Bassendean WA, Development log

Hi everyone i wanted to start a log on my newest project to share ideas and get opinions from the experts here.

My partner and i bought this property in June 2014 for 490k. Originally we bought as a long term investment with a eye on possibly knocking down and building a house for us and the family in the future. The block itself is 655m2 corner block zoned at R20 currently and can be upgraded to R25 with the current town policy.



Existing House


I currently have a few different ideas on how to move forward with this property.
Plan A. Is a built strata duplex development. The block is currently undersized for this 2 x 350 = 700m2, however if they allow the 5% variation for special circumstances it brings the required area down to 665m2. This is very close to what im after and i was hoping they would look at the development with all its merit rather than just flat out denying me.


Proposed Unit 1


Proposed Unit 2


This is our preferred plan as we can develop and create some more equity while also having a house we would be happy to occupy with a family 5 years down the track. I have drawings ready for planning approval however when my friend went into to lodge them for me they told him the fee would be 2080. This seems really high to me for planning stage only especially since they might just throw out the development all together due to the area restrictions.

Plan B. Is to move into the house ourselves and renovate firstly to create some equity then build a granny flat on the corner of the block. In the long term this would work out just as well as we could possibly subdivide into a triplex in the future if the zoning does change like planned.

If anyone has some ideas or opinions on the council side of things please feel free to share.
As i said earlier i will continue to update the thread depicting which way the development goes.
Fingers crossed it works out as planned.

 

Have you spoken to the council about the 5% variation? You might get over the line with the corner truncation rules, but from memory, the 5% criteria were sometimes hard to meet.

Also, how much do you know about future planned zoning changes? Its not something I'd ever rely on personally - unless there was something really solid coming up.

 

Have you included the corner truncation in your calculations as per the R-Codes?

 

Corner truncation (20 m2) plus 5% variation should get you over the line. Have to go through wapc though. That's what i did for a corner block.

 

Thats Great thank you I've never seen the corner truncation rules before.
I can't seem to find what the rules are for the 5% variation. All I can see is that it's up to the wapc but mainly they want two permanent Street front access's which I have. Is there something else I am missing here?
So if this is correct that means that I should shelve the plans and lodge with the wapc first. No more option of built strata I will need to go survey strata instead?

 

get the subdivision underway, with 2 streetfront lots u should be ok to get the 5% variation but there is no guarantee.

once you have conditional approval you can submit your plans to council i guess, since you seem to want a bit a certainty before paying for council submission fees.

 

It actually doesn't bother me if the zoning does change we are happy to stay here and build our ppor. I still think it's a good area for capital growth and we both love the area to live.
We would be happy with the extra cash from a granny flat and sit on it until we are ready to demo and build.

 

Thanks sanj that's the sort of answer I was looking for I'll get that process started right away.

 

i think you need to work out what you are trying to achieve here, it appears to be 3 entirely different outcomes

1) PPOR
2) 2 homes, presumably youre trying to manufacture some equity/make some capital for other things
3) granny flat - no equity created (likely lost) but higher rent

all 3 options may have merit in some respect (i personally dont like the granny flat idea but thats just me) so you really need to work out what youre trying to achieve here.

too much indecision and meandering imo, i suspect not wanting to spend a tiny amount on council submission fees after surely spending more on the design of the 2 homes was in part due to the indecision, work backwards from your goal and the best option to achieve the goal will be obvious

 

Well my goal is to always improve any property I own whether it be capital improvement cash flow or tenant retention.

I may have not been very clear and concise with my first post. This is my first time trying to write down my thoughts so others can try and follow them. So sorry for my ramblings.

As far as my property goals are concerned creating equity is my number one goal at the moment. However when we purchased this property development was not on the cards I was simply looking at a buy and hold strategy as my partner and I both really liked the area.

Over the last couple of years however our personal circumstances have changed and we are looking to create equity where ever possible. This is when I started to look into building a duplex.

My first choice Plan A is to complete this duplex and I will put my money and effort into this venture first.

However I listed plan B as a backup just in case the council or wapc flatly rejected my development proposal.
Plan B consists of building a granny flat in such a way that it is out of the way of the original house, it will have its own Street front and access. This means if the zoning changes In a few years it can be split up with the rest of the block to create a triplex site.

