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Congratulations on finding a property.
You have now done more than most!
Maroondah is not difficult to deal with. As with all councils they have a set of guidelines to work in.
- Local planning controls
- Victorian Planning Provisions
The difficult part, of course, in understanding these various guidelines and navigating a successful path.
Your goal is a Town Planning Permit (TPP) and they can be tricky.
Before you engage anyone to help you down this path ensure you have a plan.
By this I mean an understanding of what you want to achieve.
Good luck with the project.
$600,000, at the sizes you have suggested is less than $1,500/m2.
$1,500/m2 is a useful benchmark for townhouse construction of a "modest" level of finish.
In essence you have two major issues (each of many parts) to contend with:
- The investment strategy – the financial goals
- The development strategy to achieve those goals.
You need to do work on both of these parts and ensure they come together with the right structure.
Seek professional advice, especially early on, to ensure you get the basics right.
I use a process broken into 7 Steps:
- Assessment – of the opportunity
- Strategy – for development
- Concept – work through the ideas
- Application – you will need a TPP/DA
- Detail – documentation to build
- Realise – sell, rent or a bit of both
This process works and helps make sure nothing is left to chance.
Best of luck with the project.
Dtermined, add it all up and see if it makes sense.
You need to understand the fundamentals before you approach a lender.
If it is profitable and secure, and makes sense, you should be able to fund it.
Best of luck with the project.
If you are not settling until completion this is straightforward.
You enter into a contract to sell that which is described in the TPP.
Stamps are payable on the value at the time the contract is entered into – thus the benefit of sale off plan.
As part of the JV agreement, the parents could allocate part of the property to you by splitting the title as tenants in common. There are tax issues on which you'll need advice.
Great summary Xdrew.
A Section 173 would be required if part of the property is to be sold before the subdivision is completed.
In the simplest terms, it is an undertaking to complete the subdivision in line with the Town Planning Permit.
Great read, thanks Freckle.
Nice one DWolfe.
I have used staging before, and would do so again.
It should be considered as a development or marketing cost from early on in the process.
Consider making your own positively geared property.
Find a house with adequate land to build a second dwelling, ensuring the planning overlays are accomodating.
Assume the house is purchased for $500,000 and can be let for $500/week.
Spend $250,000 to build a second dwelling behind.
At this point, a number of things can happen, but here are two common outcomes:
- Rent both of them for $500/week each – positively geared.
- Sell the older dwelling (for say $450,000) and keep the new dwelling and rent for $500/week – positively geared
I am sure Ash will steer you in the right direction.
I am reading between the lines a little here, but I thought I might give you something to consider.
In order to subdivide land you will require a Town Planning Permit (TPP)
Usually, in order to get your TPP council wants to know what you will do with the land.
In this case, the land is quite large and is situated on a corner.
Without knowing the details, it is quite common to propose two additional dwellings if the frontage is adequate. So, if it is your intention to subdivide and sell the land, you could consider getting a TPP to develop the two additional dwellings, then on-sell the land with the permits to someone else.
In this case you will have added significant value and can reap some of that value without expending too much cash, or may find that you have a lucrative project to help build your portfolio.
Plenty of good advice there.
Here's some more that you may find useful.
- Understand what you want and have a plan.
- Understand the context you are working in – from zoning to re-sales.
- Have an understanding of the process, even if someone else manages your project.
- Budget for $1,500/m2 delivery costs.
- Get good advice early. The profits are in the detail.
- Ensure you have a sound team with the relevant expertise at hand.
- Get the right structure in place to minimise tax.
Ash does our subdivision work for us, and it makes all the difference having a diligent professional on board.
Nice work Ash.
A few things you may wish to consider:
- Our clients are finding two dwellings much simpler to finance than three
- Make sure your structure suits your sales/retention strategy
- Keep a cash buffer from the start – it's easier to solve problems quickly
- Include all you can in the build contract – little bits outside the contract amount add up
- Engage with a team that can guide you as well as do the work
- Have a plan for the project, then some wriggle room
It always takes longer and costs more, so try to limit overrun with tight documentation and rigorous planning.
Best of luck with the project
You're welcome Jewel47.
If you are planning a property development there are three major disciplines:
- Town Planning
- Architecture (design)
There are lots more people involved, but the three above are the key.
These three elements need to come together to deliver your project.
Before getting too far down the track, the first step is to talk with a good town planner. These are private, not municipal planners, that I am talking about. A good planner will be able to tell you in 10 minutes whether the land can be developed. Hopefully your planner can also provide you with an inexpensive assessment of the proposal.
I hope it all works out – for both of you.
You may well be starting again, but you have a great advantage.
- What you have learnt along the way. If you have done it once….
- Time to think about what happens next, and to do your research and build a plan
I wish you all the best with this endeavour.
You have some great advice in there.
I would offer a few points for you to consider:
- Establish a budget and respect the budget – if it can't be done within budget, don't do it.
- Renovating (I reckon) is fun, but keep the emotion out of it, its essentially a large transaction.
- Have a plan for how time and money will be spent. Both are difficult to come by.
- Research what the market wants, it may not be what you like.
- Keep it real. Building is occasionally fraught and requires a sense of humour.
- Respect the trades. A cup of coffee in the morning, or a slab of beer for a job well done will bring good will.
The proposal should be robust enough to absorb some overrun.
A budget of $1,500/m2 is an adequate starting point.
Here is a simple equation that will account for roughly 20% margin after expenses:
1/3 for land (including stamps and purchase costs)
1/3 for development (including documentation, building and peripherals)
1/3 gross margin
Buy for $500,000
Develop for $500,000 (maybe two dwellings, or three small ones)
Sell for $1,500,000
If you find something that fits these rough parameters, you can then finesse the figures.