Triplex Development

Matthew helped us secure our first development property within 2 months and his team worked swiftly to commence the development process….. They never pushed us into any decisions we were uncomfortable with and answered our never ending barrage of questions professionally and with enthusiasm.

Trinh & Wei-Mun

1. Client Brief

Encouraged by friends, our clients, a busy professional couple, came to Capital Property Advisory initially looking to attempt their first development project – only problem was they had little knowledge and even less time. Through expert advice, as well as collaboration with their mortgage broker, our acquisitions team was able to source and secure a development site which would allow this couple to educate themselves on the process to the point where they were able to make confident decisions and allow our team to manage the entire process from beginning to end.

Property Purchase Saving $40,500
Estimated Development Costs $1,852,398
Potential Income $2,100,000
Potential Profit Margin $247,602
Margin on Development Cost 13.4%
Internal Rate of Return 16.3%
Project Timeline 16 months

We knew we were in a good position financially and did not want to overextend ourselves but wanted to leverage our fortunate position to ensure financial security in our twilight years.

2. Property Sourced & Negotiation

Our acquisitions team expertly negotiated this original gem of a home from the initial asking price of $739,000 to $769,000 down to an accepted offer of $730,000. Further negotiations produced an additional discount of $1,500 from this price for maintenance work found during the due diligence period, bringing the final purchase price to $728,500.

3. Design and Subdivision

The purchased property had a number of design elements that we were able to use in our favour to ensure our clients’ site was developed to the highest and best use, including utilising benefits from the rear laneway and minimum variations to lot sizes. We worked closely with our designers and surveyors to look at potential outcomes, including developing the site with apartments or developing the site with a mix of apartments and townhouses, before concluding with the preferred outcome of developing with three townhouses. Our intensive development research and investigation process allows Capital Property Advisory to review all potential development options in line with council and planning regulations, appropriate site designs, sub-market supply and demand, and potential feasibility outcomes to ensure the outcome is the best for the client, site and market.

 

4. Development outcome:

Our clients are ecstatic with the designs and project feasibility, which is set to return a very healthy $247,602 over the 16 month project timeline. Based on our relationship with the builder who won the tender and the prominent location of the site, we were able to negotiate to lease one of the completed townhouses back to the builder to be used as a display home. The builders desire to complete an outstanding product for display has them building well above the agreed specification, not just on the one future display home, but on all three!

 

The clients are ecstatic with the progress to date and are well on the way to exceeding their desired property investment portfolio goals.