First development - 4 units

Discussion in 'Development' started by RickProp, 12th Feb, 2018.

Join Australia's most dynamic and respected property investment community
  1. RickProp

    RickProp Well-Known Member

    Joined:
    21st Aug, 2015
    Posts:
    146
    Location:
    Melbourne
    Hi all,

    I have recently secured a development site and planning on putting 4x 3br units on it ideally - site dimensions are circa 20 x 45.5m. This will be my first development so still very wet behind the ears and this will be a huge learning experience, hopefully I can document as we go so others can also learn.

    I have some preliminary general questions from those more experienced in terms of design.

    1) Is it best to do 2 side by side at the front if one can get 2 crossovers, single garages with parking in front
    2) If only a single crossover is allowed, then is it still best to do side by side with double garages behind and reverse living (lounge upstairs)
    3) What is the general preference, double garage with reverse living lounge upstairs or single garage with open parking in front of it and lounge downstairs?
    4) As it is a back sloping site, my impression is that it will be difficult to put a double garage at the back against the far wall (easement and storm water), what are your thoughts on a double carport instead built over the easement? Obviously a garage would be preferable but I doubt this is possible. Alternatively this area seems to be used for cars to reverse into and turn if units in a row.
    5) I am looking to use a draftsman/architect that does their own townplanning, there are a few that have townplanning applications in progress around the area and know the council requirements. Do you always use a separate townplanner or someone like this who can do both?

    Thanks for your help.
     
  2. Kr@mer

    Kr@mer Well-Known Member

    Joined:
    25th Jan, 2018
    Posts:
    94
    Location:
    Sydney
    No real experience in this field
    But will be interested in your updates
    Best of luck

    What area is the development in?

    Personally I would engage an experienced architect familiar with the area
    It might be a lot more expensive initially but spread it over 4 properties if it gets you an extra 5% it’s worth it
     
  3. Tufan Chakir

    Tufan Chakir Well-Known Member

    Joined:
    18th Aug, 2016
    Posts:
    872
    Location:
    Victoria, Australia
    Re: Doing their own town planning..... It's horses for courses. For something simple, say a dual occupancy, yes a drafter or architect, doing their town planning in house. For something not so simple - and yours isn't simple, I'd get a planner on board. The benefit will be that the planner speaks the same language as the Council, hopefully no bluffing or misinformation happening, and will know what to push, and how to present the application as well as feeding in options and tweaks into the design solution.

    An architect or drafter will approach the design from a different perspective, and (in my experience) then try to bulldoze through, or alternatively accept what they are being told by the Council planning staff

    As for the people - ARCHITECT ask if they are registered, make sure you are getting what you're paying for, not just a drafter, go for someone with good skills who is willing to work with other team members . DRAFTER, go for someone with good skills who is willing to work with other team members. Not all drafters OR architects are created equal, and it's not about experience with the Council or in the particular location (if you're told that, move on). PLANNER - ask if they belong to PIA, and are Registered - site a few people out there claim to be but are not planners (eg building surveyors, surveyors)
     
    MTR, Ringo1, dan_89 and 4 others like this.
  4. Sackie

    Sackie Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    25,035
    Location:
    Vaucluse, Sydney.
    If it were me, I'd be getting a separate town planner.
     
    Tufan Chakir likes this.
  5. RickProp

    RickProp Well-Known Member

    Joined:
    21st Aug, 2015
    Posts:
    146
    Location:
    Melbourne
    Thanks for this, I guess they will know where they can push council and where they can't and hopefully get a bit more out of the site.
     
  6. 6993

    6993 Active Member

    Joined:
    13th Sep, 2016
    Posts:
    38
    Location:
    Sydney NSW
    Where is the development located?
    If it is in Sydney then I can give you a good contact for planner and architect
     
  7. RickProp

    RickProp Well-Known Member

    Joined:
    21st Aug, 2015
    Posts:
    146
    Location:
    Melbourne
    It's Melbourne, thanks. Certainly looking for a draftsman and builder if anyone has a good one.
     
  8. jyeung80

    jyeung80 Well-Known Member

    Joined:
    25th May, 2017
    Posts:
    215
    Location:
    Melbourne
    Which suburb in Melbourne is the development? In some of the more premium suburbs, double garages are almost expected, particularly if you're going for 3 or 4 BR. Also, what's the zoning? Might be hard to get 4 townhouses approved if it's NRZ.

