Figures don't Add up
I'm racking my brain, trying to come up with an attractive price to offer a couple who own 4000 sq m of land on a main road in a fast-growing outer northern suburb of Adelaide.
An existing house on the land is worth around $275K.
The average price of vacant land in the area is $275 per sq m, for lots of around 500 sq m.
Based on this, an RE agent told the couple their land is worth $900K-$1M.
A 3 br house and land package in the area goes for $275-285K.
I want to build a small, gated retirement village on the land, with 5 units that have a community title, not one of those wicked "license to occupy" set-ups.
Trouble is, when I do the sums, it can't work if I offer the owners anywhere near what they are asking.
How can I put it to them that the market value is way lower than what the agent told them?
I want to do this project but obviously I need their co-operation.
Here are my rough figures:
Credits
Sale of 5 units @ $275K ea $1,375,000
Sale of existing house $275,000
Total $1,650,000
Debits
Developer Margin ? 33%
of Project Value $544,500
Construction costs
5 X $1,200 per sq m
X 120 sq m. $720,000
Subdivision of land
? 6 X $30,000 per lot $180,000
Purchase of land $205,500
Total $1,650,000
I've thought about adding more units to the village, but keep running into the stone wall of the $30K per lot subdivision cost.
and the smaller the units, the lower the price.
There must be some way to add value to this land so that everyone is happy.
I'm racking my brain, trying to come up with an attractive price to offer a couple who own 4000 sq m of land on a main road in a fast-growing outer northern suburb of Adelaide.
An existing house on the land is worth around $275K.
The average price of vacant land in the area is $275 per sq m, for lots of around 500 sq m.
Based on this, an RE agent told the couple their land is worth $900K-$1M.
A 3 br house and land package in the area goes for $275-285K.
I want to build a small, gated retirement village on the land, with 5 units that have a community title, not one of those wicked "license to occupy" set-ups.
Trouble is, when I do the sums, it can't work if I offer the owners anywhere near what they are asking.
How can I put it to them that the market value is way lower than what the agent told them?
I want to do this project but obviously I need their co-operation.
Here are my rough figures:
Credits
Sale of 5 units @ $275K ea $1,375,000
Sale of existing house $275,000
Total $1,650,000
Debits
Developer Margin ? 33%
of Project Value $544,500
Construction costs
5 X $1,200 per sq m
X 120 sq m. $720,000
Subdivision of land
? 6 X $30,000 per lot $180,000
Purchase of land $205,500
Total $1,650,000
I've thought about adding more units to the village, but keep running into the stone wall of the $30K per lot subdivision cost.
and the smaller the units, the lower the price.
There must be some way to add value to this land so that everyone is happy.
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