Develop a block, some advice please?

Hello all.
I have a rental that is a bit of a failure in High Wycombe, Perth. One is going great guns, but the other is substandard accommodation and as such I can only seem to attract substandard tenants.

I went there today because I recently evicted the nice meth addict and his punching bag girlfriend (the neighbors told me all about it today). There is a MASSIVE gum tree out the back with 4 main trunks branching out, 3 of which are over neighboring properties. One bloke has developed his block and placed a small unit/house right under the thing.

I would have loved it if he came and told me he was going to do it so I could negotiate getting an EWP in on his block to bring down that tree but he didn't.

Rather, he chose his first contact with me right as I evicted the tenant to leave a long legal threatening voice mail about how he is going to take me to court over loss of net rental income, damage to his gutters, clogging his soak well, and water damage. Also damage to his cars. I think it's a long push up a steep hill to claim all of that, but I am not unreasonable. The tree is on my property and if it's causing him issue's I'll remove it. It'll have to be a tree climb to do it though and I suspect somewhere around $6 grand.

So now I am in a situation where I am looking at it all and thinking.. bugger it. If I could get someone in to demolish the house with all its faults and also rip down the tree's it would be around $20,000 at the most. I could then see about filling the 905sqm block with a couple of units or something and claim depreciation before the governments make moves to remove tax concessions for investors.

I am not 100% sure on the zoning but I do remember looking into it years ago. It was just about to be zoned R60/R90 but then the Perth Airport submitted plans to redevelop and the theoretical line of noise now incorporates my house so the kalamunda shire redone their plan's to exclude my block. Bugga.

I think it's current zoning allows me to split into two, but I'll confirm with the shire when the weekend is over.

So my long winded question is... How does one go about it?
Do I go to the bank first and ask if they will give me the $$?
Do I see a specialist unit developer??
Can anyone recommend someone I should be talking to first?

current mortgage on the property is about $285,000. I think the land value alone exceeds that and I am hoping that I can get it all done and dusted neutral/positive but I can handle a bit of negative gearing. I've pretty much been paying people to live there anyway!!

 

Others will no doubt have more detailed advice but in a nutshell if it were me I would:
A) check to see if it IS subdividable. Shire of Kalamunda - online Mapping will tell you the zoning then u can check the RCodes or post on here for an answer. I'm not sure where it is but it is most likely with block size of 900sqm.
B) check if you CAN get finance. Mortgage broker will be able to talk you through this pretty easily.
C) decide how active you want to be in the proces (I.e. Subdivide yourself or outsource).
D) depending on the answer to C; read read read, or find a consultant to assist.

Good luck and keep us posted!

 

Oh wow theperthurbanist! That link was exactly what I was looking for. I just spent a few hours looking at proposed rezoning plans and things trying to figure out what it is now (before proposed planning).
Thanks for that, I didn't know what I was looking for but you found it for me

So I just figured out how to use it, and it is actually R25. Bummer, but if I have done everything right
10,000/25 = 400
905/400 = 2.2
Therefor, it looks like I might be able to develop the block and put 2 dwellings on it?

 

Happy to help!

That's not 'exactly' how the RCodes work (google Residential Design Codes and check out Table one) but for R25 the average size is 350sqm so it looks like you are good to go! Just check there aren't any easements over your lot (on your certificate of title or possibly even shown on that intramaps link) or slope that would require expensive retaining, etc.

Of course just because you 'can' do it doesn't mean you 'should' do it. Search PC for info on undertaking a feasibility and crunch the number to see if you will actually turn a profit for the time, capital and risk you will have to put in.

If the current dwelling is limiting the rental appeal you could also run the numbers on a renovation as option b. - For $100k you may be able to end up with a dwelling that would cost you $200K+ to build from scratch. though this still leaves you with a tree in the backyard.

 

thanks for your time theperthurbanist. its very much appreciated.

it's a dead flat typical perth sandy block. no characture to it at all

the house is beyond repair. nothing would please me more than to have it dropped to the ground. it was the first house I ever bought and there is absolutely no attachment issues at all!

if all I was able to get was $100k to do it up id be very reluctant. it'll be a crappy house with sprinkles on top.

I'll have to have a good read of feasibility studies like you suggested and decide if it warrents further inquiries. cheers!

 

Hi redchair, I would look at two lots and see if you could possibly squeeze a third single bedroom dwelling on its own lot, the RCodes allow up to one third reduction on area for these dwellings and WAPC can approve up to an additional 5% reduction overall. Probably worth a sit down with the local government planner. Some local governments are really helpful in pushing single bedroom dwellings (some allow a study also, AKA second bedroom) especially if you design it for elderly or mobility impaired.
Just a thought

 

Thanks SamK.
Would they talk to someone like me without an actual plan/commitment going forward?

I'd love to talk to them first and see what they would expect a development to include. I did see there is more leeway for elderly or disability housing but I think that may kind of limit your income potential and target tenants. Or do I have that totally wrong?

