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Thanks Rick.
Jessica,
Hope the research is coming along.
A few things I would note from my own experience:
Lower land value equates to lower margin. By this I mean that the margin is made by the subdivision of one lot into several, and the building on that land is simply to make the land viable, to give it a purpose.
An estimate of $1,500/m2 for building works, $1,000/m2 for garaging and 10% on top of all for site costs and peripherals is a budget I would be more comfortable with.
A useful, but certainly not foolproof, rule of thumb is for 1:300m2.
Nice work Vonny.
If you can invest the time, and have fun doing it, I agree you can save thousands.
But the "fun" part is what captured my attention with your post.
It's easier to do the work described if a) you enjoy doing it, and b) you're making (or saving) money.A builder can't spend the time and effort in sourcing things without it costing the client.
If you can (and do) then it will save money.
It will also often be desirable for the builder, if the owner takes on some of the "peripheral" responsibilities. All those little things take time and energy as well as money.You might consider using your land (properly secured) as equity in a JV project.
Wow, lots of great stuff….long thread.
Here's perhaps a slightly different angle as an acquaintance put it:Build equity and cash flow into your investments by developing them yourself.
That is to say, develop property as an investor.Start from the end point and work backwards.
If the margin on a development is say 30% (as is common) then this can also be seen as a 30% discount to retail.
If you are buying at a 30% discount the likelihood of positive cash flow increases.Reading through this thread, there's much to consider.
In terms of the planning or development potential I'll make a couple of points you may wish to consider:- There more land you have, generally speaking, the greater scope for subdivision and development. This is especially true if you have a good street frontage.
- There may be an opportunity for your mother to move into the planned development, thereby downsizing whilst staying put.
- If you are only paying the holding costs for one property, but planning the development of two (in some sort of arrangement with your family) your costs are less than they otherwise would be.
Simply, an architect or a drafts-person can prepare and lodge an application for a TPP.
If it is for the benefit of the children then consider making the children the beneficiaries of the trust.
As regards the planning, Ms Ellis has done a great job setting out your options.
One other option to consider is to get a TPP for the subdivision and enshrine the right to subdivide in the future.
Council will almost never refer to precedence in giving advice. In fact, we often get feedback from council that they cannot support a proposal because it will generate a precedent. So, to answer your question, yes the council (municipal planners) will give advice, but no, it will not necessarily match your intentions.
It's my personal opinion that it is best to collaborate with municipal planners and have a project evolve. This is less confronting for council than just having a big stack of documents dumped on them and the expectation of a fight.
Again I find myself agreeing with Breece! Bad precedents do not make good planning.
The location would need to enjoy great amenity (close to transport, shops and public open space) and private open space and car parking will generally need to be accommodated.
However, to your questions:
If you intend to sell "with plans and permits" for four new dwellings, it may be best to do so with the existing house retained. This will allow the developer some income if required while pre-selling.
We handle high density small allotments, and it's not for the feint hearted. Feasibilities need to be robust enough to soak up some disappointment at the planning table. So if you go in, my advice is to go in with plenty of margin.
Good luck with the project.
Learn as much as you can about money and risk.
In my opinion property development has precious little to do with carpentry and building. I would recommend some accounting and legal studies to understand the basics.
Most of the developers I work with know nothing about building, and don't feel they need to.
It may seem a little primative, but the best looking deals I see are explained quickly and clearly with pen and paper.
Hi Marcus,
Consider contacting a town planner or designer local to (or knowledgeable of) the area. You will find they can either answer your questions or know someone who can.
You don't need a detailed development plan, but you should have a clear idea of your intentions and a neat summary of the research you have done to date.
We handle a number of projects within heritage overlays. Breece is quite right in suggesting that a precinct-wide heritage overlay need not necessarily preclude development of one sort or another. If the overlay is specific to the property that can be far more restrictive, but again not necessarily the end of the road.
Technically speaking an overlay can be altered or removed, but in practical terms in is not possible. Your best opportunities then rely on working with the municipal planners to agree to a concept that will get the result you want whilst maintaining the heritage values the overlay is designed to protect. It's not always possible, and the degree to which you may need to compromise may be too much, but it may also be worth the effort.
What about a more radical re-design?
The houses to both the north and south are both duplexes.
The property has a long north boundary.
There is lane-way access to the rear.I would propose dividing the existing dwelling into a duplex with garaging to the lane-way.
The outcome would be two, three bedroom dwellings, each with garaging on separate titles.The property may be within a heritage overlay – that's okay.
It may have a single dwelling covenant – that would be a problem.
Otherwise, the proposal would work well.Whilst it is prudent to approach the municipal planners to get their opinion on possible development opportunities, you must also remember they are not in the business of subdividing and development.
One should not necessarily be deterred by the opinion of the council if the proposal fits within the parameters of the planning provisions and other governing policies. The municipal planner will never advise that a proposal should be made if it is "pushing the envelope" as that advice could later bite them on the arse.
I believe there are 9.29m2 to a square.
Generally it is less expensive to build out than up.No worries Steve.
- Yes, project costs should always encapsulate all costs.
- I'm not here to advertise Steve – I get at least as much information as I give – but, yes, we do that sort of work.
And again, best of luck with the project.
Hi Mav86,
This is a question I am asked a lot. There is no "one size fits all" answer, however, it's almost certain that the bigger it is the more it will cost. So, if you are looking to make a profit it's a good idea to contain costs.
We recently got a permit for a client for a 3br + study dwelling, behind an existing dwelling, that was 99m2. It's small but will be comfortable enough. It uses a few tricks like plenty of natural light; clever storage; minimal corridors; differing ceiling heights.
It's my opinion that the size of the dwelling is not that important.
What is important is how the space looks, feels and works.
I do think that bedroom sizes are important and have found that 3m x 3m (excluding robe) is about as small as a comfortable bedroom can be, and that 3.6m x 3.6m gives the feeling of a big bedroom.
Also, a smaller room with a larger window, will often appear larger than a larger room with a small window!
Hi Steve,
It's a good sized property, and one would think 4-6 dwellings, depending on size, car parking, and proximity to amenities, would be a reasonable outcome.
Before approaching anyone regarding this sort of project I suggest you put your targets in writing. I find, in dealing with clients, that the "triangulation principle" can work well to start that process.
Generally there are three competing priorities for this type of project:
- Cost. Are my financial resources finite?
- Size. Is there a minimum or maximum size from which I will not budge?
- Finish. Is there a minimum finish with which I will be satisfied?
You can add "time" to the mix as well, but this is generally tied in with cost.
Only one of these priorities can sit at the top of the triangle. Establish which it is and the other priorities will fall into line.
For example, if cost is at the top of your triangle, then size and finish will have to fit your budget.
Your research might determine that the end value of your townhouses is $500,000 each, and you have paid say $750,000 for the land. Assuming you want to achieve a margin of 20%, then you project costs (budget) is the bit in between.
5 x $500,000 = $2,500,000.
($800,000) acquisition and costs
($500,000) margin at 20%
$1,200,000 is then you project works budget.$1,200,000 / 5 = $240,000 (per dwelling)
$240,000 / $1,500 (per m2) = 160m2In this way the budget drives the outcome and you would then have a simple instruction for your team:
Design me 5 townhouses, of approximately 160m2 each, that can be constructed (including peripherals) for $1,200,000.
Good luck with the project Steve.
