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We are in the process of getting a DA for a 13 unit 5 storey apartments in Brisbane and hopefully will have the DA in about 3 weeks. The first 2 people on our team were the town planner and architect. The architect will work out how many units can fit on the block allowing for the GFA and site coverage and what the demand is for the units ie 1, 2 or 3 bedroom. Both the town planner and architect have been invaluable as we have worked our way through and they have provided the contacts for other consultants as required eg surveyor, civil engineers, traffic engineers, landscape architect, acoustic engineers etc. To date the DA has cost approx $100K in various Council and consultants fees. Once the DA is through then we will look at the architect preparing working drawings that we can then get builders to provide quotes. At the same time we will need a solicitor to prepare body corporate information to enable us to start getting presales before we approach the bank for construction finance.
The DA takes time and money and that is why a lot of professional developers just buy and develop sites that have the DA already in place. Having said that, for the person with patience and money to complete the DA process, there is money to be made selling the DA site rather than proceeding with the construction.
I hope this has helped.
Congratulations on the sale. I think with REA there are 2 kinds – the ones that you would want to sell your property and the ones that you would want to buy property through and generally they are not the same person.
I was sent this same article by another investor I know in WA (luckily he is not into rent to buyand nor am I) and I think that ultimately it wil have implications across Australia.
I think my broker also mentioned difficulty in financing storage sheds even though the cashflow is good.
Don't some States require the owner builder to have done some TAFE course before being given an owner builders number? Also I think that there are additional requirements if the property were to be sold within a period of time. I understand that Bunnings now have 'granny flats' that you can purchase to build yourself or can use their registered builders to assemble. Some of these homes are being used in mining areas in WA.
I don't think an ATO ruling is required but I would refer these questions to your accountant. The amount that would be depreciated would be the total cost – door plus installation. A good property accountant who owns IP themselves apy for themselves when questions like this arise.
I'd agree with Catalyst that it should be a 50/50 split particularly if you want to possibly do the same thing again with these same friends and family.
I would get agreement on what each party is responsible for, cover all the possible what ifs that both parties can think of even if unlikely eg what happens if one party dies or divorces, what happens if the property can't be rented or sold, what time frame is all this to happen in and then take it to a solicitor and get the agreement done legally.
"My job is to find potential developments then to do a feasibility, if the development is profitable I get the help from my business partner, who has the money and experience (hasn't missed a DA in 10 years), and we split the profits at the end of the process." I think this sounds very much like Mark Rolton is your 'business partner' and you would then be placing an option on the properties.
Generally, I agree with most things that have been said here. I looked at storage sheds for positive passive cashflow but over the course of a few months found that the storage complexes that came on the market sold fairly quickly. My finance broker had also warned of some difficulties with obtaining finance as most banks don't like them. Depending on your circumstances, I think they are a good way to diversify a portfolio.
Brian
The standard REIQ commission is 5% on the first $18K and then 2.5% on the balance of the sale price. There may also be a release mortgage fee and there will be adjustments for Council rates and water rates that are worked out by the solicitors. Your solicitor will possibly charge a title search fee and possibly a agent fee if an out of town solicitor is used.
Whether a property should be vacant at the time of selling will depend on your financial position but if it is vacant then I would suggest that the property be staged. If tenanted then you may have to negotiate with the tenant so that vacant possession may provided on settlement.
I would suggest that your property manager or that real estate agency may not be the best agency to sell your property. As with anything, you will need to do some research – see who is most active in the area and making the sales, particularly close to the listing price. Avoid selling by auction in Queensland as it is not as accepted as in the southern states and a lot of agents will push it to get the marketing costs covered and an exclusive agency for possible 90 days.
Brian
