1. Client Brief
Our clients came to Capital Property Advisory initially looking undertake their first development project. CPA were engaged to provide buyers agency services initially, whilst also being engaged to provide initial due diligence and feasibility options analysis for the proposed project. The clients saw the benefit in engaging CPA as they wanted to expand their property knowledge and particularly saw benefit in the negotiation and analytical skills that our team brings to the table. The clients’ brief to CPA was to find a sub-divisible property (side by side dwellings or retain and build) in a premium inner city established suburb (5km radius to CBD) in order to undertake their first development. With one of the clients working for a residential building company, we were able to collaborate on discussions regarding proposed end product and construction costs.
2. Property Sourced & Negotiation
Our acquisitions team expertly negotiated this character dwelling for $780,000 which represents great value for the area. Properties like this in Inglewood are in very high demand. Our ability to locate the property and swiftly conduct the necessary due diligence allowed us to secure the opportunity below market value prior to competing buyers driving the price up.
3. Design and Subdivision
The site and location of the dwelling presented some challenges to our surveyor in order to facilitate a rear lot subdivision (access via side street and/or the rear laneway). In addition to this, the position of street trees on the verge of the side street limit the potential crossover locations. The CPA team sought input from both our preferred surveyors as well as our architect and building consultants in order to confirm development of the rear site was viable and represented relatively low risk, despite the red flags that may have scared less sophisticated buyers away.
4. Development outcome
Our clients are delighted with the pending subdivision outcome and project feasibility, which has potential to return a very healthy $183,000 profit over the sub-two year project timeline. Given the client is a builder, there is potential for an even greater profit margin as he will be completing the renovation and construction of the new dwelling himself. As a fallback position, CPA also introduced a potential buyer for the rear vacant lot, which would allow for a circa 12% development margin without taking on the additional risk of building. The clients are ecstatic with the project outcome and the service they have received from our team and they can’t wait to see it take shape!