LOOKING TO BUILD 3X UNITS ON BLOCK OF LAND

hi everyone, im nick  first time poster here, loving this forum already!! Have a few questions which i need to know.
ok, myself, my parents and my sister want to go thirds in a property and want to build 3 units on this, hence owning one each.  just need to know a few things.

- is it easy getting permit to build units in the first place
- what would the approx cost be to build all 3 excluding the land
- is it easy getting loan with 3 parties together
- is it easy to sell the units and sub-divide separatly once built

thanks any help would be great!

Hi Nick

Firstly welcome to the forum and I hope you enjoy your time with us.

Not a bad opening question so here goes with an answer or two 

Is it easy getting permit to build units in the first place. It is if the property is zoned for such and the land size allows for 3 units to be constructed.

What would the approx cost be to build all 3 excluding the land. Bit like saying how long is a piece of string becuae it will depend on the size, quality of fittings etc. Single storey lowset or garages below and units above? Unit, Townhouse or 3 x single residential dwelling.  There are so many variable it is impossible to give you a figure.

Is it easy getting loan with 3 parties together. Not ideal but if you all 3 want to be involved then i guess there isnt much choice. Wont worry at this stage about what entity you setup to buy the land and do the construction but bear in mind with 3 of you having ownership to the Title all 3 of you will be on the loan application. All of your liabilities will need to be taken into consideration when assessing the serviceability.

Would suggest a trust structure if you intend to buy, build and onsell.

Is it easy to sell the units and sub-divide separatly once built. Would normally be condition of the Development approval. Course you will need to decide if you make them Strata Title or can get them to be Freehold. A good local Town planner should be able to help you further. 

Cheers

Yours in Finance
Richard Taylor
Ph: 07 3720 1888
Residential & Commercial Finance Broker.
richard@tayloredfinancialsolutions.com.au.

thanks a lot for help. its definatly a starter for me.

the main thing  firstly that i need to do is get a property, as u said that is allowed to construct the units.  For instance, if i was looking at property, say 1200sm, advertised, would i actually know if a permit would be allowed before i purchased? or could i apply for a permit before i actually bought the land?

cheers thanks for help

Yes look at the council zoning.

Just because it is a big block of land doesnt mean you can build multiple units.

I live on just under 3 / 4 of an acre a stones throw from Brisbane CIty and you definately will never be able to build multiple dwellings on my block or my neighbours.

Cheers

Yours in Finance
Richard Taylor
Ph: 07 3720 1888
Residential & Commercial Finance Broker.
richard@tayloredfinancialsolutions.com.au.

Consult the local government if it is possible to subdivide and develop in the first instance.

Allow at least one year for the development and subdivision. Finance can also be difficult so check this out first before jumping in.

You will also have to pay capital gains tax and stamp duty and gst if you want the future lots in individual names, which you should budget for.

I would suggest you read up and learn quickly or engage help if you want to get going now.

Ryan

RHPlanning.com
Town Planning and Property Development (Western Australia)

Hi Nick,

Call your council and ask them if the block is able to be sub divided. They will tell you if there are any overlays, minimum block sizes, height restrictions.

Get an architect or google some of the development companies (such as the ones on this forum) and give them the address and get their opinion on what can go there.

You may have a 1200 size block but there may be a sewerage easement at the back which means you can't build on that piece. There may be a setback of 10 meters from the front of the block, can't build there. Then there may be an environmental overlay which means the council may want you to keep the existing tree in the side, can't build there. These are all things you can find out quickly so you can make a decision.  

A couple of other things to talk over with your accountant is if you will be selling or keeping the units as you will need to purchase and sell in the right entity (trust, Co, etc)

If you do a search on the forum you will find many previous posts regarding costs, time frame, etc.

Good luck it is a lot of fun. The only problem is when you are done and can't find the next block (that will make a decent profit!!!)

D

Work Smart, Not Hard.

Hi qksilver,

You have some great advice already from the folks who have responded.
The type of project you are proposing isn't particularly difficult but it is quite complex

The important thing is to understand a) your intentions, and b) the process involved.
You need a project plan (which you can generate yourself) and some professional advice as to the process.

