Purchasing an IP with DA approved

[Cherry Pro]

Hello again

I'm looking at purchase an IP on almost a quarter acre block with DA and plans approved for a 3 bedroom unit at the back. There is 4 bedroom house
in the front.

This is in Melbourne and I'm in Sydney - know a few of you have managed
interstate developments.

I have a rough idea of how the costs will pan out :

Cost of current purchase : $220,000
Cost of development (3 bedroom unit) : $130,000 (approx)

After development, these could possibly be valued at

original home : $190,000 (block size cut)
new developmt : $190,000

giving me at least about $30,000 of equity.

Looking for recommendations on builders in Melbourne and on advice on whether it makes sense to take this forward.

Thanks.

 

[Chris.R_WA]

Hello again

I'm looking at purchase an IP on almost a quarter acre block with DA and plans approved for a 3 bedroom unit at the back. There is 4 bedroom house
in the front.

I have a rough idea of how the costs will pan out :

Cost of current purchase : $220,000
Cost of development (3 bedroom unit) : $130,000 (approx)

After development, these could possibly be valued at

original home : $190,000 (block size cut)
new developmt : $190,000

giving me at least about $30,000 of equity.

Thanks.

Hi Cherry,

Without getting into the interstate development part of your query, I would humbly suggest that you might want to firm up your numbers on the new build a bit more. Having an "approx" cost of development that may vary by up to 25% or more (seriously), will not look too good for your final figures.
On an IP that I hold, I looked at the numbers for putting a 3 bed 2 bath unit on the back while retaining the front house.
Build cost for 3x2 unit = $142K (slightly above my 140K "approx")
Site costs for access/retaining/permits/fencing/everything else you could think of...= $49K (waaaay more than my estimate)
Total = 191K.

The finals numbers didn't stack up for the development of this additional unit, but I had purchased it with other things in mind anyway. I wouldn't have wanted the whole viability of the purchase to have hinged on my "approx" numbers.

Don't want to be a wet blanket though...I'm sure you've done all your DD and things will work out well for you.

Regards, Chris

 

[Cherry Pro]

Hi Chris

Thanks for that info - it's only initial stages and I'm only in the preliminary stage of checking out things and knew the insights that this forum would throw up will be invaluable.

I reckon the purchase will be good even I choose not to go down the development way.

Think building prices in WA have skyrocketed since the last boom
(a friend recently built their PPOR in Dianella and they said that it cost
them 40% more than then had originally budgeted), hopefully, things
over the Eastern states haven't gotten that crazy.

Anyway, will do my DD and I like your llittle Charlie Brown quote, tis true !

Cheers.

 

[tobe]

I work with a major builder in Melbourne. I do the finance, not the sales, but the cheapest 'house price' is around the $130k mark. You wll then need to allow for site costs roughly $10k, fencing landscaping driveway etc. Using a volume builder I cant see you getting change out of $150k....

 

[BAZARI]

Hi Tobe,

Not sure what quotes your referring to, but I have family who built some small (16sq) 3-bed homes not too long ago, and each came up at $109,000

Obviously they were basic, but it's possible to get quotes as low as $95,000 for 2 bed units/townhouses.

Rich

 

[aaarghhh]

Cost of current purchase : $220,000
Cost of development (3 bedroom unit) : $130,000 (approx)

Are you gonna keep and hold or sell the lot?
How big is the 3 bed unit gonna be? 80m2? 100m2 150m2?
One storey or two storey?

How much a square metre are you getting charged?

I am doing a similar project in Caboolture, QLD right now. Building a Duplex behind a 3 bedder. At the end of last month I got approval from the council to start the Build phase.

 

[Giulio Taranto]

if your planing to sell the lot you need to factor in the selling costs and holding fees. Remember that the council process is normally a long drawn out one.