Investing Strategy subdivision

Hi Stargazer,

Factors to examine when considering a Subdivision
• Local town planning regulations
• Land zoning restrictions
• Minimum size of lots
• Access to water and sewerage services
• Setback requirements
• Minimum building envelopes
• Parks and open space
• Easements
• Vehicle access including Council refuse collection
• Storm water management
• Increased noise from new development
• Environmental and heritage issues

As each State and Council have their own rules its impossible to give you exact figure

A good website that contains a site checklist is http://www.propertydivas.com.au, along with articles about subdivision and property development.

Two great books to read are:
“Australian Residential Property Development”
By: Ron FORLEE
Publisher:Wright Books, 2004

“Smarter Property Improvement”
By: Peter CEREXHE
Publisher:Allen & Unwin, 2004

Good luck!!

Amanda
“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”

SG,

Some other things that you should consider are:

* Duration of the subdivision process, these will vary greatly from council to council. For example, I’ve just had one be approved in 3 months, but another council I looked in the waiting time was 12 months. So I could potentially get 4 subdivisions one after the other through the first council before the second got through. This can do wonders for your development budget and cashflow, remember that you’re going to have to cover the costs of holding the property while you wait for the plans to be approved.

* Generally the plans will be drawn by an architect/draftsman, however there will also be surveyors, civil engineers, etc who may/will get involved. The costing for this process can vary depending on how problematic or simple the site is, we budgeted $15,000 to get plans and permits drawn and a building certificate issued for a sub-division with a 3 br unit on the back.

* Watch out for the hidden costs, generally you’ll get stuck with costs for subdividing a block by the council, the water provider, etc for their numerous bits and pieces, you’ll probably find you shell out a few grand to line the pockets of these organisations.

* Get to know an architect, use architects/draftsmen who are working in the area, before you buy anything, talk to them about what you want to do and have them inspect your site BEFORE YOU BUY. Theres no point you buying a big block of land if its unsuitable to build on, you’ll be left holding it wondering what happened.

* You will pay CGT on the sales of the rear block of land when you sell, however if you’re planning on holding the front property, have a chat to your accountant about how you can roll as much of the profit into the front dwelling such that you can pay less tax. Of course you’ll have to pay this tax when/if you sell the front property, however if you’re planning on holding for a long time, this can be a way of freeing up that cash now.

* Go and see the councils you’re dealing with, I’ve found these people to be most friendly. Basically you need to find out what the council is after, are they they looking for dense housing in the area, if you can meet their requirements, you’ll find you have less headaches with your submissions/approvals.
For example, there are a number of suburbs around melbourne which have been flagged for more dense housing, in addition to your zoning, therefore you can fit more dwellings on the blocks (sometimes down to 250m or less per unit site), whereas others require larger blocks. This can be the difference between the same size block of land being a 3 unit site or a 4 unit site. Something to think about when selling land.

* Neighbours and other developments in the area should be considered, during your approval process, the local residents will be informed about your intention to subdivide your block and, if you go down that path, build an additional dwelling. Even if you follow the letter of the law and do everything correctly, the local residents will still be in their rights to contest your submission and hold up your submission. If you’ve done everything right, you will probably get through without issue, however you may end up in VCAT (tribunal) to argue your case which just costs you more time and consequently money.

* Crunch your numbers before you go ahead and buy/divide a block, depending on where you buy, the activity may or may not be profitable once you factor in purchasing costs, stamp duty, architect/planning fees, interest, etc etc.

Hope this helps.

D.