As Richard suggested, the finance structure is also important. In fact it's vitally important.
I'll add some more detail to your questions below:

- is it easy getting permit to build units in the first place....As has already been suggested it's simple, but it isn't necessarily easy. The devil is in the detail, and ensuring you don't miss anything along the way, or make simple mistakes or omissions that may affect the application. As DWolfe suggested, it's also important to get high level feedback as early as possible.

- what would the approx cost be to build all 3 excluding the land....Very rough figures, using HIA industry standards (and I have heard many differing opinions on this) is for $1,500/m2 for a medium level of finish. So, if we assume 3 townhouses at 140m2 each, plus garaging, landscaping and the other "incidentals" you will encounter, let's say $700,000 +.

- is it easy getting loan with 3 parties together....As Richard said, probably not! However, in my opinion this gets back to the structure and intentions. And also keep in mind the risk the finance provider is taking, and how you can help them control that risk.

- is it easy to sell the units and sub-divide separately once built....Again, as has already been pointed out, the sub-division is generally approved as a part of the TPP. There are still technical issues that need to be covered off in order to certify the sub-division and have the sub-divided and re-titled land fit for sale.

Best of luck with your project.

Design & Build Consultant
http://brutalart.com.au

Hi Nick

Welcome to the forum.  Thought you might be interested in our current 3 unit project and the little challenges we've encountered.

Last October we purchased a house (unit 1) on 1,338 sqm - a double block but on one title.   Two days after signing the contract we had a tenant sign up to move into the existing house after settlement.  All good.  We are building two units which are being plastered and bricked this week so things are moving along quite nicely. 

On the original subdivision our block was two blocks.  The sewerage, town water and storm water connections are available on the second block HOWEVER as it is only one title council like only one connection point for services.  This has taken some negotiation for them to see logic and not have to dig up the front and back yard of the existing house to hook everything together.  (Splitting the title back into two was not an option as 350 sqm is the minimum area required per unit.)

The meters on the exising house (unit) have to be moved from the back to the front to make it comply with today's requirements before power authority will sign off the development.

As the existing (old) storm water infrastructure is unable to cope with the rain water from two units rather than a house the council require that we put in a storm water retention system to slow the flow.  Still working on a cost effective design but has meant many more $$.  It is hit and miss in this suburb whether retention systems are required and the council likes you to 'submit your application' before indicating all the conditions they will impose in the development approval.

An overhead power cable to the neighbours house crossed the front corner of our block however there were no easements on our title and we had our solicitor do extra searches to be sure before we settled.  When the time came to ask for the power cable to be relocated we were informed that we needed to pay for it because 'automatic easements' were granted by legislation many years ago.  As there were so many cases, none were ever registered on the titles.  Extra cost $1,400.  Lesson learnt - always ask the service provider yourself and don't assume anything.  Our solicitor still believes we shouldn't have to pay but it wasn't worth holding up the project to argue over it.

There have been other minor things but we are using a builder who we trust (have used him before) and this has certainly made the construction process run smoothly.

Whilst not ideal, as we had equity in our PPOR we cross-colateralised and this has made funding process easy, not having to get valuations at each point along the way.  On completion we'll either sell 1, 2 or 3 of the units or re-finance them with another financier.  For future projects we will set up a line of credit against our PPOR and have the funding and security of each property stand alone from the outset.

Yet to be seen whether there are any other surprises along the way but hopefully we'll be able to have strata titles issued within 12 months of purchase and also have a nice capital gain in the process.

Best wishes for your development

Tracey

@ Tracy B - It is great to hear your story and to find out exactly how things are going. It is really interesting to hear from someone in the thick of it.

One of the properties I am looking at buying at the moment is on a huge block and I am looking to possibly subdivide it. So this thread has been great for me. Thanks to everyone for your input. It is great to find a place where people are willing to be helpful...for free.

Ryan McLean
http://CashFlowInvestor.com.au
Positive Cash Flow Properties Are Just a Click Away

Ryan McLean
http://CashFlowInvestor.com.au
Positive Cash Flow Properties Are Just a Click Away