First Unit Development

Viewing 8 posts - 1 through 8 (of 8 total)

kris07
Participant
@kris07
Join Date: 2007
Post Count: 101
January 26, 2012 - 1:14 pm
Hello everyone,
I am looking at undertaking my first unit development.
I have met with the council at the property for preliminary discussions around what I am trying to achieve and whether the general concept will be permissible. Council have advised that the development should not be an issue(despite the property being heritage listed) , as long as it complies with the standard building requirements.
I am looking to build 2 units/townhouses behind an existing dwelling.
As this is new territory for me, I would love to hear from investors who have gone down this path to share there stories and point out things I should be aware of/common pitfalls, things you may do differently next time.
I intend to engage a builder who will ultimately PM the development. If you know of any quality builders in Ballarat that would also be great.
Many thanks.
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
January 26, 2012 - 1:27 pm
Kris
I will let those with experience in Vic in undertaking such a project comment on the possible pitfalls however i would advice
that you be very wary with the choice of lender as many lenders will not allow 3 units on a single title.
Given that you probably cant Strata Title the land until the project has been completed you want to make sure the funding is in place.
Still a few lenders who will do such a project on a residential basis but the terms and conditions do vary considerably.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
wobblysquare
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@wobblysquare
Join Date: 2010
Post Count: 95
January 27, 2012 - 12:41 pm
Richard,
I have a property (In Gladstone) that i could sub-divide and build on the back. But would need to borrow to do so. Could you give us an outline of the (rough) difference between a construction loan vs normal residential loan…(criteria / int rate difference etc.)
– Bad time to revalue, but i may be able to use existing equity to fund a large portion of the build….servicability wont be an issue.
Just trying to get a feel for options
kris07
Participant
@kris07
Join Date: 2007
Post Count: 101
January 27, 2012 - 11:24 pm
Hi Richard,
Thanks for getting back to me.
Why can’t the land be strata titled before the completion of the project? Vic regulation?
Stacey Surveying
Participant
@stacey-surveying
Join Date: 2011
Post Count: 138
January 28, 2012 - 12:07 am
Hi Kris,
Strata subdivisions in Vic are completed and finalized upon completion of the project – or at least when there’s some brickwork up. The surveyor uses the structures for the subdivision.
On the plan of subdivision we show the building extents/footprint rather than the typical bearing-distance boundaries for torrens subdivisions. The reason we do it this way is that we can’t be 100% certain that the builder will put the structure within a few mm of the plans so it’s much safer to do it afterwards. There will be drafts of subdivision before building, but as I said it’s completed when there’s some buildings up.
Hope this answers your queries. I’ve put a flowchart up for Vic subdivisions both on my website and in the value adding section for free download which would be useful for your project.
Cheers
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
January 28, 2012 - 12:36 am
Hi Wobbly
On a small development such as that you will find a few lenders open to the idea but what residential lenders do not like is multi properties on the 1 single title.
Simple reason being that if you dont complete the property and they take possession and they get left with the project re-sale is a lot harder given the number of potential buyers.
Some lenders wont allow anything more than 1 property on 1 Title whilst others will go upto a maximum of 4.
Dont get me wrong over and above this is doable however is normallly classified as a development deal where the lvr's are a lot lower and the application, ongoing fees and interest rate applied is higher.
There are a couple of little tricks to get a deal over the line on a resi basis.
Would need a little more info to provide you with a couple of options.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Mick C
Participant
@shape
Join Date: 2010
Post Count: 1,099
January 28, 2012 - 3:05 am
wobblysquare wrote:
difference between a construction loan vs normal residential loan…(criteria / int rate difference etc.)
If you want to get down to the finer details of criteria and rates etc…why not shoot Richard an email and he should be able to direct you + provide a more accurate and detail answer.
Regards
Michael
Mick C | Shape Home Loans
http://www.shapehomeloans.com.au/
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christianb
Participant
@christianb
Join Date: 2009
Post Count: 386
January 31, 2012 - 12:31 am
Kris07,
All good advice above, but perhaps I can clear up a couple of issues.
Funding for developments of more than two dwellings is tough since the GFC. Much easier to develop two dwellings.
In your case – and as you alluded to – it may be prudent to subdivide the land first. Once this is done you have two titles and the existing property can be excised from the larger allotment and set aside for financing purposes.
As Ashley pointed out, this is generally done when construction is well progressed. However, this can be overcome by subdividing the land firstly into two lots, and then developing the second lot as two dwellings. When the two new dwellings are under-way the subdivision of those two properties can commence. Thus, you will end up with three titles.
This should all be done under an overarching planning application so that the municipal planners are aware of, and supportive of, the proposed development.