The opportunity has presented for you to develop a parcel of land with 25 residential units. Selling expenses include legal expenses on sale of $1,200 per unit, marketing of $7,000 per unit and agent’s commissions of 2.5%.

The project is expected to produce 10 one bedroom units and 15 two bedroom units. Prices for the individual units are expected to be $420,000 for one bedroom unit and $500,000 for two bedroom unit.

Total estimated development costs include:

Professional fees: 8% of the construction cost

Headworks contributions: $30,000 per unit

Construction costs: $130,000 per one bedroom unit and $180,000 per two bedroom unit

Holding costs: $25,000 per annum

The period of development is 3 years

Acquisition costs: 6% of the land purchase price

Mortgage finance: 11%

Anticipated Profit and Risk Margin based on total outlay net of selling expenses is 20%

All costs and expenses have been shown as GST exclusive and all being inclusive of contingency.

How much you can afford to pay for the land?