Small Development in Adelaide

[firstmillion]

My major concern with your budget though is the time you have allowed for construction. Don't get caught short with this part. I don't want to see you having to sell a half finished project.

Make the adjustments and plan for the worst. Anything then above that is a nice unexpected bonus.
Gools.

Hi Gools,

I am working on the following assumptions:

1. Will get the DA and finalise plans before ordering demolition. Total time taken 6 months.
2. The house will be rented until then.
3. Once everything is finalised, will order demolition and builder has quoted 26 weeks build time.
4. I am taking 16 weeks for delays by the builder and selling time. (if we have to sell). We intend to keep both the houses

I have made the changes and attaching the updated sheet.

I am meeting a builder broker / project manager in next couple of days.

A question: Will loss of rent be taken as cost of construction?

 

[Nguyen]

I am in the process of subdividing my block into two and have 2 homes built. Any good drafters and builders in Adelaide that people would recommend.

Thanks.

 

[jordanoz]

Nguyen,
try inspire design (fullarton rd, norwood) - they can do your plans and can also provide quote on your building.

FM,
I am also doing subdivision in Clearview - but this is one is a bit different to what Ive done before. Also doing another development in a nearby suburb - most of my development are in Port Enf Council.

Going back to the subject - i think two build development is still profitable though you really need to do your research and get a good price on the land + favorable terms prior settlement.

Goodluck on your project.

 

[Nguyen]

Thanks Jordanoz.

 

[tkhn02]

Does these one worth consider?
http://www.realestate.com.au/property-house-sa-enfield-106642551
http://www.realestate.com.au/property-house-sa-kilburn-106670357

 

[Gools]

Not to me, you can do a lot better for your money. I would much prefer to get a site that is in a much better location for $30-40k more. You will be able to sell the finished product for a lot more.

You have chosen two busy busy roads used by lots of heavy vehicles and that's only the start of their undesirability.

Gools

 

[pjvdl]

I am in the middle of a 6 townhouse development in Adelaide at the moment (3 x 200m2, double storey and 3 x 150m2 single storey). Final contract prices on the houses ended up being around $1000/m2 for the basic house (regardless of single/double) and around $1300/m2 including all the extras (good quality floor coverings, ducted A/C, landscaping, fences, high quality appliances, paving, stormwater, etc.). Construction is yet to begin, so there are certainly going to be some variations. Time will tell how significant these are, but I have most aspects of the contract locked down (including footings, etc.). Needless to say, I have a reasonable contingency put away.

I agree with the other posters. Demolition should only be around $12-$14k and holding costs can be a killer. My builder is quoting 6 - 10 months (depending on single/double storey), but I am allowing for up to 12 - 14 months. We will see

I am not a financial expert, but one other (potential significant) cost that you may need to consider is GST. If applicable, this will come directly off your bottom line. Again, I am no expert, but I believe that its applicability depends on the financial vehicle through which you are going to develop, so you should speak to your accountant. Assuming you can't use the margin scheme the GST will be 1/11th of the sale price.

 

[RumpledElf]

Random question - Google isn't turning this up easily so I probably have the wrong search criteria, but do any SA project builders have an off-the-shelf duplex design? I don't think distance will be a factor, a lot of major builders seem quite happy to build here, if the ridiculous plethora of new builds here is anything to go by.

If I manage to sell my old house (have an investor coming to look at it soonish) I would seriously consider building a duplex. $45k would get me a block big enough for a duplex (approx 20mx45m block - most blocks here sell for $45-55k as long as they are under about 1000sqm) and I think this would be a lovely next project after our new house is done. So no time soon now, but its a nice idea ... a duplex (even an attached pair of 3x1s, although I'd probably go 4x2 with a single carport each side) would gross around $600-650 a week rent.

How much would one cost to build, anyway? If its around the $200-300k mark that sounds like a nice positively geared venture. Also, is a duplex twice as expensive as a normal house or less than twice? Or worse - more than twice! If its more than twice I'll drop the idea.

 

[jas_dow]

Great Info

Hi Guys,

Great info, I feel motivated after reading it. I am out of the country until October but will then be looking full time for the right place. So I'll be sure to keep you updated and probably ask for more advice down the track.

