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This is process (summarised) that we use:
- Assessment. Find out if what you are proposing can done, and if it is worthwhile.
- Strategy. Understand how your proposal will work.
- Concept. Using information from S1 and S2, generate visual concepts for town planning.
- Application. Having sought municipal feedback, make formal application based on the concepts.
- Detail. Having been granted town planning permission, generate working documentation.
- Build. Turn the documentation into bricks and mortar. complete the subdivision work concurrently.
- Realise. Sell, lease or both. This should go all the way back to Step 1!
Each of these steps contain there own complexities, but it's important to get your thinking in the right order.
Good luck with the project.
Hi KDC,
The sort of deal you are proposing will, in my opinion, become more common as wealth "shifts" between generations. The difficulty seems to be around securing each party adequately and ensuring it all stays friendly. I am coming across these scenarios more commonly in my work.
The first thing you need is some confidence that what you are proposing is legal, sensible and practical. You may need to get some advice from a planner or designer who has done similar in the area. If it can be done, then you need to look at how it can be done.
1 1/4 acres is a large allotment by most standards, and some sort of subdivision may be possible. When you say they will "sell….the house for $750,000" I will assume you are referring to the house and the land.
A proposal may work like this:
You agree to purchase the property for $750,000
Settlement is to occur in say 12 months (or otherwise by agreement)
You – at your own cost – seek and are granted a DA to subdivide into three parts:
a) Unit 1 (part existing dwelling)
b) Unit 2 (part existing dwelling)
c) Lot 3 land excised
The land approved for subdivision could then be excised and sold, with the proceeds to the vendor
You would then have a dwelling, approved for subdivision into two dwellings, and will have paid the vendor a significant part of the contract amount, thus allowing for a loan at an acceptable LVR.There are of course many variables in this sort of arrangement that others on the forum will be able to cover better than I can.
Good luck with your plan
Lhaldoupis,
It can be done, and I know of "air space" that has been recently marketed for sale.
The principle, in it's simplest form, works like this:
Let's say you purchase a small shop on 200m2 of land (5m x 20m)
You seek and are granted town planning approval (DA or TPP) to build two dwellings above the shop, over two levels.
You could, at this point, subdivide in strata (as Scott suggested) and agree to sell the strata space to be developed as permitted.In practical terms it is difficult as the existing shop would almost certainly need to be vacated while the development was completed, however, it's still possible.
This sale then becomes a little more like an agreement between purchaser and vendor.
More commonly the TPP is granted, the development completed, titles issued and properties sold or leased.
Hi Matt,
I'm not sure if you are aware of the process, but we do a lot of this sort of work and it goes something like this:
- Sort out, in your own mind, what it is you want.
- Make sure what you want to do can be done and does not contradict local or state planning.
- Communicate this in writing. Essentially a project brief. For example, three bedrooms, double garage, home office, north facing garden, or whatever else is important to you.
- Have someone put this into a simple concept drawing.
- Use this concept documentation to explain your proposal to the municipal planners (council).
- Take their feedback, refine your concepts and use these to generate a town planning submission.
- Apply for a town planning permit (TPP) to subdivide and develop the land.
- Assuming you are successful in obtaining your TPP, then generate working drawings for the builder to use.
- While the building is underway, formalise the subdivision.
- When your building is complete, the subdivision should also be complete.
- You now have two dwellings on two allotments.
Good luck with your project.
Hi Matt,
What sort of project are you undertaking?
A few more details might see a better response.Oryx,
It's fundamentally an issue of qualifications. An architect is trained in the history and theory of building design as well as the technical aspects, whereas a building designer might be a drafts-person who is more familiar with the technical rather than theoretical (or philosophical) aspects.
Some would suggest and architect is best for more sophisticated proposals.
The type of project you are undertaking will determine the service you require. Often a designer will be less expensive than an architect. In any case you can get a quote from each and determine where the best value is.
Hi Mishier,
There are plenty of places to look, but a few fundamentals never go "out of fashion".
- Proximity to public transport
- Distance to the CBD
- Proximity to shops, schools and other amenities
And in you case, if you are looking to subdivide later, I would add zoning and overlays.
With all that in mind, I would suggest West Heidelberg, Footscray and Newport offer some value.
From the planning applications we have been handling there seems to be good sized land down Chelsea way.
Best wishes with your search.
Both a good size then. I'd be happy to have a look at each and offer a couple of suggestions if you like. Perhaps you can PM me some details and I'll give you some feedback.
I recall reading an interview with a prominent investor/develop – it may have been Harry Triguboff (maybe not!) – and his take was working on a 3/3 principle: 1/3 for the land, 1/3 for the development costs, and 1/3 (before taxes) for the pocket.
I would think these would be rare and well researched opportunities and perhaps this is why it works.
A simple strategy backed up by rigorous analysis.I read about this in the Age newspaper and it was really sad.