But if the zoning stays the same then we move to Plan C which is we build a PPOR for us on the front and continue to rent out the granny flat separately.

What I was trying to portray is that we are comfortable with any one of these 3 options but plan A is definitely the one we want to be working towards at the beginning

I hope this makes more sense.

 

Yup you will need to go down the WAPC splitting first as they have the power over the 5% variation and in some circumstances can also approve 2 X lots at minimum R25 size.

You will most likely need to engage a surveyor to handle the survey and lodge to WAPC. Again there are fees which aren't refundable if denied but I think you should be ok.

Then once that has all been approved you apply to council and pay more fees. Yes there are fees, fees and more fees so make sure you are aware of all the costs when doing your feasibility

 

Id love to have the PC's look over my feasibility figures.
From my calculations i'm around the 15-17% profit margin.
This is not the recommended 20% but i'm comfortable with this as the houses will be a decent spec to as we will be occupying one of the units in the future.

Initial Purchase price including costs $ 515,000
Unit 1 - 245m2 - $320,000
Unit 2 - 200m2 - $290,000
Subdivision costs - $70,000
allowances of
Demo - $ 20,000
Retaining - $30,000
WAPC - $ 3000
Water headworks - $6000
Power - $7000
Misc - $4000
Holding Costs - 18 months - $55,000
Total Cost - $1 250,000


Unit 1 Value - $750,000
Unit 2 Value - $720,000
Profit 17%

Here is a site plan of what im proposing.
The build costs are averages from a few builders i have had roughly quote my previous plans. Since then i have reduced the overall floor plan especially the top floor so hopefully my build costs are definitely less than this.

If anyone can think of things im missing or if im way off on current costs please let me know.

 

Is that a laneway next to U2? Have you considered facing the garage to that - depending on the width of the laneway you just need 6m in front of the garage then for manoeuvring - so if the laneway is 5m wide then the garage is inset 1m into your block.
I am suggesting this because then you don't have to have that 5m setback and crossover and you would gain a lot more yard space
Just noticed they are both labled u1 but I think the one I am referring to is U2

 

Those figures look good, there is no contingency and you'd want to be sure that those figures from builders include all paving, landscaping, turnkey items etc etc

 

Looks like a good project

I cut up a corner block, into 2 strata blocks in Kardinya.

What I found when selling was that buyers preferred green title blocks, which went against my research at the time. Not sure whether you would or can consider this?

If I had gone green title the additional cost was only $10,000, however I would have made perhaps an extra $50,000 end profit.

At the time I contacted Council and was able to acquire a separate street number/name for each block, this is only possible if the number works/available.. This made a difference when selling.

 

$1350/sqm for 2 story turnkey might be a bit tight. Saying that, builders are currently squeezing their margins.

I see the slope is 4m from one side to the other. $30k for retaining should be enough, although you'll need to allow for earthworks.

Is there any issues with clay around the area?

 

Nope unfortunately no row. That is a sewer easement you can see on the plans.

 

Thanks MTR, I will definitely look into the green title blocks. I'm not sure on the difference between green title and survey strata. Do you have any advice of where to read to get the rundown

 

Yes there is 4m from one end to the other. However I have incorporated a 800mm step in the buildings them selves so I'm hoping I can get away with only a 1m retaining wall between the two units. With any luck i will have some leftover in this part of the budget.

Would 20k be suitable for demolishing a 2 bedroom old workers cottage in Perth.

 

I asked re agents in the area whether strata or green title would make a difference to end value, the answer was always no. But as I mentioned it made a difference to end value and also unfortunately limited my market.

Also are you going to live in one and rent out the other or sell?? The end values seem high in this current market??

Just another possible option, don't build double storey, stick to single villa, cheaper to build and the end values would be lower, much easier to sell due to the lower price point, larger pool of buyers. I have not worked out the numbers.
My guess would be $195K per each villa to build. ($1000-1100 per sqm)??

or....build one villa and 1 townhouse??

Just throwing idea out there, its also of course dependent whether it works on this block.

I am mindful that in the Perth market you can purchase lovely villas in Yokine 3x2 (18-20 sq) for $680K-$700k, much closer to city and debatable but I would say more desirable area??

MTR