Understanding Time frames and Costs
Unit development has been a way for many people to unlock the full potential out of their existing block of land. It also allows the budding entrepreneur to make a profit or set up a number of rental properties for themselves without having to pay retail "profit-filled" prices. Of the all the developments I have helped people with, there is a common rhetoric question I hear, “if I’d known how long this was going to take, I would have come and seen you earlier”. The biggest misconception with developing and constructing a triplex development, is real time frames and hidden costs.
Understanding time Frames (Time is a Cost!)
The administration and paperwork time frames are often longer than the physical time frame to build the units (*single storey plans). As a rule of thumb, from when a client makes first contact with us, and come to an agreement to design up their development, this can take 1 to 4 months to complete. You have not agreed to anything yet, just had plans drawn up. The next step is to either submit straight to the council for planning approval or tender and select the lucky builder and have them facilitate planning drawings. Councils/Shires generally have 60 days to reply and 90 days to make a decision. That’s a 3 months wait… At this stage, there is no point in having a builder produce Building contracts until planning approval is signed off and stamped in the affirmative due to there most likely being some small or large council changes required. Once approved most builders will need at least 2 to 6 weeks to finalise working drawings and contracts. You’ll then need a prestart colour selection meeting. Typically most people make a number of changes at prestart so plans are redrawn and scheduled for a start. As a rule of thumb, from when you receive your contracts, allow 2 months for a physical construction start*.
There-for, when you first pick up the phone to speak to us through to a physical construction start, you are looking around 8 months. If you’ve heard different, it’s probably a good salesperson, not a Building Broker running the show. Single storey physical construction we recommend allowing 6 months while Double Storey (with an upper concrete slab) we recommend allowing 11 to 13 months for physical construction. *Please note time frames will differ pending the builder and construction techniques which we would always have to look at your individual requirements first.
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Anyone can make money in property development in a rising and appreciating market. If you follow the basics you can do well. But one of the biggest single cashflow expenses when developing is bank interest. Bank interest must be paid at the end of each month regardless of how good or bad things are going (it doesn’t care). Our point here is by underrating realistic time frames, costs you money.
The best property developers I have met have two traits. One is budgeting for realistic timeframes and costs. The other is lateral thinking to save money. An example of a unit development with lateral thinking- You call the council and they confirm you can only build a duplex development. You do more research (by speaking to us) and find out that you can do a triplex development if you follow a different Government subdivision channel. You've just made potentially an extra $100,000 profit from a phone call.
Another example of lateral thinking/development is running things simultaneously. A lot of builders and developers wait till the first thing is done before they start the second item. This is often done by volume-based organisations as they simply can’t manage two things at once (no disrespect). As an example, if a unit development enters a large builders organisation it is a step by step process. An opposite/good example of this, is we have builders who will start physical construction before you finalise your plans as they have checked there is no changes to the slab size or wet areas, hence site costs and slab down won’t be affected. This one move could save you 12 weeks in interest payments.
Triplex Costs
Triplex costs are made up of three parts-
Site costs
Turnkey Costs
House Price
Site Costs
Site Costs Consist of -
Survey and Set Outs
Earthworks
Fence removal
Access track
Retaining Walls
Shire fees
Headworks Fees
Council Bonds
Distribution Boards
Over Head power Conversion
Power run
Sewer run
Piling
Water Run
Gas run
Stormwater (soakwells)
Paving
New Boundary fences
Gates
Letter Boxes
Concrete Pumps
Site Clean
The average site cost for a Sandy site will vary from $80,000 to $160,000. Ares such as Beckingham or Gosnells can be as high as $240,000+ due to additional commercial grade Soakwells and excessive sand pad / earthworks requirements* We have had a duplex in Beckingham with a $65,000 sand pad!
Turnkey Costs
Turnkey Costs consist of -
Carpets
Tiling to family areas
Internal wall painting
Window treatments/Blinds
Internal lighting
Air conditioning
Landscaping
Depending on the quality of finishing the customer’s requirements the average cost to finish a unit will vary from $20,000 to $35,000 each.
House Costs
House costs are the cost for the unit to be built by the builder.
90% of the triplex designs in Perth are drawn on 720 square meters to 1000 square meter blocks. Therefore, the price will not vary by much. The cheapest triplex unit designs will cost around $185,000 each or could cost as much as $350,000 each depending on the customer's expectation of quality finish such as high ceilings and room sizes. The average unit development cost we would be recommending at this early stage for your budget would be $185,000 to $300,000 each.
Working on the averages within the Perth area these are the recommended costs we would allow for your triplex.
Site costs $130,000
Turnkey costs $90,000
Construction Costs $550,000 (3 Single storey units)
Total $770,000 or “turnkey” price of $256,000 each.
You could easily go $30,000 down or up, pending your final requirements or the specification the builder offers!
So how much does it cost to build 3 units?
We see triplex pricing vary from as little as $730,000 because the client chooses to organise their own demolition and other external site costs, to as much as $900,000 where the site is not flat and needs additional work done.. Our strongest recommendation is to budget between $750K to $850K and you should be covered for the general information we are sharing.
If you are in doubt, give us a call and we will work out your costs over the phone.
Most of our Developer clinets use our smaller builders and save thousands (don't get caught in the "Big Builder" marketing hype) we can guide you to the right builder for your project with guarenteed savings!
