Forums / Property Investing / Help Needed! / 980sqm Land Corner block (flat)

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  • Profile photo of AlBoscoAlBosco
    Participant
    @albosco
    Join Date: 2013
    Post Count: 7

    Hi (i am a newb at this),

    i have a corner block of land with house in Melbourne. Currently leased.

    Within the next two years, i plan to develop this corner block.

    What are my possibilities?

    plan A: 4 units (3 bedr, 2 bathr)

    plan B: 3 compact townhouses double story (3 bdr, 2 bathr)

    Standard finish.

    which will be cheaper plan A or B?

    can i fit 4 units on this block?

    cheers.

    Bosco

    Profile photo of Nigel KibelNigel Kibel
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    @nigel-kibel
    Join Date: 2005
    Post Count: 1,425

    Firstly Melbourne is a big city so depending on where it is may determine what strategy you use.

    Then you can see what is currently selling in your area. You will know price point and size.

    Without knowing the location it makes it hard to offer the advise

    Nigel Kibel | Property Know How
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    Profile photo of AlBoscoAlBosco
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    @albosco
    Join Date: 2013
    Post Count: 7

    Hi Nigel,

    its in Wantirna South, 5min from Knox Shopping Centre.

    Cheers,

    Bosco

    Profile photo of Scott No MatesScott No Mates
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    @scott-no-mates
    Join Date: 2005
    Post Count: 3,847

    Most importantly, what is the zoning of the block, this will determine whether you can a) subdivide b) build a duplex c) build villas/units/townhouses d) do nothing.

    Profile photo of TheFinanceShopTheFinanceShop
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    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271

    Get yourself onto both a town planner and the local council.

    Also have you done the numbers to see whether you will make money? Are you across all the costs associated with a development?

    Regards

    Shahin

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    Profile photo of AlBoscoAlBosco
    Participant
    @albosco
    Join Date: 2013
    Post Count: 7

    the plan is to keep the properties once built and have them as a money stream.

    Rental estimates based on current (similar) properties leased in this area suggests the following:

    Plan A: 4×350 = 1,400pw = 72,800p.a.

    Plan B: 3×450 = 1,350pw = 70,200p.a.

    Before i bought the property council gave it the green light for development (zone 1)

    Profile photo of TheFinanceShopTheFinanceShop
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    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271

    Ok so you have done the cashflow numbers but what do the total construction costs vs resale/value look like?

    Regards

    Shahin

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    Profile photo of AlBoscoAlBosco
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    @albosco
    Join Date: 2013
    Post Count: 7

    not sure about construction costs. I only know some basic figures. Just standard quality, so maybe 10K/sq

    But i dont know how many squares per unit/townhouse. If i want either unit or townhouse to have 3bdr and 2 bathr  how many squares will that equate to?

    Would it be cheaper to build x3 townhouses single story? Less for more.

    I'm after the cheapest plan for max return.

    As for construction cost vs resale value: I'm not so concerned with this because I'm not selling them for 20 years maybe never, but my aim is to choose a plan that will require the least capital.

    Profile photo of TheFinanceShopTheFinanceShop
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    @thefinanceshop
    Join Date: 2012
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    Not trying to disagree but I don't think you should look at it that way. If something comes up and you need to sell the dwellings then you need to ensure that the numbers add up?

    Re construction costs you also need to factor in council fees, contribution fees, site costs, demolition, fencing, concreting, driveway, etc. Not just the dwelling itself. 

    Regards

    Shahin

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    Profile photo of Daneo79Daneo79
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    @daneo79
    Join Date: 2012
    Post Count: 32

    Don’t forget about storm water management, headworks (cost ,fees,location) and setback. Become good friends with the local council, they can help a lot (or not). Make sure you can build what you want to build, your mind could be made up for you.

