Develop or not?

hi all,

We need some help please!

We recently brought our first home in Melbournes west, a run down weatherboard on a large block of 760m2 for 235k.

We’r just about finishing renovations and are starting to think about developing some of the land behind.
We went to see a town planner, who said he was 95% sure we could get permission to build 1x3br and 1x2br units. (his fees $5500 inc)

Our problems are:

1) The house next door is half demolished and overgrown etc,
we thought they was halfway through demolition/ developing. (nothing has happened for more than a year) !!! [biggrin]
i think that this is a minor problem, its also one that you dont have much control over so i wouldnt spend too much thought on it.

2) We could build 1 unit ourselfs as an owner builders (i have some construction expeariance.) But not the second unit (new owner builder laws.)
Building a unit will be a great way to learn new things (i wll be building by the end of the year) BUT you need to know that its going to take up a lot of your time, not only on site but you will be needing to do a fair bit of leg work also. Will you be able to allocate the time needed in building? Might it be a better option to get a builder that will be on site do the job. This is something your going to need to consider.
3) We have used most of our savings on deposit and renovation costs.
Do you have much equity in other properties ? You might need to have a chat to a morgage broker or a bank to run some numbers for you too see if your able to get the lend. Would you want to hold or sell the units on completing them?
4) We still owe 135k on the house, but a valuation should come up about 270-280k
there you go some equity to get you started !
5)The local council will not let us subdivide before construction has started.
this seems strange to me /shrug first time i have heard this

How could we finance this project?
Or should we wait and see what happens next door??
you need to have a chat to a broker for the finance.
i fail to see the importance of the house next door. UNLESS your planning on selling. Then again it didnt stop you buying now did it !

The only solution we can see is;
To forget about the two unit plan, and just build 1 unit as owner builders, trying to slowly steer the application though town planning ourselfs [blush2] saving 5.5k.
In the meantime try to save half the construction costs say 60k
then lend the rest, build- move in- sell the old house and repay all loans.
(if we stay in the new house 1 yr do we save tax?)

I feel though our option is safe we are not fully capitalising!

We would apreaciate any advice.

Regards, berrygordy.