Hi all,
I am new to this site and am interested in getting into the property market. I am a graduate architect and was previously a carpenter. I am looking into purchasing a property and creating profit by selling it with a planning permit for multiple dwellings. I work for an architecture firm and am familiar with council planning laws. The inspiration for my venture is the fact that I live in Altona (Pier st Region) Vic and there seems to be a lot of development happening in the area, particularly multi unit developments. I have joined this forum as I would like to discuss this with like minded people and perhaps people who have done or are doing this as a form of investment. The reason I have focused on Altona is the fact that the properties seem to be reasonably priced given the location and access to public transport. I would love to hear any ideas people might have on the subject. I know that if i was to build the units I would further maximize the the properties earning potential however this will be my first investment and the quick turn around and the lower risk are the factors which appeal to me. Another added benefit which I can see is that I have no cost for the planning documentation as this will only take my time. Obviously I will incur duty and application costs as well as interest on the loan. What are peoples thoughts on timing? I know that development is slowing down however this may be a benefit as builders may be looking into species as tendering is down, just a thought. I would love to hear your thoughts.
Thank you
I am from Perth, however about 18 months ago I put together DA (plans and permits) for an 8 unit site in Broadmeadows, Melb and on sold it to a builder developer within a 12 month timeframe.
I made approximately 40% profit and it cost me all up around $20,000 for the architect to put this together. I am not sure whether I could repeat this in the Melbourne market at the moment as I believe things have changed and there is an oversupply.
My DA did not even hit the market as it got snapped up, the reason being the developer/builder had enough fat in the deal to make it work.
Perhaps at the moment the Melb market may be a little risky for this strategy. At the end of the day it comes back to numbers, its one thing you making money but if the builder has not got a minimum of 20% it will be very difficult to sell.
Cheers WI
I think Altona is a great prospect for this sort of thing but make sure there is money in the deal for you. Do your research on what properties with permits are selling for, then identify properties that are suitable for getting permits and spreadsheet how much you think you will really make. It can be tight on making profit if you don't buy well.
Go and talk to your local council about properties and identify what the council requirements are for you to be able to apply for plans and permits. You need to learn about block sizes, requirements for side entry, open space etc.
Also look at your holding costs and if it takes you a year what does that cost you. Make sure you buy a place that is liveable enough to have a tenant in there, not one that you can't find a tenant for and you are paying all of the out of pocket costs yourself.
You probably also want to hold the property for 12 months so even if you got permits inside 12 months (doesn't happen often in Melbourne) you were over the 12 month mark so only pay CGT on half of the profit you make.
After stamp duty, council costs and selling agent fees it is hard to turn a profit. I haven't looked around Altona for a while but I've noticed in areas in Melbourne I have been looking that it is a lot easier to find sites with plans and permits than it was say 4 years ago when the market was hot. BUT, if you do this and the market turns as you are about to sell you will make yourself a nice profit to put towards your next deal. It's a great way to start out but if you aren't going to make any money you will need to be prepared to hold onto the site or actually do the build yourself.
Good luck with it all and have fun.
Hi,
So, if I see an advertised property for sale which says something like: 'with plans and permits approved ready to go….', it means I will have to pay a premium, right? If I then bought the property, would there be a time limit in which the building(s) have to be commenced or fully constructed?
Do I have an option of not going ahead with the construction, and if this is the case, will I get any portion of the planning/permit fees that were included in the premium selling price?
Thank you.
jenny111
The DA does lapse if works aren’t commenced but the timeframe differs between states.
Thanks, Scott.
Now that I know that the permits have expiry date, I will by pass properties with approved plan/permit if I am not planning to build. Otherwise, why pay a premium price now for something that is not needed 'now'.
Regards,
Jenny111
Thank you guy's very much!
I am reading some very goood info.
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