Jas

 

[Gools]

How much would one cost to build, anyway? If its around the $200-300k mark that sounds like a nice positively geared venture. Also, is a duplex twice as expensive as a normal house or less than twice? Or worse - more than twice! If its more than twice I'll drop the idea.

RE, I had a feeling I had answered this for you in another thread so excuse me if I have already before. What is your motivation to build a duplex in an area where land is so abundant and cheap? There is very little difference in price and it seems such a waste to try and save a tiny bit of money but end up with a product that isn't as valuable when you go to sell it.

From your question above it looks like if a duplex costs the same as two seperate houses then you would consider it. To me that would be heading down the wrong track for your area. What is the market like for duplexes in rural SA? Surely everyone would want to by a seperate dwelling and that would be the same for rentals as well.

Gools

 

[RumpledElf]

Nah, no answer in that other thread (I went fishing for it). And what did that place on Houghton st sell for I'm not looking for resale value, just cashflow. Two new rentals in this town, paid off or near paid off, would be more than enough for us to live off and close enough to self-manage. Duplex = two rentals. That's my only real logic here.

Land may be abundant but rentals are by no means. Its easy enough to buy land and build a monstrous house that will be worth $500k but if you just want somewhere to live, you're screwed.

Land here is about the same price regardless of size for 'normal' size blocks so yes, small saving (the price of one block of land) by putting two houses on one block, but its still a saving. There is a triple block (3 lots, one title) of land just down the road from me at $69k that could be trivially subdivided along the existing lot boundaries (it is too small to divide into more than 3) and have 3 standalone houses built on it, vs a single block at $45k that can have two attached ones on it. If I was going to buy anthing if my old house sells this year, it would be land that can be split or be dual occ/duplex, and then fund the build by selling our current house. Our current house is a small cottage and is the second-cheapest category of house here, so will never be especially high value or high rental.

There's actually a fair few duplexes here, they are all extremely new (< 5yo), very fancy looking, and attract very high rents because they're new. Its an interesting divide between locals who think $300+pw is high, and people new to the town who think it is cheap. Its very expensive for the country so realistically those high rents won't be able to be maintained beyond about 10 years, which is the timeframe for finishing the wind farms. Think 'mining town' but not quite so extreme, there's plenty of other people besides wind farm workers moving here.

If I was made of cash I'd buy the 23,000sqm lot that is for sale and do a massive subdivision lol ... large (700-1000sqm, but not subdivisible) lots in new subdivisions here attract about $60-65k each. But I don't think that counts as a 'small' subdivision, that's one for a seasoned developer with some serious contacts.

I'm thinking out loud, a bit like a cash-challenged wannabe developer here, don't mind me

 

[Gools]

It's an interesting topic, these duplexes. By duplex you're meaning a common wall right? In Adelaide we do everything we can not to have them adjoining (not even the garage walls). It just gives the sense of being disconnected from your neighbours.

You couldn't have a meter gap between them on the small blocks?
I can't see a duplex renting for more than a detached house (comparing same spec and age that is).

Gools

 

[RumpledElf]

The duplexes here are all long, thin, common wall down the middle, all look like late 2000s vintage. Obviously all built by people who know about the 10m minimum for a duplex as none of them are on wider blocks. There are basically no units or townhouses or battlaxe divisions here, council biases heavily towards street frontage and this kind of duplex complies beautifully.

Its the age that gets high rents. Rental stock here is either really old cottages in varying states of disrepair, new transportables, or new duplexes. Or old attached row cottages! Basically the cheaper kind of housing. The more modern it is, the more rent it gets.

The freestanding houses, particularly new brick ones, sell for so much that you'd be insane to sully them with grotty tenants (or at least that's how it appears). They sit empty for sale instead. You'd be mad to buy one as a rental, $300-500k for $300pw vs $150k to build a basic transportable (including land) for $300pw. The old cottages cost as much as transportables - if not more - and get less rent.

ETA - the triple block down the road is probably the best value. 3x14x43m blocks. Just the right width for transportable + garage + gap, x3, all separate titles. The location is 'bad' though. You could rent out the one right on the corner but *noone* would buy it.

