Good day, everyone
I am doing a feasibility study of a subdivision project at the moment which doesn’t seem good. I really need your suggestion or help. The project is for my PRP therefore I don’t care about the profit as long as it can fit my budget. I will give a bit of brief of what I am doing and then detail the cost of each step throughout the project. If you think the project is not feasible by looking at the brief, please ignore the details.
I and a friend of mine are looking into buying a block of land in Sydney northwest area and then subdivide the land into two pieces with separate titles (i.e. torrens title). We then build a duplex and each of us keeps one. Our budget is $1.2m and I would like to stick to it for now. I did a bit of research on Hills Shire council and found out that they don’t allow creating separate titles by subdivision. Therefore without fighting for that, I budgeted on Cherrybrook’s house/land. For subdivision in Cherrybrook, I found the land needs to be minimum 1000m2 (minimum lot size 500mm2 by council). In my assumption the steps of the project is as follows:
Buy land -> rent out while get final approval for construction -> subdivide the land -> design and get DA, CC approval -> demolishing -> construction of building
Then I did the detailed cost estimate which is short at the moment:
Cost:
1. Land purchase: $750,000. It could be for existing house or land. For house I can earn some rent however I need to consider demolishing. Therefore the land may be the better choice. However I assume house under.
2. Purchase cost (stamp duty, legal, mortgage, others): $30,000
3. Subdivision cost: $15,000 not sure whether I need to use town planner or surveyor for this. Will find out later.
4. Council contribution: $10,000 (any fee associated with council approval for subdivision, DA and CC)
5. Design cost: $15,000 architect, structural design, civil design, landscaping, services, etc
6. Demolishing of existing: $15,000
7. Interest while holding: $62,400 I assumed 80% loan of 1.2m for 18 months at 6.5% rate
8. Construction budget left: $318,600 (this figure considered rent return which gives below) which is not too good as we are planning to build 350m2 – 400m2 overall floor areas.
Earn:
1. Rent return for $400 per week at 10 month : $16,000
Summary:
Cost: land purchase 750,000
Purchase cost 30,000
Subdivision 15,000Council 10,000
Design 15,000
Demolishing 15,000
Interest 62,400
Construction 318,600
Earn: Rent 16,000
Overall: 1,200,000
Since the construction cost is too low, I am hoping to save some money from other estimate. The land seems the efficient way of saving however it is almost impossible to buy a land of 1000m2 at Cherrybrook by $700,000. I am not sure whether there is project duplex out there to save the cost of construction and design. I also considered buy the land and let a project manager to do the whole lot but the cost of that may be higher than doing all these myself.
I really want the project to go ahead if there is any light of success. Can you please take some time to have a look at my study and give me some comments or suggestions? Anything is welcome especially those who have same experience. Alternatively, if anyone thinks it is worth considering the Hill council to get their exemption of subdivision, please advise.
Very much appreciated
Chen Xu
Chen- i haven’t looked over your numbers, but just a quick tip as im subdividing one of my IP in the North west district as well ( Cheltenham — > Hornsby council).
1. There are diff type of subdivision, if you want it to be torrent title then it will need to be a min 500+ squ ( depending on council) from what i understand + a 1.5m set back.
2. However if you subdivide as a strata title or company title the min squ meters requirement is reduced + less set back less and 700 squ meters ” may” be possible.
3. Different street have different set back requirements, especially corner blocks
4. Everything can be done as an exception as long as you have a good reason + design plan- ie you may need to build a smaller duplex etc..Talk to the town planner + read the council’s DCP.
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
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Just don't assume that every block that is over 1000sq can be subdivided. There are a lot of people out there who have bought land (thinking they can subdivide) that cannot be subdivided. Do your homework.
You'd be VERY lucky to get 1000sq land with a house on it for $700K in Cherrybrook. Friends of mine are looking for a vacant block in Cherrybrook ATM.
Check with an accountant when buying also. If you buy the land and build a duplex you'll find you both own both duplexes (not one each).
Thank you all for your reply.
I am wondering how strata title will work for duplex. Does it mean a strata manager and body cooperate have to be appointed for maintenance? If the strata title doesn't differ much from torrens title in terms of maintenance and strata fee is no mandatory, I don't mind use strata titls to reduce the land cost.
Cheers
Chen Xu
Hi Chen,
Was there a property in mind?
Just some points:
The construction cost seems too low, unless your keeping the existing house;
Existing houses on 1000m2+ blocks in the area are well over $750k (although I haven't really looked to see what was available);
Also I didn't notice a cost for earthworks.I grew up and lived in Cherrybrook until quite recently and majority of the land there requires earthworks to develop the whole block.
It may be possible to find such a block, I found a block in Thornleigh almost 3000m2 from memory for $800k with an existing (yet very old) house. (which I didn't have the money to purchase
)No property yet. At the moment I am doing feasibility study.
I think I need to go for strata title duplex, which requires less land. I need to talk to a town planner as I don't quite understand The Hills Shire's LEP. Seems like it doesn't allow any subdivision of dual occupancy (ie. duplex?) unless it has been granted before 1996.
Regards
I rang the Hills Shire Council and the town planner told me that the council won't allow subdivision of dual occupancy regardless the titles. Therefore this option is off.
The good thing is I realized that the Hornsby Shire council allows subdivision of dual occupancy into strata titls as long as the land is more that the minimum lot area (correct me if I am wrong). Therefore I can buy a smaller block of land (say 800m2) and the purchase cost could be reduced to 700k. And if my understanding of maxmum 0.4 floor space ratio for duplex is wrong, I could buy even a smaller land. I contact one strata management company and they reckon they can help me to creat by law to get away with strata management and body cooperations. Anyway I think I can deal with this later.
Cheers
told
Hi Mick,
We are in Cheltenham too and interested in subdivision of land and rebuild.
We found out that minus lots size for R2 zoning is 600spqaure metes in part of Beecroft snd Cheltenham.
Our land is close to 1100 square metres.
Was your subdivision in Cheltenham based on a land size over 1200 saqure metres?
Thanks,
EL
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