Property developer doing the maths in Mackay


Information supplied by Malyshka

By Grant Muddle, Managing Director of Malyshka Pty ltd.

It's another beautiful day in Mackay. The sun's shining above and a gentle sea breeze – the weather, Adani’s investment, port expansion and community infrastructure developments are just some of the reasons why Mackay continues to be a favourite market for Malyshka Development.

I’m standing on a potential development site and confirming if it satisfies some key requirements:

  1. Street Appeal: Tree lined. Clear and level sidewalks. Little traffic. Cars not parked on the street all day? Nice shading trees, etc
  2. Land Shape: A regular rectangle shape is best
  3. Land profile: Flat and level land is the easiest and best to build on
  4. Frontage: The wider the frontage the greater street presence and appeal

But can we make a profit for our investment partners?

I can find out using Malyshka’s new Real Estate Development Feasibility App for the iPad. Following the prompts for input:

  • Location (for automatic stamp duty and mortgage insurance calculations)
  • Margin Scheme
  • GST registered (for GST income tax credits and GST collected on income)
  • Land purchase price and associated cost
  • Consultant Costs/Soft Costs
  • Construction Costs/Hard Costs
  • Selling Costs
  • Contingency amount
  • Finance Costs

I hear the cash register ring …… this site will return 22.43% margin or $402k in profit.

What are you planning to build?

5 Townhouses

Total Income

 $2,265,000.00

Total Purchase Cost

 $415,925.00

Total Consultant Cost

 $20,000.00

Total Construction Costs

 $1,258,000.00

Total Selling Costs

 $5,000.00

Total Contingency Costs

 $31,450.00

Total Borrowing Amount

 $1,188,740.16

GST Collected on Income

 $169,545.45

GST Income tax Credits

 $119,950.00

Margin Before Interest

 $471,259.84

Less Borrowing Interest

 $68,949.29

Profit Margin

 $402,310.56

Total Development Cost

 $1,793,740.16

Return on Developers Equity

61.90%

Margin on Development Cost

22.43%

Cost per Dwelling

 $358,748.03

Output summary from the Real Estate Development Feasibility App

Malyshka’s Real Estate Development Feasibility App saves me a great deal of time when looking at initial financials for a site, meaning that it takes less time to confirm a great development opportunity and means Malyshka can secure it for clients/partners before someone else snaps it.

Astute investors know that in the current low growth environment you have to build your equity upfront by acquiring properties at cost – not by paying retail! To do this you need to be involved in property development and as competition heats up for great sites every little advantage helps and Malyshka’s new Real Estate Development Feasibility App is just one that Malyshka provides to investors.

Grant Muddle is Managing Director of Malyshka Pty ltd, a property development specialist with a strong focus on the booming area of South East Queensland. You can reach Grant directly at 0419 846 799, or by going to www.malyshka.com.au.

Disclaimer: while due care is taken, the viewpoints expressed by sponsors do not necessarily reflect the opinions of Your Investment Property.

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Comments
  • ross says on 14/03/2013 11:52:44 AM

    the Australian version of mathematics is MATHS, please refrain from Americanising us any further.

    This system is helpful in working through a typical set of costs and benefits, however each development has its own special twists. Such twists will need to modify the outcome and ensure the generic version is tailored to the specific site.
    However I do not own a smart phone and therefore do not use apps. Can this system be seen as an Excel spreadsheet? It would be helpful to cost out my Mackay development on Ooralea.

  • JTkach says on 18/03/2013 12:12:53 PM

    Hi Ross,
    Thanks for your comments... Mr Muddle had nothing to do with putting the headline on this story and he most certainly only does "maths". The YIP-per (me) who put the headline on this story apologises for the miscue and will do his best to rid himself of all Yank-isms.
    Cheers,
    Jon Tkach

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