VIC Developing multiple units in Melbourne Northern Suburbs

Hello All,
Hope everyone is doing well.
I am planning on doing a multi unit development in melbourne northern suburbs and looking for a block where plans and permits are already approved by the council. There are some of them advertised on realestate.com.au

6 Gordon Court Glenroy Vic 3046 - House for Sale #126117250 - realestate.com.au
77 Hubert Avenue Glenroy Vic 3046 - House for Sale #126190166 - realestate.com.au

Plan is to

1. buy and hold all units
2. wait for couple of years
3. get equity out of these
4. go to step 1.

I have never done multi unit development before and i am in the process of getting equity out of my 2 existing properties. I'll have around 200K in equity (valuation already done waiting for the paperwork) and planning on going to 90% LVR to secure the loan for this multi unit development.

So the questions are:

1. Does it all make sense?
2. Are there any gotchas?
3. Would it be hard to get the existing tenants out of the property to re-develop?
4. Is 90% LVR ok? since i would most likely get another loan in a couple of years for the next project.
5. How much do you think would be building cost etc. on a multi unit development given they already have a plan approved by the council?
6. Any other issues?

I really appreciate your advise and support.

Regards,

 

Since no one has given you their thoughts as yet this is mine and I haven't done a development but am in a similar boat as our recent purchase was on 1,600m2 of land 10km from CBD (Brisbane).

1. Does it all make sense? - Yes it makes sense
2. Are there any gotchas? - Work out what the end price is first and then work backwards to the purchase price. Are you factoring in CG during this period, if so I would be less inclined to include them as Melbourne has/is booming and unless you know where the top is it might work out harder for you.
3. Would it be hard to get the existing tenants out of the property to re-develop? Depends on tenant but really as long as you give enough notice then there shouldn't be any issues.
4. Is 90% LVR ok? since i would most likely get another loan in a couple of years for the next project. - It is high LVR which means higher risk higher reward or losses. What if Melbourne drops by 10% either before you develop or during your development how will this affect your numbers?
5. How much do you think would be building cost etc. on a multi unit development given they already have a plan approved by the council? Build cost are roughly 10-20k per builder square depending on quality, I would have at a guess you would likely be budgeting about 13-15k as the average build as getting to 20k is stone benches etc.
6. Any other issues? How much $$$ will you have in reserve? What will happen if the bank wont lend you the money to construct? What will happen if they raise interest rates by 2-3%? How much equity would you be destroying by demo the house? Do you have sufficient insurance including personal? What happens if life throws you a curve ball? Have you factored in buy/sell cost into your workings? Have you considered holding first and develop in a couple years?

Best of luck with your project/investment.

 

You can buy the property with vacant possession. That way there is no issue with tenant. Allow about 3 months to do your engineering and building permit. Make the Contract subject to the vendor allowing you to do these before settlement.
Market in that area is hot with 90% auction clearance rates.