Renovating the front block and building on the back block.

Hi everyone

I am quite new to this and hoping some of you guys will be nice enough to give me some insight and pointers.

There’s potential duplex that I am currently looking at.

It was first listed 3 weeks ago at $450,000 and is now listed at $399,000 - $439,000.

The front structure is an old (think 1970s) 2 x 1 brick house with access to develop behind.

It’s close to amenities, shopping centers, etc (about 5km), about 10km from Perth City and situated right off a busy road service road.

Land size is about 530 sqm and is currently zoned at R20/R40.

I have called the local council and they said that if I wanted to build on the block behind. The back house needs to be build so that the cars can come out on forward gear since it’s on a busy service road and the front house needs to be altered as well to allow for this.

Also, the agent did mention the property is part of a deceased estate but she doesn’t think the owner passed away in it.

I have done some quick numbers and this is what I came up with. We’re only going to loan half the costs so our holdings costs are quite low.

Feasibility Study
Front 400,000
Back 400,000

Property Cost 410,000
Stamp duty 14,750
Surveyors Cost 15,000
Building Expenses 180,000
Reno Expenses 30,000
Holding Costs 22,500
Selling Costs 20,000

Profit 107,750

I was wondering if my figures are wrong and if I needed to account for any other expenses and if I used the right sale prices (I’ve based it on previous sales on that street).

What’s the next step if I was to build on the block behind?

Thank you in advance. :)