. Depending on the design this may be a mix of three, 2 bedroom and 2 bathroom units and a single bed/bath unit.

The block is vacant and backs onto a large park (public open space). The street is within a good pocket of Bayswater about 350m from the train station and minimal through traffic. I estimate there is a fall of about 5m from the front to the rear of the site which will require retaining.

The plan is to settle in about 3 months to give me a head start on the DA process.

Feasibility Information:
Land Purchase Price: $463,000
Purchase Costs: $20,000
Building Costs: $810,000
Holding Costs: $85,000
Selling Costs: $55,000
Contingency: 2% of total cost
Completed End Value: ($1,840,000)

The exit plan will be to keep and rent all the units at completion with a nice 7.5%+/- gross yield.

I?ll keep this thread updated as items progress and feel free to ask me any questions as you wish.
 
Well done on the location, they should sell very well. There's another 8 apartments been built across the road from the bayswater pub (in laws sold the block off to nty for 580k in 2012) and the start from 425k.

I will keep following this thread and best of luck to you Kent.
 
Looks like to great project. Best of luck!

Are you able to share:
- Confidence level of getting $460k for 2x2 apartments in the area
- Expected timeframes for the project
- Expected rent per week
 
HD_ACE: I have a 3 month head start due to a delayed settlement and I have allowed for an additional 3 months in my feasibility. Officially, I think it should be around 24 months.

mrdobalina:
  • $460k is always a guess in 2 years. However if the apartments selling are anything near the asking price these are a superior product.
  • As discussed above with time frames.
  • For rent the closest suburb to go on is Maylands and new 2/2's are getting low $500s so I would expect high $400s (around $475p.w.)
 
Update #1 (6/2/2014)

Started looking into Due Diligence on the site and come across an interesting 'hiccup'. Vacant blocks can be heritage listed despite their being nothing to protect on the site. This block is on the Local Council's municipal registry as a classification 4 (one of the lowest.) This form of classification is not statutorily protected, so there isn't too many design considerations I have to take into account. For those who like to read: http://www.bayswater.wa.gov.au/development/heritage

The surveyors are booked in for tomorrow, it would be interested to see how much fall is on the site.

Called around about soil tests done in the area and a property 2 doors down has done a geotech, it's come up A class so I'm not too concerned about the soil condition.

Full steam ahead...
 
I do love a good multi!

The selling photos are terrible - is it really skinny or just the photos?

Yay for overlooking a park as there is less neighbours to whine, less overshadowing, less cone of vision issues :)

Have you thought about putting the parking underneath and taking advantage of that slope?
 
Maybe developers themselves live in large blocks like I prefer, and the people that live in their "product" have to deal with closeness issues that I could never tolerate.

I consider 450sqm to be a tiny block of residential land. Not big enough for occupants to comfortably reside in 1 dwelling, let alone 4 families jam packed in.

Are you looking at that tiny sliver of land between those two war homes ??

The block appears to be only 12m wide ?? If that is so, the length could only be 37m. With a driveway taking up roughly 2.5m, the living quarters for four separate families will be squeezed into a box 37m x 9.5m ??

At least 5 or 6 social problems would trigger from this development for the occupants.

I know Kent you are only interested in the block of land making a return, both cashflow and capital, and good luck with that, but once it is built, real people will be dwelling there for decades to come.
 
Maybe developers themselves live in large blocks like I prefer, and the people that live in their "product" have to deal with closeness issues that I could never tolerate.

I consider 450sqm to be a tiny block of residential land. Not big enough for occupants to comfortably reside in 1 dwelling, let alone 4 families jam packed in.

Are you looking at that tiny sliver of land between those two war homes ??

The block appears to be only 12m wide ?? If that is so, the length could only be 37m. With a driveway taking up roughly 2.5m, the living quarters for four separate families will be squeezed into a box 37m x 9.5m ??

At least 5 or 6 social problems would trigger from this development for the occupants.

I know Kent you are only interested in the block of land making a return, both cashflow and capital, and good luck with that, but once it is built, real people will be dwelling there for decades to come.

please. your target occupants are large families and the very idea that increased density automatically means social problems for its occupants is a ludicrous one.

he has said above that it will likely be 2x2 aparments and a 1 bedder, how many families do you think stay in brand new 1 bedders? what about people who live alone (30% of the population)? Shoudl they not be catered for?

im guessing planning/social matters arent your forte dazz?
 
Ive done multis in the same heritage area successfully.

Families dont live in these...54% of this state live in one or two person households yet no-one catering for this market.
 
At least 5 or 6 social problems would trigger from this development for the occupants.
Ouch! There are at least 15 similar type developments within a kilometer of where I live. Rough times ahead? ;)

Seriously though, they have been selling well off the plan. Not everyone wants a 2 storey, water guzzling, power guzzling, 4x2 McMansion. I know singles or young couples that want a 2x2 or 3x2 apartment at most.
 
Westminster: I'm thinking about the new Rcodes allowing for a basement to be 'free' plot ratio. We will see how the $$ go with the project. It's a 12.5m frontage.

perthguy: And you're 350m from a train station which is a 13min journey into the CBD.

Aaron & Sanj: Totally agree!

Dazz: Maybe you come from a generation which appreciates the quater acreage in the burbs? Since the dawn of time things change, Perth's sprawl is categorically not sustainable. You call it a 'product' I call it a 'solution'. Lets discuss the 5 or 6 social problems?
 
Hi Kent,

Just wondering if you have done a feasibility on building a modern two level dwelling.

Just as an alternative
 
The site could possibly support 2 group dwellings but I would expect this to loose money with out crunching the numbers.

Mind you 2 blocks in Bayswater of around 200sqm. would have to be worth $250k - $299k as a gut feel. The question would be if you could sell then with the tight size, narrow shape and retaining.
 
Hi Kent,

Will follow your journey with great interest as it is an ambition to do similar in the future once i am more experienced.

Good luck and hope it is as smooth as possible! :)
 
Quick Update:

Finance has been approved with a fairly quick turn around of 10 days. I've been advised to stick with a lender who will do residential construction for up to 4 units. Stayed away from costly commercial lending and dont need any pre sales.

Letter has been sent off to Bayswater council from my town planner to confirm, if any, extra hoops ill need to jump through due to the heritage listing. Verbally there doesnt sound like too much but I would prefer to have that in writing.
 
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