Developing in Adelaide

Discussion in 'Development' started by D.T., 28th Aug, 2015.

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  1. D.T.

    D.T. Specialist Property Manager Business Member

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    Leased for $275 to someone at the 1st home open :)
     
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  2. Aconis

    Aconis Well-Known Member

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    Great work. Out by $5 from original thoughts. Well done in having the patience and perseverance over the build.
     
  3. D.T.

    D.T. Specialist Property Manager Business Member

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    Handed over the keys to the right side today. Suppose I should get a wriggle on and finish the other side off but I've been too busy with work; a great problem to have.

    I also plan to do a summary / writeup here of what all the actual numbers end up being, how far out from the estimates they ended up being and a list of lessons learnt.
     
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  4. Corey Batt

    Corey Batt Well-Known Member

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    Interesting to see how quickly you gained a tenant - whilst you see others struggle to find anyone for weeks. If I was to bet on the main reason why - it would be the spec and build quality.

    So often you see these little dog boxes being built with no living space and subpar fitouts which defies any reason to even build new. Tight investors saving $5k on specs, only to short change their end values by 20k and rent by 20%.
     
  5. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Absolutely - cutting their nose off to spite their face.
     
  6. bez23

    bez23 Well-Known Member

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    I think it rented out quick because of the rent as well. My 3-1-1 is renting out at 280 in elizabeth north. Munno para west brand new 3-2-2s renting out at 285+.
     
  7. D.T.

    D.T. Specialist Property Manager Business Member

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    Yup, I follow the market closely for both my hobby and my job.

    Smithfield Plains is a little less than those areas. There's a couple others around asking 280-285 but I'm happy to jump to the front of the queue in these circumstances.
     
  8. Jamie_

    Jamie_ Well-Known Member

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    I'm sure DT saves on PM fees too :p
     
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  9. Erica

    Erica Well-Known Member

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    I looking forward to reading your summary :)
     
  10. jim1964

    jim1964 1941

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    Abbreviated to TAPO,s.
     
  11. D.T.

    D.T. Specialist Property Manager Business Member

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    So here's a summary:

    Firstly the numbers as I'm a numbers guy :)

    Costs:
    Block purchase: $100,000
    Stamp Duty: $2,830
    Subdivision: $21,500
    Build contract end up coming in at $140,000 each side: $280,000
    Site clearing , stormwater and concrete driveways / permiter paths: $15,900
    Fencing: $7,500
    Carpets: $3,100
    Tile supply: $3,000
    Tile lay: $4,500
    Airconds and fans supply and install: $3,800
    Landscaping supplies (DIY) - Sand, paving base, pavers, stones, mulch, plants - $1,500
    Curtains $1,000
    Light fittings $200
    Theft / Vandalism in December - hard to put a number on it, probably $2,500 (new laundry tub, new shower heads, new towel rails, stolen tiles, stolen pavers)
    Interest during project: $7,400
    Conveyancing twice (initial purchase and subdivided new titles): $1,100
    Rainwater tanks: $3,600
    Total of all of the above: $456,730
    End value: $520,000 (13.8% return)
    Rent: $550 per week (6.3% yield on costs) + Depreciation (Estimate $9000 per side, NYD)


    Key dates:
    Contract: 11/10/15
    Settled on block: 11/2/15
    Council / DA approval: 15/5/15
    Slab poured: 19/8/15
    Handover: 3/12/15
    Tenants lease began: 3/2/16 (less than 12 since settlement!)

    Final thoughts:
    - Lower return than seasoned developers, but most people forget to add things in like stamp duty and conveyancer costs. Would have amounted to about 15% return if not for the vandalism and theft in item replacement costs plus additional holding cost / time. This could have been partially avoided by using a builder who includes more of the afterwards things as you're left vulnerable in the stage between the handover and tenants.
    - Didn't register for GST beforehand, so therefore couldn't use margin scheme so therefore selling wasn't a viable option. Undecided on whether I would have sold anyway, but having the options is always handy.
    - Finishing building around Christmas time was awful - difficult to find trades who weren't closing up.
    - DIYing landscaping is hard work, but I'm glad I did, the quote i had was about $20,000 which is outrageous.
    - There's about $20,000 left remaining in the loan as a result of that, so I can invoice my own trust to reimburse myself which will be really handy.
    - Luckily I don't have kids as I stayed overnight at the properties over Christmas holidays while doing work. Extremely grateful that my better half came too and led the way on landscaping. There was a stage there I got a little depressed about the vandalism / theft and she helped me through it.
    - Rental demand in the area was good. Undercut the others that are on the market by $5 so I could get tenants quickly.
    - Builder was a pain in the ass and probably won't go with them again. Their build time was quick, but my assigned 'client liaison' seemed to change every 2nd time there was contact. They really didn't care about any of the issues I raised, they're just a 'pump out as many as we can' type builder.
    - Glad I went with a decent product (high ceilings, porticos, internal sqm size, front fences, nice floor coverings) - made value and rent easier. There's lots of little dog boxes on the market at the moment that get penalised for being cheap I think.
    - Not really in a hurry to do this again. A couple of my other properties are development capable but the numbers don't stack up on them yet - happy to rent them out til they do stack up. Would probably prefer to renovate as a means of generating equity.
    - Depending on what comes up, next on the agenda is likely a PPOR as we're living in one of our renovated rentals at the moment. Ideally we'd like a run down character / period home that we can do up to our tastes and generate some equity on.
     
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  12. eskander

    eskander Well-Known Member

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    Great summary @D.T. !
     
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  13. hobo

    hobo Well-Known Member

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    Thanks for the honest, warts-and-all assessment, @D.T. - really helpful and vauable info for people considering doing a similar project. The vandalism/theft was really unfortunate but your end product looks great.

    Best of luck with the next project, whatever it is.
     
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  14. HeavenlyThang

    HeavenlyThang Member

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    Wow!! Thanks for the journey Dave, it was insightful and a real eye opener x
     
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  15. Sackie

    Sackie Well-Known Member

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    Yep one of the things @D.T. definetly opened my eyes to NOT attempt is DIY landscaping. ...I'm just too lazy for that. ..
     
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  16. Erica

    Erica Well-Known Member

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    Hi DT, have you got a copy of the dwelling floor plans on hand to share?- I'd like to see the design that $140k buys, and do you mind sharing the builder name?

    I'm very impressed at how quickly you achieved a subdiv and build- well done. A good overall result!
     
  17. Joshwaaaa

    Joshwaaaa Well-Known Member

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    Pretty much sums up my dealings with them to a t. We didn't make payments twice because they wouldn't even acknowledge the fact they stuffed up (slab poured on the ****, ensuite tiled completely wrong which had to be gutted and started again). Client liasons were fresh out of school drop kicks who didnt even know the first thing about the building process so messages never got passed on to site manager, i actually got the site managers mobile number and sicked the misses on to him after quite a few screw arounds she's better at dealing with idiots, I'm too nice Lol.

    Build was fast though (the only nice thing I will say)
     
  18. D.T.

    D.T. Specialist Property Manager Business Member

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    I'm not in a hurry to do it again, but it's the kind of thing professionals charge a fortune for and now I can see why so it was a good value thing to skip.

    Sounds remarkably familiar.

    Sure , see attached.
     

    Attached Files:

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  19. Sackie

    Sackie Well-Known Member

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    @D.T. the floor plans look very functional.
     
  20. Erica

    Erica Well-Known Member

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    excellent floor plan- and better price per sq m than I achieved through W&M