Simulate a subdivision for this please? Education

[Property Meister]

hey all,

Im just throwing ideas into the air, and I would appreciate if someone could quickly tell me the potential to subdivde this. Now this property has already sold but it came in my inbox a few days ago, and I just wanted to simulate it for kicks and for my education. (PLEASE NOTE, that I do not own this property or have anything to do with it)

http://www.domain.com.au/Property/F...ver=Emails&s_cid=HomeAlert:VIC&haprof=1158120

ok, so its a bluechip location,
1400sqm would mean 4-5 units, so that would make it $275k to $220k per land at a sale price of $1.1mill.
build 4-5 average town houses on it, so assumies economies of scale and not going over board, would I get away with $190k per townhouse?

so that'll bring the total to $410-$465k per townhouse,
obviosuly not including demolition fees, GST, stamp duty, holding costs etc. etc.

my understanding is that due to location, anything new costs anywhere of $700k+

so what could HAVE been done with this one??

Please lets keep this to a education thread and not a Frankston/Economics thread

 

[Lynchy]

190k per townhouse seems incredibly cheap? I'd be thinking closer to $300k?

 

[Tanqueray]

I think you are about right. Good profit but hard work

 

[cdd]

The problem with your numbers is you have purely looked at the costs of constructing the dwellings, and not the cost to actually develop the land.

In order to get permission to do the development you'll need to get a planning permit, with costs incurred for the following items:-

• Town planning drawings
• Planning permit application
• Feature survey
• Planning permit lodgement fees

Once the planning permit has been issued, you then need to get construction drawings done for the buildings, and also get the site prepared ready to build on. Some of the costs incurred at this stage include:-

• Construction drawings
• Stormwater/drainage
• Sewerage
• Water
• Power
• Gas
• Earthworks/site cuts
• Civil engineer
• Licensed surveyor (assuming you are subdividing)
• Council infrastructure levies
• Water authority levies

Finally you can then start to build the $190k townhouses. Once they are complete you then have landscaping to do, driveways to pour, fencing etc etc. But even once the site appears to be complete there is still the task of chasing up Council and the relevant authorities to make sure they are happy, to obtain a Statement of Compliance and hence the titles. Naturally there is a bit of work for your solicitor as well.

In summary, there is an awful lot of work (and costs) in development that most people realise. It isn't as simple as 'the land cost me X, the buildings will cost Y, they will sell for Z, and therefore Z - Y - X = profit'