Hi all
After absorbing so much information from this site, I thought I would contribute something back to the SS community and start yet another WA development thread. Hopefully it provides some info/inspiration to those considering doing something similar, plus I am under no illusion that I have much still to learn of the process ahead of me so am open to feedback/suggestions/constructive criticism.
We had been looking with limited success for a viable duplex/triplex/quad development site that fitted our criteria for location, site costs and construction costs for some time. Having a larger pool of competition from buyers for ?vanilla? deve sites, plus vendors seemingly incorporating any ?profit? already into their sale prices had me investigating what other opportunities were available. We decided to progress with a smaller sized site, building smaller scale apartment/multi dwelling units. After looking for a couple months, crunching a lot of numbers, add in a false start, plus some subtle encouragement, we secured a site in August this year.
Site
Vacant block in West Leederville 6007, 354sqm, RoW access at rear
R60 zoning, plot ratio 0.7 = max 248sqm of apartments
1min walk to local shopping centre (Coles, pharmacy, bakery, booze, etc)
3 min walk to train line
15/20 min walk into CBD
Purchase/Finance
Purchased in August 2014, 90 day settlement period
Residential finance, based on end values. 75% through P&N bank, 25% from PPOR equity & savings.
Proposed build
Three apartments
Two 2x2 apartments of approx 80sqm each, one 3x2 of approx 90sqm
Apartment 1 & 2 being double storey ?townhouse? style apartments, each with own courtyard
Tandem car bays (6 total) located off RoW
Apartment 3 single storey, located above the car bays, with large balcony at rear.
Post construction
Intend to retain all three long term
Potential to let as fully furnished, executive apartments. Will look at this closer in terms of returns/costs/demand when nearer to completion.
Initial napkin estimates
Costs
$700k site
$35k stamp duty and settlement costs
$700k construction costs (everything)
$110k holding costs over 2 years.
$50k contingency
$1.6m total
End values
$625k #1
$625k #2
$675k #3
$1.925m total
Potential gross return ? 20.3%
Progress to date
> Met with accountant to determine appropriate structure for what we intended. (Baggetta and Co)
> Met with finance broker to assess what was viable given our financial situation (Colin Rice, Empower Finance)
> Purchased the site in August.
> Finance obtained for the purchase of block, plus pre-approval given for the estimated construction costs.
> Block settled this week, 90 day settlement from purchase (MDH Legal)
> Recently finalised the initial floorplans/design - currently out for tender. We have engaged a building broker (HBA) to perform the tender process, due to me being unable to devote the necessary time to it with my current ?day job? working arrangements. I know building brokers are treated with a healthy dose of scepticism by some on this forum, I agree that some of the benefits they claim may be over exaggerated/unquantifiable. After a fair bit of investigation, HBA were in my opinion the most ?transparent? of the brokers I approached and what they offer in terms of tendering suited my needs as I currently don?t have the time to approach lots of builders. I?m halfway along the process with them, will update my findings here (good and bad) including posting up the plans once I have signed with whichever builder.
After absorbing so much information from this site, I thought I would contribute something back to the SS community and start yet another WA development thread. Hopefully it provides some info/inspiration to those considering doing something similar, plus I am under no illusion that I have much still to learn of the process ahead of me so am open to feedback/suggestions/constructive criticism.
We had been looking with limited success for a viable duplex/triplex/quad development site that fitted our criteria for location, site costs and construction costs for some time. Having a larger pool of competition from buyers for ?vanilla? deve sites, plus vendors seemingly incorporating any ?profit? already into their sale prices had me investigating what other opportunities were available. We decided to progress with a smaller sized site, building smaller scale apartment/multi dwelling units. After looking for a couple months, crunching a lot of numbers, add in a false start, plus some subtle encouragement, we secured a site in August this year.
Site
Vacant block in West Leederville 6007, 354sqm, RoW access at rear
R60 zoning, plot ratio 0.7 = max 248sqm of apartments
1min walk to local shopping centre (Coles, pharmacy, bakery, booze, etc)
3 min walk to train line
15/20 min walk into CBD
Purchase/Finance
Purchased in August 2014, 90 day settlement period
Residential finance, based on end values. 75% through P&N bank, 25% from PPOR equity & savings.
Proposed build
Three apartments
Two 2x2 apartments of approx 80sqm each, one 3x2 of approx 90sqm
Apartment 1 & 2 being double storey ?townhouse? style apartments, each with own courtyard
Tandem car bays (6 total) located off RoW
Apartment 3 single storey, located above the car bays, with large balcony at rear.
Post construction
Intend to retain all three long term
Potential to let as fully furnished, executive apartments. Will look at this closer in terms of returns/costs/demand when nearer to completion.
Initial napkin estimates
Costs
$700k site
$35k stamp duty and settlement costs
$700k construction costs (everything)
$110k holding costs over 2 years.
$50k contingency
$1.6m total
End values
$625k #1
$625k #2
$675k #3
$1.925m total
Potential gross return ? 20.3%
Progress to date
> Met with accountant to determine appropriate structure for what we intended. (Baggetta and Co)
> Met with finance broker to assess what was viable given our financial situation (Colin Rice, Empower Finance)
> Purchased the site in August.
> Finance obtained for the purchase of block, plus pre-approval given for the estimated construction costs.
> Block settled this week, 90 day settlement from purchase (MDH Legal)
> Recently finalised the initial floorplans/design - currently out for tender. We have engaged a building broker (HBA) to perform the tender process, due to me being unable to devote the necessary time to it with my current ?day job? working arrangements. I know building brokers are treated with a healthy dose of scepticism by some on this forum, I agree that some of the benefits they claim may be over exaggerated/unquantifiable. After a fair bit of investigation, HBA were in my opinion the most ?transparent? of the brokers I approached and what they offer in terms of tendering suited my needs as I currently don?t have the time to approach lots of builders. I?m halfway along the process with them, will update my findings here (good and bad) including posting up the plans once I have signed with whichever builder.