 

[RumpledElf]

Oh, should mention the reason all the dual occ on narrow blocks have common walls is just council regulation. Attached houses can be on a 10m wide block, as soon as they are detached you need 15m, and the larger blocks in this town tend to be 18-25m wide. Very very few are big enough to get 2x15m *street frontages*, even corner blocks. Ours was 29m and we divided it into 15 and 14m frontages but the existing house lacks that 1m gap between it and the fence. Basically it means that the only way to get two houses on a 20-29m wide block is with a common wall.

This is a pretty serious point of difference between here and Adelaide that you're probably not used to.

 

[granev]

I have finally compiled the list and approx costing selling price for the development project.

Cheers

Hi All

Thanks for directing me here Firstmillion

Saw an A V Jennings house at Seaford Meadows display that I really liked for $130,000 , might be worth a look.

Question on your workings out - with your profit figure , if you sell them (or one of them) , dont you have to pay GST ?

 

[firstmillion]

Hi All

Thanks for directing me here Firstmillion

Saw an A V Jennings house at Seaford Meadows display that I really liked for $130,000 , might be worth a look.

What does the 130K price include? What the built up area?

 

[granev]

What does the 130K price include? What the built up area?

I will investigate further and let you know , my understanding was pretty much everything you would expect , it had the most expensive front part they do on it also , if you picked a different one it would be cheaper

 

[Gools]

Granev, housing pricing is not as it first appears.

Things to keep in mind. Footings, ceiling heights, heating/cooling etc....
Then the other things you have to budget for like storm water, land scaping, fencing, paving, kerbing.....

You would be looking at atleast $1000sqm for the build and seeing as though the smallest place at Seaford is 156sqm don't get too excited about the $130k figure. That's why they use the word "from". That's more than likely if you don't want a carport/garage and you find a site that doesn't have soil but a nice concrete base already....

Please read up on the many threads with development figures listed on them and tread carefully, there are plenty of traps for new players.

Gools

 

[RumpledElf]

We're building at the moment and got a few prices - once you get past the glossy catalogue and phone up the price skyrockets. Telling them your area/estate they can often give you a fairly accurate price on major extras like footings, although of course they'll still want to do soil tests to confirm, even if they built another house last week on the block next to yours. Just an idle phone call can increase that list price $20-40k.

The house we are building was listed at $85k or so (its weatherboard, and they had cheaper designs than this one), but we're up to about $110k now and we haven't even got to selections. That number is going to go up more again once we add carpet, nicer oven, prettier cornices etc. $10k of our price is for raising the ceiling to 2.7m and having solar HWS. No landscaping/garage included, we're going to add a large carport down one side later, with half for the car and half with a deck off the family room. Bit out of our budget at the moment and our council can cope with no garage on a new build.

We're cheapskates but we do want some reasonably nice stuff on this house. It is a 4x2 and is by no means the most basic spec they had on offer, but weatherboard transportable with the extras is a lot cheaper than brick with extras. The completed version of this house would cost about $300k so this is a massive saving over buying established.

 

[granev]

Granev, housing pricing is not as it first appears.

Things to keep in mind. Footings, ceiling heights, heating/cooling etc....
Then the other things you have to budget for like storm water, land scaping, fencing, paving, kerbing.....

You would be looking at atleast $1000sqm for the build and seeing as though the smallest place at Seaford is 156sqm don't get too excited about the $130k figure. That's why they use the word "from". That's more than likely if you don't want a carport/garage and you find a site that doesn't have soil but a nice concrete base already....

Please read up on the many threads with development figures listed on them and tread carefully, there are plenty of traps for new players.

Gools

Thanks for that Gools

The one I was looking at is the A V Jennings Villa 155 (look it up on their website FM)- 3 bed 2 bath "from" $107,000 , as displayed at Seaford Meadows it is $130,000 (Higher ceilings , more expensive facia etc)

Working off FMs excell spread sheet he allows extra for paving etc , but I would have to check about the other things you mention.

Anyway , I just thought it was a good basic house for the money compared to others I have looked at.

My big question about it (that I am getting mixed answers to) , is if I knock down , subdivide , build 2 , rent them out for 12 months then sell them for say $420,000 each , do I have to pay $42,000 GST on each of them when I sell them ?