Hi
I am new to subdivisions and need some help. We are looking at a property in Melb which has an existing dwelling in good structural condition just needs approx $25k worth of renos done on it. The house has 3 bedrooms and 1 bathroom.The current owner of the property has submitted plans to the council for plans and permits to add a 2 bedroom plus study, 2 bathroom unit in the back.
The property is 853.56m2
The details are:
Existing Dwelling 109.40m2
Garage 1 39.00m2
Unit 2 127.95m2
Porch 2.50m2
Garage 2 42.22m2
Land covered 321.07m2The owner is looking for $390,000. We believe that after subdivision and addition of the unit plus renovations we could sell both properties for $350,000 each.
We believe that for a quality home (but not expensive) that the cost of the unit would be $10k per m2. This would then be a cost of just under $130,000. We figure with the driveway, reno costs, porch for existing dwelling that this would probably come to $180,000. Can anyone tell me whether this sounds like a legit figure?
Also the plans show stores behind the garages does anyone know if this can be just a $500 shed type storage room?
Also has anyone purchased a house just as the current owner has submitted plans and permits to the council. I guess things I am looking at knowing is who would be responsible for ensuring the sewerage and other utilities are connected or will this depend on the condition of the sale of the house?
What else do I need to think about? What have I missed that is so obvious???
Bec
[juggle]TroynBec
Hi Bec,
If all the owner has done is submit an application to council, they have not really added any value. It may be a very good development opportunity, but don’t pay any premium unless he has an approval. Nothing is certain when it comes to the town planning process.
With regard to your question about utility connections. If the property is sold with permits, then that is all you get. You can use or ignore the permit, it does not require anything of either the current owner or the buyer.
Regards
Alistair PerryIf he has only just submitted plans, it will take about 2 yrs to have them approved ($holding costs) he may not have had full plans drawn up ($) and engineering calculations ($) sub division of land to sell (approx $3500) (bank may not finance new unit until sub division done). Is there council storm water in this area, if not and you are on the low side you will have to have pits and pumps installed to take stormwater back up to the footpath ($10). Your reno costs sound about right (depending on finish or course) Driveway will cost about $10. You wont be able to get a CofO until outside landscaping as shown on plan is finished. I think a cheapie aluminium shed will suffice. Have you thought of new gas or electrics for original property – some new appliances wont work on old lines ie a new instantaneous hws needs bigger gas lines run. Another area to check is leaking spouts. Try to keep reno same style colour as new house. Is there a nice wide ‘gracious’ driveway to new place. Presentation and approach to new house will have a big bearing on resale
Fern
Me again, – about $2000 for water, extra for gas & power – new lines, meter etc. If power not on your side, drilling under road to bring across.
Fern
Originally posted by troynbec:The owner is looking for $390,000.
We believe <snip> we could sell both properties for $350,000 each.
What have I missed that is so obvious???
If you were looking to purchase, and were faced with 3 choices:
– Purchase a 3 bed house on 850m^2 & renovate for a total of $415,000.
or
– Purchase a 2 bed unit on ~400m^2 for $350,000
or
– Purchase a 3 bed house on ~400m^2 for $350,000
Which would you choose?
By going ahead with your plans and assumed prices, you’re betting that buyers will go for the second or third option. I just can’t see why anybody would. If I was a buyer, I might consider option 2 or 3 if they were 40% less than option 1, but not at 16% cheaper. Catch my drift? I think you’re being overly optimistic. Perhaps speak to an independant valuer (no, not a real estate agent) about a realistic resale on the subdivided/developed properties.Cheers, F.[cowboy2]
I am new to subdivisions and need some help.OK – fair enough.
We believeOops – radar is up…there’s that word “believe”
We believe that … Can anyone tell me whether this sounds like a legit figure?What is your belief based on ??
does anyone knowI guessWhat else do I need to think about? What have I missed that is so obvious???Troy,
I agree with foundations sentiments. It appears from your post that you need to do way more research before dipping your toe into the water. You don’t seem to be too sure about anything.
It’s a bit of a chicken and egg thing, you’ll do well with sub-divisions when you have experience, but to get true experience you really need to just jump in.
It’s good that you’ve posted lots of questions, and hopefully you are blessed with very wise and sage responses. I am not experienced at all in the area in which you have chosen so have nothing concrete to add.
Caution, lots and lots of research and make sure those end sales figures are truly achievable.
Good luck Troy.
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