Mr McNichols seemed to have the attitude that the "show doesn't go on for ever, so let's see what we can do to make things a little better" and I admire the way he was having a go.
I understand there is now a push by his family and loved ones to finish the job in his memory, and I wish them all the best in that endeavour. Housing people is important. This has always been the responsibility of the property industry and I should think it always will be. Without people like Mr McNichols doing their bit to bring some civic pride back to run down neighbourhoods the cycle of neglect permeates all levels of those communities.
I'll preface what I'm about to say with the following:
The profitability of any proposed subdivision rests with the value of the land, and the value of the land is most often a reflection of the location of the land.
That said, it may be possible to excise the house and a small amount of land from the rest of the property and sell the land onto someone else to with as they wish. This will require a DA/TPP and a proposed plan of subdivision at the least.
There are no doubt many different sorts of deals that could be set up around this proposal, but in the end it is perhaps best done by the land owner (or their agent) at the land owner's expense.
If time is not the most pressing issue, then an indicative plan of subdivision could be prepared – at a cost of hundreds rather than thousands of dollars – and this indicative plan could then be used to seek appraisals and opinions on the value prior to heading down the path proposed.
Posswillow,
Are there two blocks or one ("one 9m the other about 11m")?
And are you planning to build two townhouses or four?
I love the narrow sites and tough building envelopes!Good luck with the project.
The councils have great mapping tools, for which they pay a fortune!
They have the up to date aerials, with boundaries and topographical images.
So, as Fredo suggests, use this resource wherever you can.Developing a corner block can be easier for all those reasons mentioned above. In essence, a corner block will generally enjoy a dispensation that allows more of the land to be used for building. There is also more street frontage, and that makes retention of on-street parking easier.
In developing a corner block there is generally no need for a body corporate as each property can have its own frontage and address, and no need to share a driveway.
In regard to the side setback issue specifically:
- The primary street frontage may have a set back of say 9 metres – this is quite common.
- The secondary frontage may have a set back of as little as 2 metres – also common.
So, if you were to build two dwellings side by side on a regular allotment, they would each need to be set back 9 metres, whereas if one were to build two dwellings on a corner allotment, one of these could be set back as little as 2 metres. For this reason, corner allotments have long been seen as desirble for subdivision.
Most councils will happily give you an opinion on the potential to subdivide any given parcel of land. This my may not be the best opinion, but a reasonably objective opinion none the less.
The rules that govern the subdivision of property are to be found in part in the planning overlays for the area, and these overlays are often best understood by someone who regularly assesses them, like a surveyor or planner.
Density objectives are also affected by issues of proximity to services and amenities like shops and public transport. Any local precedent is also a useful yardstick, although just because the neighbour has done one thing or another, that's no guarantee that you will be able to do the same.
Have a look at West Heidelberg in Melbourne.
Spotswood seems to be good value.
Also Bendigo or Castlemaine in Central Victoria.Hi Matt, it's a loose question and allows me the opportunity to provide a loose response!
- Demolition is generally somewhere in the vicinity of $10,000 – $15,000 for a house.
- You could look at having the house removed if it is sound and of lightweight construction.
- Building costs of around $1,500/m2 are usual for a site specific dwelling.
- You could also consider using a volume builder if the project is extraordinarily straightforward (say $1,100/m2)
- The town planning process (getting permission) generally takes about 6 months.
- A building contract would typically run for 6-9 months.
- Whilst building don't forget to get titles in order.
So a 3 unit development might take you say 18 months and cost say $600,000 (plus the land and holding costs) assuming modestly sized dwellings (120m2 for 3br) and a reasonable run with the municipal authorities and other stakeholders.
Profit (margin) and yield are different things. The development should firstly make a profit, and then you should determine if the yield makes it a sound ongoing investment or if you should invest in something else.
It's a straightforward job and there will be plenty of drafts-people out there that can help. There are also numerous companies that sell them "off the shelf" and will do the documentation as part of the deal.
Hi Tdavies,
We deal with a number of overseas based clients on a "remote" basis. It's not so difficult with the modern technologies at hand. As I always seem to be saying, planning theory is universal and planning law is local, so as long as everyone is on the same page and communicates adequately things tend to get done as they should.
There's some great information in the thread above, but I'd perhaps encourage you to look closely at a dual occupancy project whereby the existing dwelling is retained and a second dwelling constructed on the land. This is lower risk, it's less capital intensive and our feasibilities (for clients) generally indicate they are more profitable than demolishing and developing – as long as the land is the "right" size and the existing dwelling is well sited and not an absolute dump.
Having successfully completed a "dual occ" you will be well educated in the town planning process and perhaps more confident about turning your hand to more complex development types.
As a footnote I'd also suggest that 3 unit sites are very well sought after and the good ones do tend to command something of a premium. A dual occupancy site may not be suitable for a three unit development so you won't necessarily be competing against other developers.
Best of luck whichever way you go.