    Profile photo of Stacey SurveyingStacey Surveying
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    @stacey-surveying
    Join Date: 2011
    Post Count: 138

    Hi Bosco,

    As you are not 100% on which direction to take with your project, you would definitely be best consulting with a private town planner and having a full Property Development Assessment undertaken. I would recommend contacting Breece at Pillar + Post http://pillarandpost.com.au/ as I can vouch for their excellent service and thorough assessments.

    Also, as you're in Wantirna South (just around the corner from me), it would be worth your time downloading our spreadsheets from the following forum topic and having a read through. https://www.propertyinvesting.com/forums/adding/4347086

    Cheers,

    Ashley

    Profile photo of TheFinanceShopTheFinanceShop
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    @thefinanceshop
    Join Date: 2012
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    Hi Ashley,

    Are you a town planner?

    Regards

    Shahin

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    Profile photo of Stacey SurveyingStacey Surveying
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    @stacey-surveying
    Join Date: 2011
    Post Count: 138
    TheFinanceShop wrote:
    Hi Ashley,

    Are you a town planner?

    Regards

    Shahin

    Hi Shahin,

    I am a land surveyor, not a town planner. As the director of my small business, I do make it a priority to spend as much spare time as possible refining my knowledge of planning schemes, processes and any amendments to these. 

    Land Surveyors are often the first point of call in developments, so it is critical in today's marketplace to have a very good understanding of planning schemes and the whole subdivision process- not just the parts that I'm directly involved with. I do however correspond with some fantastic town planners, architects and building designers who are more than happy to share knowledge to increase everyone's understanding.

    Regards,

    Ashley

    Profile photo of christianbchristianb
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    @christianb
    Join Date: 2009
    Post Count: 386

    Bosco,

    Plenty of good advice there.

    Here's some more that you may find useful.

    1. Understand what you want and have a plan.
    2. Understand the context you are working in – from zoning to re-sales.
    3. Have an understanding of the process, even if someone else manages your project.
    4. Budget for $1,500/m2 delivery costs.
    5. Get good advice early. The profits are in the detail.
    6. Ensure you have a sound team with the relevant expertise at hand.
    7. 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.

    Profile photo of BreeceBreece
    Participant
    @breece
    Join Date: 2011
    Post Count: 43

    We strongly recommend our clients use the services of Stacey Surveying, as we have found Ash to be competitive on price and simply the best surveyor when it comes to attention to detail.

    I cannot speak highly enough of his professionalism and drive to deliver the best service possible. It has been wonderful to watch Ash's business grow. 

    Here is an example of his recent work for our five townhouse project in Abbotsford. This is called a Feature & Level Survey and Site Analysis: http://pillarandpost.com.au/subdivision/stacey-surveying-feature-and-level-survey/

    Ash's prices beat not just his competitors, but the recommended price set by The Institute of Surveyors.

    As a developer, I recommend you build a strong team of knowledgeable consultants for small-lot development sites. There are too many horror stories of developers cutting corners or choosing to use the cheapest shyster in the market.

    Thanks for the support Ash. I'm proud of our developing relationship as we continue to work closely to deliver quality services to our valued clients.

    All the best,

    Breece

    Profile photo of DWolfeDWolfe
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    @dwolfe
    Join Date: 2009
    Post Count: 1,253

    Hi Bosco,

    You're just around the corner.

    As far as Wantirna South goes, it depends which bit you are in as there are 3 sections, the one behind the shopping centre is maybe more likely to get ticked off at council, but having said that I know PLENTY of people who have had dramas getting anything approved with Knox. 

    Get a town planner or architect, draftsperson etc who has worked successfully with Knox council before, they are one of the hardest councils to do anything with.

    They also have a contribution fee of 8.5% add that into your figures too, that'll need to be paid when you are finished.

    Every ones comments are spot on, you really need to do your homework, and you're scaring me when you say that the profit doesn't matter!

    What if you found out tomorrow you needed to sell due to a financial problem, and you were going to owe the bank $200k, cos you didn't make any money. Would you still develop?

    As far as whether you should develop plan A or B, you should develop what people are paying top dollar for, not what is cheapest. If double storey will make you another $50k profit, then build those, if the market only wants single storeys, then build those. Make money.

