ROOMING HOUSE
Overview
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We assist our clients with a lot of new constructions. Sometimes these constructions happen as a result of other a sub-divided block becoming available or a demolition, other times we are simply engaged to assist with construction on already vacant land. Having extensive construction experience, we act at Project Managers throughout the construction process; from initial concepts, to sourcing the right contractors all the way through to completion.
Common Questions We Will Research and Answer
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What type of property do you want to build on the land
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How does council requirements and building codes effect what can be built on the site
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How do we take in to account the slope, potential views, sunlight and existing infrastructure on the street front when designing the new-built to get the most out of it
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CASE STUDY
We purchased a site in a key inner ring Brisbane Suburb at Christmas 2019. We utilised our local relationships and constructed a Rooming House on the site which was completed by July 2020. This property now not only provides a very large cashflow return, but the land site on which it sits will appreciate exponentially over the years due to its inner-ring location, not to mention the depreciation benefits on the house itself are immense.
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The project has been very successful. The location was carefully selected to hit what could be seen as a ‘sweet spot’ for these types of developments, being close enough to the CBD to command high rental returns and attract high quality tenants, without having to pay so much for the land that it negatively impacts on cashflows. The desirability of the suburb will ensure long term capital growth is realised, therefore delivering what could be considered a very unique property which offers both high cashflow and high capital growth returns.
Upon completion, an immediate equity uplift of over $200,000 was reasilsed and able to be pulled out of the property by re-financing. Meaning we were able to pull out more than our initial deposit in to the property, allowing us to go again. This has created what is effectively a “no money down deal” returning over $50k net per annum and it will experience great capital growth as well.
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Key Summary
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Site purchased for $458,000 in a high-quality inner-ring suburb
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Total development cost (including civils, utilities, stamp duty etc) $984,000
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6 Month construction process
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All 5 units fully leased and occupied just 3 days after completion to high quality tenants on long term leases
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Returning $87,700pa gross
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At a 3% interest rate and an 80% loan it is returning net $58,593 after all other costs
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Instant equity uplift of over $200,000 which was able to be recycled in to the next project
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“My wife and I have been thrilled with the result of working with OTB on our Norman Park project. If we hadn’t of teamed up with them we stood to make virtually no profit out of our project, but after the boys showed us a different strategy we could use, on completion we took an immediate equity uplift and now hold a highly cashflow positive property.”
