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Dual occupancy PPOR+IP development

Discussion in 'Development' started by GreatPig, 11th Sep, 2015.

  1. GreatPig

    GreatPig Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    156
    Location:
    Sydney
    Hi All,

    Long time no chat. I used to frequent Somersoft years ago, but haven't been on the forum for some years now. I see quite a few familiar names here, but have a lot to catch up on!

    My immediate questions relate to the possibility of knocking down our PPOR (Auburn council in Sydney) and building a dual occupancy, one to live in and one to rent. From a read through some council documents online, our site would appear to be suitable for either duplex or detached dual occ, but not for subdivision on torrens title. However, it appears the council allows strata subdivision with no minimum block size, so that would be an option at some point.

    Our land is a corner block with 680sqm and 15m frontage. I don't believe there are any covenants on the title preventing this, but I haven't checked yet (about the only thing I have started checking so far is the land tax / CGT implications with my accountant). I remember when we bought the place 16 years ago it was zoned residential 2a, and as far as I know, still is. The sewer main stops at the very edge of the property near the centre, so we should have no problems there. The council documents also indicate an allowed coverage of up to 67%, which would be about 220sqm per dwelling, though I don't know that we'd go that large, and would be looking at two storey. The PPOR dwelling we'd want somewhat better than just rentable, but that would do for the other. Detached dwellings would be the preferred option. Being a corner block, it seems that would mean we could build them totally separate with no shared areas (each with their own road access).

    Our current house is much better than knock-down quality, but is 55-60 years old (just like us!), full brick with regular cracking problems (also just like us...), and with an awkward shaped kitchen effectively in the middle of the house where it's somewhat dark (even with a skylight) and difficult to fit a decent new kitchen. My wife in particular, who spends a lot of time in said kitchen, would like a new house now (which, as it happens, is why the previous owner sold it), and a new granny flat is not going to cut it :rolleyes: (I think 60-odd sqm is the limit). We both love this location (North Lidcombe) and don't want to move, and finding another suitable location around here I think would be next to impossible, not to mention involve huge transaction costs (I'm guessing demolition plus renting somewhere for perhaps a year during building would still be cheaper than the transaction costs).

    To keep this simple and and not too long, my initial questions are the main big-picture ones:
    • Assuming Auburn council allows all this (and for people other than just Salim Mehajer), does this sound like a reasonable plan - ie. there's nothing that would likely turn the whole thing into a dumb idea (assume no funding problems)?
    • Would it be better to leave both dwellings on a single torrens title until we wanted to sell, or do the strata subdivision (if the council does in fact allow it) when we build? As I said, I'm checking on the tax implications of those options, but I'm guessing that might also affect the ability to borrow for the rental dwelling without including the PPOR dwelling. Borrowing is not actually necessary, but with an offset against a loan we could withdraw funds for other things (like buying an IP in Brisbane! :D).
    • What would be a typical construction cost for the two detached dwellings, assuming double storey, brick veneer, tile roof, and maybe 180-200 sqm each (talking of which, when the council talks about coverage, does a second story add to the covered amount, or is it only actual ground coverage)? As I mentioned, we'd want decent but not luxurious quality for the PPOR dwelling, and just decently rentable for the other. I've seen/heard figures that would suggest perhaps $700k-$800k, but I'm not sure if that would include landscaping and demolition or not. Does this sound reasonable?
    • I've also seen/heard conflicting views about builders. One said just use a large home builder to do everything, and the other said exactly the opposite: don't, using a separate architect instead. What are your views on this? (I'll worry about actual architect/builder recommendations later if we get that far).
    • If the council allows it, would it perhaps be better to try and make the rentable dwelling into two flats - perhaps upstairs and downstairs? I would imagine total rent could be higher then.
    • Finally, this strata subdivision thing. I saw that mentioned in an old Somersoft thread, and a council document said their intention was to allow it (though I have no idea how old that document was or if they do in fact allow it). If our 680sqm torrens title was strata-subdivided to say two 340sqm titles, what effect might that have on holding costs and saleability? To me, strata titles are associated with apartments, and include strata levies and what-not. Compared to two equivalent-sized torrens titles (which we can't do because 450sqm each is the minimum size), are the holding costs higher, and would a 340sqm strata-titled property likely be difficult to sell in the future?
    Okay, I think that's enough to be getting on with for now. I've never had any building done before, so this is all new to me.

    Thanks for any help!

    GP
     
  2. shorty

    shorty Well-Known Member

    Joined:
    24th Jun, 2015
    Posts:
    85
    Location:
    straya
    I can give my 2c on some of these issues but certainly not all. I'm just starting this process for myself.

    Your construction costs are comparable with what I've been ball-parked in Melbourne. 700k-800k for construction of two double storey townhouses with double garages. PPOR will be 124sqm ground floor + 97sqm first floor + garage 39sqm = 250sqm. IP will be 102sqm ground floor + 75sqm first floor + 39sqm garage = 216sqm.

    All the volume builders I've checked out have rubbish finishing standards, except one who charges obscene amounts. I'm using a good draftsman and will tender to custom builders. Not using an architect. Talked to a few architects, but the draftsman was much more practical about things. Find the architects were a bit airy fairy about things. Not bagging architects, just reckon that for relatively simple design they aren't necessary.

    Hope that helps a bit.
     
  3. GreatPig

    GreatPig Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    156
    Location:
    Sydney
    Thanks, Shorty. Good to see those size figures in relation to the cost.

    GP