    Good luck with it, hope it works out for you, keep us posted.

    Cheers

    D

    DWolfe | www.homestagers.com.au
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    Profile photo of BreeceBreece
    Participant
    @breece
    Join Date: 2011
    Post Count: 43

    Hi AlBosco and Dwolf,

    Dwolf raises an excellent point with the Public Open Space Contribution levy for Knox City Council.

    We have recently completed a number of Property Development Assessments for clients in Knox. One was for a couple who have a 1,300m2 property in Boronia and another two PDAs were for a client who was looking to acquire a development site in Bayswater.

    To be blunt:  Knox is horrific for multi-unit development on a number of fronts.

    Firstly, Dwolf's point applies to most subdivisions in Knox, however the majority of 2-lot subdivisions are exempt from this Public Open Contribution only if Knox council considers it unlikely that each lot will be further subdivided.

    Due Diligence here is critical.

    Every Property Development Assessment we have completed in Knox over the past 6 months has highlighted significant restrictions on multi-unit development. In each case, the PDA saved the client from proceeding with a development that would never gain Council support. This saved each client thousands.

    Sometimes, the better part of valour is discretion.

    I would also point out the excessive application of the R3Z in Knox.

    A word of warning to potential developers… The Residential 3 Zone is a silent killer. It provides Council with the legislative justification to refuse multi-unit development in Knox, primarily on Neighbourhood Character and Density grounds.

    The Victorian State Government explicitly encourages infill development as a sustainable design solution to increasing population growth, yet Knox City Council have their own ideas.

    NIMBYism is soooo 2002.

    Good luck with your Development,

    Breece

    Profile photo of AlBoscoAlBosco
    Participant
    @albosco
    Join Date: 2013
    Post Count: 7

    DWolfe,

    thanks for your post and advice, its much appreciated, as for all contributors.

    1. What is a contribution fee, and 8.5pc of what?

    2. My house is in Aisbett Ave (behind the Shopping Centre)…does this make it any easier to develop on this land?

    3. My prop had dual occ. potential, so i wont necessarily need to bulldoze existing bv home.

    Also, a correction on my previous post: the property is currently Residential 3 Zone.

    Thanks again,

    Bosco

    Profile photo of AlBoscoAlBosco
    Participant
    @albosco
    Join Date: 2013
    Post Count: 7

    Breece,

    very sobering info.

    My land is 775msq. I will now not divide it in 3.

    My amended goals are:

    Plan A: Keep existing bv home and build at the rear (either single or double level home whichever is more likely to be passed by council.

    Plan B: Knock down existing house and build 2 single level homes or 2 double level townhouses.

    Cheers, and thanks for your advice.

    Bosco

     

    Profile photo of BreeceBreece
    Participant
    @breece
    Join Date: 2011
    Post Count: 43

    AlBosco, 

    No worries, that's what we're all here for. Sharing info and helping each other out.

    Some quick replies because it's past my bedtime…

    1. The Knox Public Open Space contribution is 8.5% of the site value, or 8.5% of the land, or a combination of both.

    It's truly shocking on a number of levels.

    2. I breifly reviewed your site location in Aisbett Ave. There is some multi-unit development in the immediate area, but due care would need to be taken when considering this site for development given the R3Z and the GS3 Neighbourhood Character precinct. From experience, I can reliably inform you that the Neighbourhood Character policy is rather tricky, so please exercise caution. Many good folks have gone confidently before you…

    3. If the existing dwelling is in good condition and doesn't impede the proposed additional development, we generally encourage our clients to retain it and renovate it as part of the development.

    Why knock down a perfectly good house and lose $200k of potential profit on its replacement?

    4. Your Plan A is much better than Plan B. 

    5. I would strongly encourage you to seek professional advice at this point to complete a Property Development Assessment. There are plenty of excellent contributors to these forums, so please seek out either myself or one of the other Town Planners who contribute to PropertyInvesting.com

    All the best Al,

    Breece

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