 

If you are a rate payer they will talk to you. They wont want to design it for you that's not what they are there for, but they will tell you whether or not they would support or reject an application (ultimately up to WAPC anyway though). Just because the dwelling is designed that way does not mean you cant rent it out to anyone you please, its your property. Depending on the block and position of the dwelling you might be able to do a single dwelling first, get some rent whilst doing the rest. Most builders would help you design the three dwellings and recommend a licensed surveyor to chop it up for you. I would get a draftsmen / architect to design the three and then search out the cheapest or best build price.

 

Close.

R25 has an average of 350sqm - still only two. Can come down to a minimum of 320sqm so if you need to move around the existing house etc then you could save yourself some coin with a Reno instead of a full new build.

What's the address? I can work it out if you can subdivide just using nearmap. PM it to me if you like.

 

Thanks Aaron, I'll shoot you through a PM now

 

Just got to figure out how to PM haha.

 

Okay Dean here's the lay of the land for you (pun intended).

Lot is R25, not a split coding. Therefore you have an 'as right' to subdivide subject to meeting DC2.2; which on the face of it, you do.

You appear to have the minimum to make the subdivision work, but only if you remove the rear patio. Not having any pics, I obviously can't tell if it's a good one or a bad one, but without removing it you're only looking at a 275m² lot which is WAY under size.

You appear to have 3m down the side of the house, but it's also the side that you have a dirty great big tree on your lot. Personally, I like moving around them by widening out the CP driveway per the attached with the subdivision plan. You can bring a driveway down to 3m to retain an existing dwelling - but it ends up being a CP driveway 99% of the time. This will need to be this anyway, because the front house will also need to use the common drive for access as your primary street is a 'blue road' - so only one crossover allowed and all vehicles must enter the street in a forward gear.

The cars from the front house parking at 90º to the road and reversing into the CP drive, then driving forward to the street.

Hope this helps,
Aaron.

 

Hi Aaron,

That's awesome! Thanks for doing that.
I'm not actually thinking of retaining the old house. I would like to demolish and flatten the block including those 3 massive tree's.

The issue I have with the house is it is so run down it would require an large wad of cash to fix and it would only be a bad investment. It actually attracts really bad tenants because of the state it's in. All the good tenants can and do afford to go elsewhere.

It needs re-stumping, it's had termites (treated) in the floor boards, there are holes in the ceiling, There was a stone feature wall installed in the kitchen that is an oil/dust/roach trap that has been half removed, the wall where it attaches has been modified (they smashed bricks out), The kitchen is like cooking in a child's bedroom - small and claustrophobic, the plumbing was all steel pipe drainage and looks like a rusty clotted artery always blocking up, The sink/bath were once enamel coated but have rusted out too.

omg I could go on.

Currently I would be lucky to attract $250/week but with a bit of work I could get it to $280.

With a mortgage of $290,000 on it currently I think I could afford to plonk 2 dwellings on it and attract a minimum of $300/week each. Realistically there isn't much in this suburb that cheap, especially if it is new so I would expect to attract 350-380 in the current market.

I'm going to ring the bank tomorrow and make an appointment to try figure out if they would give me money to develop. It would be my first development, and I am excited at the prospect of learning how it's done. If the bank say's no however, I am back to juggling meth addicts and serial centerlink clients through it while trying to spend the least amount on it possible to keep it habitable.

But as always, thanks everyone for your help so far.

 

so doing some rough estimates id be looking in the vacinity of $500,000 to develop.
20k demolition
60k subdivision
80k general site works
300k construction
50k buffer
does that sound about right?

 

probably a bit high. total of these should only be $50k to $60k

Depending on what you are building (size and level of finishes), this is perhaps a bit low.

But if you add up your 60k, 80k and 300k the total for subdivision, general site works and construction looks about right or even a touch on the high side.

 

Why not discuss your financing options with one of the brokers from PC? I'm sure you'll find someone with more experience and knowledge than your 'friendly' bank loan manager.

 

I had what id call a bad broker experience. it actually pains me that they are still collecting commission on my loan.
I still remember her coming to me saying "guess what, great news! I've managed to secure a 1% discount" So that brought her to the same rate I'd already negotiated myself. But that isn't what mattered, her going on holiday without telling me during settlement is what mattered. Some issues with one property meant that I had to use a different property to generate equity. Unfortunately because the process was started with her the bank would only talk to her. She came back 2 days before settlement and I had worked out all the ground figures for her and handed it to her to give the bank. She was super arrogant throughout the whole process and showed no respect or remorse for the people who were selling. They had offers fall through before and I didn't want to be another person who let them down but "Sharron" didn't seem concerned about anything.

 

Ouch! Time for a new broker? There are a number of good ones on the forum.

 

yeah I might look for one.
the loans manager at the bank reckons I fail for my estimated loan on servicability. I need another $100,000 income even tho conservative estimates have that property neutrally geared BEFORE depreciation.

I'll try find one from the forums today.