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No problem swapping to gas/gas the feed will already be there. You'll need a plumber in any case.
I'm sure there are any number of builders or designers that can help you (hopefully someone from this site will see your post) to document and arrange the work. You could try a local kitchen/bathroom specialist.
Perhaps your parents could borrow the money, secured against their own assets, and give you that money for a deposit? In this way they are only "exposed" to your position to the extent of that loan rather than guaranteeing the whole loan.
Good advice as ever from JacM. This is a big undertaking you are talking about and the tax implications alone can sink this type of proposal before it starts. Perhaps try to write down your intentions (what you want to do and why) and then consider how this can be achieved and what structure is best. A larger development like this might, for example, be carried out using a company structure established specifically for this development alone.
No worries, I hope it works out well.
I can give you details for a surveyor we use if you like, just PM me.
It sounds like you may also need to talk with someone about ensuring you have understood the process and have made arrangements for the issues to be dealt with. Generally the subdivision and building works are dealt with simultaneously and a contemporaneous issue of subdivision and building certification will result. If this is an issue for financing (that is to say the financier needs to see separate titles before financing) then the contract to transfer land can usually cover off on the securities.
Good luck with the project.I don't think I answered your questions well enough in the last post, so I'm having another go!
Yes, a land surveyor can prepare the proposed plan of subdivision and help you out with the necessary compliance issues.
The proposed plan of subdivision, along with your TPP application and approval, should be enough for a valuer to provide a valuation for the soon to be subdivided land.
There are different rules from state to state however assume the following:
The planning permit should allow you the "right" to subdivide the property into new titles. Your town planner should be able to guide you through this process fairly simply.
The proposed plan of subdivision setting out the agreed property boundaries will need to be certified by the service providers and lodged with the relevant titles office. You can settle on the property and formally take title only when the new title has been issued. There may also be a need to build the cross over and run services as required to make the property usable, but I should think these things have been long ago addressed within the contract between you and the co-owner.
That's an interesting conundrum!
The most obvious way is to strata title the two "dwellings" so they are each on separate titles. The costs for strata titling are not expensive (say $10,000) but there are other costs for compliance that can add up to a healthy bill – things like fire separation and noise attenuation to name just two. There are other issues like parking, services and the like to consider as well. The end value of the newly titled dwellings will determine if this is worthwhile financially.
In terms of the family ramifications, it may be best for the daughter to arrange a sworn valuation "as is" in the first instance, come to an agreement with her sister at that point and based on that valuation, then strata title (subdivide) and use the proceeds of sale from one of the newly titled dwellings to pay out the mortgage and settle with her sister as per the agreement. Alternatively if the sisters are willing to share in the expenses and legwork involved they might also share in the upside of the arrangement.
What you are proposing is achievable, and probably desirable! As Jen1 points out, your intentions need to be clear and accommodated by the contract you put together and partitioning may be the answer. Generally if your consortium were to buy together you would do so as tenants in common. This would suggest that a single facility secured by the property and garranteed by each of you would be used as the financier needs access to the security. If you each had different loans only one lender can have first mortgage.
There may also be an additional benefit in allocating and securing on title the "air rights" over the apartments for future development. My advice would be to consider the structure (according to your goals and intentions) and find a property to suit those intentions – you can always find a deal to suit the structure.
When rendering over foam the renderers often apply a mesh over the whole surface prior to rendering. This acts to unify the whole surface and guard against cracking, and maybe worth considering in this type of application.
One advantage of a subdivision is the additional value extracted from the land (rather than the dwellings) simply by subdividing. In real terms, and especially in banking terms, the land is the appreciating asset and the building is the depreciating asset. This is also the case in accounting terms. If you have one allotment and make it into two or three then you have considerably improved the value of the land, to the extent that they would then be considered as separate securities.If there is a solid buy and hold strategy this may not be important, but if gearing is a part of the broader strategy then having separate and independent securities may be beneficial. This could also be considered as a part of a buy/develop/sell/hold strategy that uses some sales income to improve the LVRs on assets retained.
In some ways, the question explored here comes down to buying for now, or buying for later. Although there may not be a need or desire to become a "developer" right now, the land itself holds this promise. Urban sprawl will continue, but for the foreseeable future the development potential of new estates is pre-considered, whereas older areas closer to town are being renewed and the density of these areas reconsidered.
In thinking about what to buy and where there are many considerations, but if profitability is important within those considerations then the ability for the land you are purchasing to yield further dwellings should be paramount. If you think you may wish to develop your land later, either for investment or immediate profit, the potential of the land to support this intended use is important.
With family types changing I believe there will also be a change in ownership models whereby a property may be owned "across generations" allowing for parents to shift (landed) wealth to their children without giving up their home. For example, a parent might choose to gift part of their land to their children to allow them to stay in an area they might not otherwise be able to afford.
This is generally referred to as third party security and is not uncommon for aggregated loan positions. The biggest issue is that you end up with a pile of guarantees you can't see over! For the financier it's always the same issues: security (and their unimpeded access to it), your ability to service the debt, and a risk free LVR. Oh, and they like to know what you're really doing with their money.
Sounds like you might need an equity partner of some sort. There are private investors who will lend under these circumstances (like mezzanine funders in the good old days!) but want a good return and security through a caveatable interest or second mortgage.
Your neighbour may even be interested in a JV of some sort which would allow you to share the risks and profits.
I have rarely purchased a property with more than a five percent deposit on the day. Simply ask the agent if every-one's happy with that. In the end it really makes little difference to the vendor unless they are looking for a S27.
Hi Aureus,
It's a big commitment but what you are proposing is not unreasonable. You need a strategy and a plan (although it seems you are pretty close) before you can answer the questions in detail, however, here is some food for thought:
- An investor who is looking to develop for the first time shouldn't take too much risk, so a margin of 20% is a sound goal.
- A professional investor/developer will be looking at a 30%+ margin.
- Both of these should be considered in the context of the cash/cash return. If you tip in 30% cash/equity, and a financier (let's say the bank) tips in 70%, then your margin of 20% equals a CC return of 67%.
In my opinion the costs to subdivide will exceed $6,000, and the build costs will be in the $1,200 – $1,500/m2 range.
Good luck with the project.
Historical retail average is around 7.5%, which is also where the Fed has stated they'd like it. Some suggest that anything below the historical average is worth fixing. In my opinion it's not that simple.
mpave1 wrote:hi well that im thinking maybe 4 or 5 town two storey town houses ,after i pull down exsisting house ,down the street there are twenty two, two storey town houses on one block. im in the middle of finding a surveyor to give me an idea of my choices or do i get some one else builder ect the councel says use a surveyor
the house we are in is the one im talking about we have a mortgage on it with some equity if i dont pull it down can i build more than one unit on it and not subdevide it ,all on one title like building in my back yard confusing i know sorry
cheers mawsHi Maws,
You might be well served by seeking some preliminary advice from an architect or designer with planning experience. Understanding your options is the key to understanding how you might benefit from these options. There may be value in the properties that you are not aware of. Alternatively there may be options that you need to put aside for planning or zoning reasons. Generally a surveyor would be engaged to certify the designs later on. Having said that, they are usually able to provide good advice as they've seen plenty of examples.
