All Topics / Help Needed! / house development question

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  • Profile photo of canrrytancanrrytan
    Participant
    @canrrytan
    Join Date: 2011
    Post Count: 4

    Hi complicated investors

    I need your advice. I lived in a house with 2b zone in sydney (value @ $620k). I am thinking about buying the house next door (2b zone) ( @ $520K). In total the land size is approx, 1300 sqm.

    What is the best strategy to get the best value once I ve got 2 lands?

    How much can these lands be sold? Can I get any instant profit out from the selling?

    Many thanks in advance.
      

    Profile photo of Marty McDonaldMarty McDonald
    Participant
    @marty-mcdonald
    Join Date: 2010
    Post Count: 64

    Hi,

    You need to find out what sort of development would be allowed on the site. As a general rule of thumb for a site to stack up divide the current value by 3 and times it by 10. So say site is worth $1,000,000 now it would have to be worth say $3,333,333 as end stock. If council would allow say 5 townhouses on the site you need to do due dillegence on local stock to see whether you could get $666,666 each. Very rough guide but if it looks like it would work then you could.

    1) market it as a development site without da

    2) get da approval and market as site with da

    3) get da approval and build it

    cheers

    Marty McDonald | Mortgage Experts
    http://mortgageexpertsonline.com.au/
    Phone Me

    Profile photo of canrrytancanrrytan
    Participant
    @canrrytan
    Join Date: 2011
    Post Count: 4

    Thanks Marty so much.

    My cost for the site (incl. my house and next door) will be around 1m. But the market value for new townhouse now is around 580k

    From your experience, how much can I sell the site for if without a DA. What will be the difference if I obtain a DA? 

    Cheers
    Andrew

    Profile photo of Marty McDonaldMarty McDonald
    Participant
    @marty-mcdonald
    Join Date: 2010
    Post Count: 64

    Not sure but worth more with a da but not a lot more. It’s more of a marketing stratergy if you want to attract developers to have the da, but it will cost you money to get one.

    Maybe talk to a local real estate agent familiar with developments about your plans.

    Marty McDonald | Mortgage Experts
    http://mortgageexpertsonline.com.au/
    Phone Me

    Profile photo of Scott No MatesScott No Mates
    Participant
    @scott-no-mates
    Join Date: 2005
    Post Count: 3,856

    It is no good having a DA for a development which either does not optimise/maximises the use of the site, is not what the market wants (ie 2 beds where 3 or 1 are required), too costly to build etc.

    Profile photo of canrrytancanrrytan
    Participant
    @canrrytan
    Join Date: 2011
    Post Count: 4

    Thanks guys. I spoke to the local town planner, he is optimistic that  the land can build 7-8 houses.
    But I also spoke to the council and found out that there is an environmental draft which proposes to change the zoning of lands in my area. It could be effective soon after the state government signs off.
    It is quite hard to make a call.

    Question, I heard that normally in Sydney, the developers look for 150k per site as acceptable land cost, say in my case, 150 x 8 = 1.2m, that is to say they are likely to accept the price around 1.2m for both lands. I am not sure how reliable this calculation is.

    Look forward to your thoughts.
     

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