All Topics / Value Adding / Build before subdivision or subvide before building

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  • Profile photo of NoobugawaNoobugawa
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    @noobugawa
    Join Date: 2015
    Post Count: 16

    Hi all

    I have a question on the subdivision process and would greatly appreciate your advice or feedback.

    I’ve recently purchase a corner block of land approx 760sqm and I am planning to build two townhouses on it, one to live in and the other to rent out.

    The one to live in is going to be bigger and occupies more land. I am going to allocate about 460sqm of land to it. And the rear property will only have about 300sqm.

    My question is whether it would be easier to build a 37sq house on the full block and deliberately leave a backyard of about 300sqm at the back which we will subdivide later?

    I am thinking by building a large house on the front of the 760sqm block first and subdivide later, we have a better chance of getting a larger double storey home through council as only a building permit is required. I am just afraid that if we build two as part of a subdivision process, council may restrict the size of the front property that we are able to build on. Any thoughts?

    • This topic was modified 6 years, 9 months ago by Profile photo of Noobugawa Noobugawa.
    Profile photo of Jacqui MiddletonJacqui Middleton
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    @jacm
    Join Date: 2009
    Post Count: 2,539

    Also if you subdivide first your council rates are likely to go up by a decent amount as you’ll have two titles.

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
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    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of NoobugawaNoobugawa
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    @noobugawa
    Join Date: 2015
    Post Count: 16

    Yeah. Council rate going up is no problem. Just wondering if anyone has built first before subdivision and whether it’s more advantageous doing it this way instead of subdivision and building at the same time.

    Profile photo of Jason StaggersJason Staggers
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    @jason_staggers
    Join Date: 2006
    Post Count: 61

    @noobugawa, do you consider this a lifestyle asset or an investment asset?

    Jason Staggers | JasonStaggers.com
    http://jasonstaggers.com
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    Profile photo of BenBen
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    @albanga
    Join Date: 2014
    Post Count: 54

    Personally I would be applying for DA for both properties. I think trying to separate them is very risky and will limit what you can do. I take it you have never dealt with a council before? It is hard enough to deal with them on one occasion let alone on two separate projects.

    Your also going to have increased costs as you will need to engage the same services twice. For example draftsmen/architects, council, utilities, surveyor?.

    But ontop of that you are increasing your build costs. It will be cheaper to build both dwellings together as opposed to engaging a builder for two separate projects. Combined they will discount the project, source materials cheaper in bulk, less delays.etc

    I think Jasons question is very relevant because it sounds as though you are mixing lifestyle with investment. This is a dangerous formula because it is likely your emotional decision is going to have a big affect on your investment. Without a shadow of a doubt you will make more money by doing the project in one hit.

    Profile photo of JustAllanJustAllan
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    @justallan
    Join Date: 2003
    Post Count: 168

    I know of a guy who purchased a block of land along a highway, planning to build a petrol station/restaurant – based on a backroom handshake with council – regarding future development of the area. With $$$ in his eyes he purchased the land dirt cheap from a farmer, then waited. When development plans for the area were released, the off ramp from the future required new bridge, would rejoin the highway AFTER his block – thus reducing expected customers to a fraction of original expectations.

    I’d want the subdivision signed off on before doing anything else. Who knows what council might change their mind about tomorrow.

    Profile photo of BallerinaBallerina
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    @ballerina
    Join Date: 2011
    Post Count: 63

    It is very important which council is the land in. Some things which are Ok in WA, are no no elsewhere. Certainty with any development is a must, so you know that your plan/strategy have no obstacles. Talk to your council or local town planner first. Then look for the people with the same experience.

    Profile photo of Don NicolussiDon Nicolussi
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    @don
    Join Date: 2005
    Post Count: 1,086

    On this I would definitely be heading to a local architect or planner who knows your local rules inside and out. Pay them for their time. The rules will be very different depending on location.

    In the end what needs to be considered is product.

    When I say that I mean what will you end up with and what is the demand for it in the market. Both properties need to be maximised. If you build the wrong mix of dwelling you risk turning the development into something niche and hard to sell or of lower value.

    Could you live in a rented home and develop the site as an investment property to hold.

    • This reply was modified 6 years, 7 months ago by Profile photo of Don Nicolussi Don Nicolussi.
    • This reply was modified 6 years, 7 months ago by Profile photo of Don Nicolussi Don Nicolussi.

    Don Nicolussi | Mortgage Broker - Home Loan Warehouse
    http://homeloanwarehouse.com.au
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    "I think of finance as a technology, a way of getting things done." Robert Shiller

    Profile photo of fxdaemonfxdaemon
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    @fxdaemon
    Join Date: 2013
    Post Count: 114

    All depends on the municipality you are in really.

    In my case, I’ve done the subdivision first to have two blocks with each large enough for individual new dwelling that doesn’t require the
    usual full DA requirements. The beauty with this approach is that although subdivision approval was granted by council, the process itself
    is not considered complete before final compliance is granted. I didn’t have urgency or deadline to beat for compliance issuance which means
    the title remains as one with no increased council rate or land tax.

    I took my time to build my home on the child block while leaving the existing dwelling on parent title/block tenanted. During this
    construction period, I only had one council rate and one land tax for the parent title to worry about.

    I am now in the process of applying for a DA for duplex on the parent block after both subdivision and title split are completed.

    Cheers,
    FXD

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