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Croydon (Melb) - 3 Townhouse Development

Discussion in 'Development' started by MTR, 7th Jul, 2016.

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  1. MTR

    MTR Well-Known Member Premium Member

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    Thought I would start a thread on my recent project, 2 townhouses/1 single storey all around 18 sqm. Block size around 1200 sqm

    We are about 2 months from securing our plans and permits, met with Council last night and my gun Town Planner basically got it over the line. Its been a long and hard road.

    On advertising we end up with 12 objections, in the main all about the removal of trees. For those who don't know Croydon is a very nice leafy area, along the south eastern corridor of Melb, about 35 km from CBD. Its seen significant growth as the area is gentrifying and developers are moving in. Unfortunately the locals are not happy with the changes and will fight tooth and nail, its been tough but we are almost home now.

    The developer next door also took around 12 months to get his development approved, he started with 5 townhouses and ended up with 3 townhouses.

    We also started with 5 townhouses which was way too ambitious and of course ended up with 3, I will share the basic numbers and as moving forward will provide further information.

    What complicated issues with my development site was that I had a vegetation overlay on my property, which means certain/significant trees can not be removed. We had an arborist on my site and he identified 4 hugh mothers including 2 oak trees that were in poor health that should be removed, however the council disagreed. After 9 months the Council's arborist viewed the trees and he agreed they needed to be removed due to poor health/risk.

    I can not stress the importance of the professionals you employ, employ amateurs and you will most certainly experience pain and probably end up at VCAT.

    My Town planner worked for Council for 25 years, he knows how they tick and without him it just would not have happened, same as my arborist worked for Council for 20 old years, he knows how to get around the system.

    Below are my estimated numbers, don't need a fancy spread sheet, I know these like the back of my hand.:)

    Purchase Price/stamp duty (Professional fees)
    $600,000 (cost of home/deve site $520,000)
    $648,000 (build costs, spec suitable for Croydon)
    $180,000 (holding costs/infrastructure costs)
    $1,428,000

    Estimated Sales Prices - ie neighbour sold next door OTP similar product
    $620,000 x 3

    $1,860,000 (total sales)

    $432,000 gross profit
    Gross Profit - 30%

    Where is the market today in Croydon?
    Still very strong, not an oversupply of this product, will it change in 2017? I don't think so the demand is from FHB and also from downsizers. FHB grant cuts off at $600,000
    To accommodate downsizers we are building the master bedroom/ensuite downstairs.

    I am still not sure whether I will be holding any of these, probably will hold 1 and sell 3.

    Rents approximately - $480 per week

    If I sell 2 and hold 1
    Interest = $9120 pa
    Rental income (gross) - $24,960 pa (does not include depreciation, management fees, rates)

    Will provide update when something exciting happens:)

    MTR:)
     
    Last edited: 7th Jul, 2016
  2. melbournian

    melbournian Well-Known Member

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  3. Now or never

    Now or never Active Member

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    Well done MTR. As usual, will follow your progress and hopefully learn during the journey.
    Was following the Election Thread for light entertainment but back to basics now
     
  4. MTR

    MTR Well-Known Member Premium Member

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    Got our Westie 9 years ago from a breeder in QLD

    I was not familiar with how puppy mills operated then, was not even into dogs, my husband was.

    I started researching this is why I would recommend rescue dogs, so many beautiful dogs need a home, that is why I foster rescue pups.

    MTR
     
    Last edited: 7th Jul, 2016
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  5. MTR

    MTR Well-Known Member Premium Member

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    Not following the election thread, not even close to being tempted:)

    MTR
     
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  6. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    Congratulations MTR - sounds like a straight forward build too. Looking forward to seeing the plans and the progress. Good luck with everything.
     
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  7. MTR

    MTR Well-Known Member Premium Member

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    Pretty straight forward except for those damn trees, it will probably cost me around $10,000-15,000 to remove them, oops... better add that to the final costings.

    MTR:)
     
  8. Skilled_Migrant

    Skilled_Migrant Well-Known Member

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    Congratulations. Numbers are very inspiring:).

    If not too intrusive, can you share some details of the planning zone and the problems/solutions in your interactions with council ? Reduction from 5 to 3 units must have a lot of lessons for us.

    Do ignore if still early or private.
     
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  9. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Nice one @MTR ! Looking forward to following this project.:cool:
     
  10. MTR

    MTR Well-Known Member Premium Member

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    Thanks, my Town Planner and architect believe this should be a 4 unit site, however it would mean going to VCAT to fight Council on this, and there is currently a 6 month wait time, too long and also additional costs, I like to move on and keep turning over stock, less risk IMO.

    In a nutshell very difficult to deal with a Council and its all upto interpretation, whilst our proposal met the quantitative elements of ResCode, one of Council's issue was failure to adequately respect the character of the street??? We had beautiful elevation, sympathetic to the area, but Council did not like this, now we have ordinary elevations as we copied the developer's elevation next door, this is what Council wants.

    When I purchased the block I was hopeful we would get 4 over the line, but did the numbers on worse case scenario which is still OK. I think this is just part of developing, you win some you lose some. If I got 4 approved I would have sold the DA with plans and permits, nice and easy.

    MTR:)
     
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  11. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Character of the street/streetscape and neighbour amenity - all words that scare the bejeezus out of me as they are soooooo subjective and its the Council who maintain the subjective rights :confused:
    Its a shame you had to dumb down the elevation:(
     
    Last edited: 7th Jul, 2016
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  12. MTR

    MTR Well-Known Member Premium Member

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    yes, its a real Shame

    MTR:)
     
  13. Iamnumber5

    Iamnumber5 Well-Known Member

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    Nice project as usual.
    When you refer to 18 square, is that including garage or dwelling only?
    Now that you have experienced some problem with vegetation overlay, is there any way of identifying it prior to purchasing a development site for next project?
    Thanks
     
  14. Starlite

    Starlite Well-Known Member

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    Thats quite extensive.. how many trees are there?
     
  15. Skilled_Migrant

    Skilled_Migrant Well-Known Member

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    Such a shame, 3 words in the PS cost almost 300K. Personally, I would have seriously considered VCAT, especially when the block size is 1200 sqm. Look forward to further development updates.
     
  16. Bayview

    Bayview Well-Known Member

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    Fabulous MTR!! hope it will be (I don't hope - I know it will) a big success.

    The trees are a cost of doing business unfortunately.
     
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  17. MTR

    MTR Well-Known Member Premium Member

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    Yes, its a matter of weighing it up, the profit margin is still very attractive.
    At the back of my mind I always think about markets peaking/turning this is when developers are at risk of not being able to sell or having to drop price.

    What's that saying "one bird in the hand is worth two in the bush".
     
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  18. Brady

    Brady Well-Known Member

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    Great to see another project going ahead MTR. Very interested to see the plans and the progress.

    Completely understand council and their trees. Cost me thousands for my Arborist reports in my Highbury development.
     
  19. MTR

    MTR Well-Known Member Premium Member

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    Thanks.
    I used 3 arborists, your right not cheap

    I will share the plans down the track
     
  20. Brady

    Brady Well-Known Member

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    Mine was fortunate enough to work the first time, albeit now how I exactly wanted. Would have been extremely frustrating to have to deal with 3 until you got the right response. I ensured when speaking with different arborist I confirm their experience with what I was looking at doing and the actual council I was dealing with. The arborist I used was very very familiar with the councils arborist.
     
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