CASE STUDY: Manufactured Growth
Aldinga Drive, Wamberal: Strategy – Cosmetic Renovation and Rear Addition
- Strategy: This type of transformation utilises the majority of the existing building combined
with a minor rear extension as well as the removal of minimal internal walls (see below
images that show what is possible with an existing modest house). - Results: The kitchen has been relocated to create generous open plan living with multiple
living and sleeping zones. There is also plenty of room left in the rear yard for a pool for a
family. - Comparables: There are numerous examples of larger properties of a reasonable standard in
this vicinity that have achieved great prices. - Risk Mitigation: Costs and timeframes are minimised by retaining the majority of the existing
dwelling and in addition, there are no Council overlays or significant site constraints that
would make the project too complex. - Alternative: As another option you could have just bought and held this property and did
nothing and it would have increased in value over the last 12 months.
- Purchase
$860k Purchase Price
$37k Purchase Costs
$250k Renovation (cosmetic and rear addition)
$69k Holding Costs (6% for 6 months)
$1216k Total - Sale
$1600k Sale Price (Comparables in the street & other nearby properties which sold for more
at the time)
– $48k Sales costs
$1552k Total - Profit
$336k or >20% ROI (profit/purchase costs x 100)
It may also be worth considering allowing for a buffer for unforeseen circumstances such as
increased costs of a renovation (allowing an addition 50k).
This would result in a slight reduction in the ROI.