    Does it have to be a choice between living upstairs or tandem car parking? Personally, I'm not a big fan of either...
     
  9. Mel Morgan

    Mel Morgan Sydney Property Manager Business Member

    Joined:
    6th Jun, 2017
    Posts:
    1,448
    Location:
    Sydney
    Well done on taking the plunge, but I think you have quite a long journey in front of you. Here's my thoughts:
    - have a chat to some local agents and find out what the demographics in the area want (whether you're planning to sell or rent at the end). Do they want double garages and living upstairs etc..
    - a good architect/draftsman will recommend a planner when they are out of their depth
    - you can always discuss what you want to do with the council's planner so you can have some idea of what they will allow before you start
    - as its a backwards sloping site, stormwater management may be a major issue and should be considered at the very start
     
    benofbrisbane and RickProp like this.
  10. RickProp

    RickProp Well-Known Member

    Joined:
    21st Aug, 2015
    Posts:
    146
    Location:
    Melbourne
    Thanks, it has about a 3m fall over 45m, stormwater easement over the back so carport can go over, difficult to put a garage over I believe. It will need a stormwater retention system...$$$$.

    I spoke with a developer friend and he prefers to do single story as far as possible. He said for the area, one does not get the return for going 2 stories. I see a few on here recommend single story in Melbourne. If one has to go up to get the 4 units on the block, then minimise the number so go up with 1 if possible, otherwise 2. This also gives diversity from a council perspective. It is just discussion at the moment. I will try to meet up with some agents in the next few days and discuss demographics. Going 1 story suits downsizers as well I presume. m2 wise they are smaller, quicker and cheaper to build.

    I am not a fan of the reverse living scenario but when I spoke with an agent last year, they said rather that and have a double garage than single garage and lounge downstairs but that was just 1 agent, I need to discuss with a few more.

    As this also has a wide 20m frontage, it seems it may be an idea putting in 2 crossovers and having a front unit on separate title. This will be more valuable as not part of body corporate.
     
  11. Chung Le

    Chung Le Active Member

    Joined:
    7th Oct, 2017
    Posts:
    35
    Location:
    Melbourne
    i agreed : it is not about the exp with the council or in a particular location. i think all council the same. If your design meet Rescode, everything should be ok. Some council have their own guideline ( available on their website ) so if design according to these, should get a permit. When pushing the boundary, ask the architect. building designer to talk with council planner to see if council will support the proposal.

    The only different is one council take week to response, some take months to response to your request.

    I would recommend Urbis or Ratio planner, they are quite expensive but these 2 company are really good.
     
  12. Chung Le

    Chung Le Active Member

    Joined:
    7th Oct, 2017
    Posts:
    35
    Location:
    Melbourne
    It is hard to tell without knowing your property zone, schedule requirement, but i can give this a go:

    2. Normally if you have 20m street frontage - double crossover should be ok as it comply with Rescode. Just make sure new crossover stay away from street trees ( general 3m if can), 1m from any street feature such as ele pole, pits etcc. Those things can be relocated if cant avoid, but cost $$$

    3. Hard to tell without knowing what zone schedule your property is. Developer use reverse living type just because they can not fit tradition living on ground floor type due to the requirement of private open space need. Reverse living type - only need 8sqm of balcony and small service yard on ground floor. Traditional living house - you need bigger backyard. sometime the requirement is min 60sqm of SPOS etc.. If you can fit a traditional house with living on ground floor and still meet your required yield, always do as it will sell for more and quicker to sale.A single garage and a car space is good.

    4. Double carport is ok there, just make sure car can exit in forward direction. you will still need to apply for Build over easement but should be approved- allow time for this, these things take time.

    5. As i mentioned above - use a architect / building designer that can do town planning report is ok. Can always engage with a town planner later if things go difficult. this is just my opinion.

    Hope these comments help.

    CL
     
    RickProp likes this.
  13. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    3rd Jun, 2015
    Posts:
    11,331
    Location:
    Perth
    My number one question to you would be "can you get construction finance for 4 on your block?"

    Lots of people don't realise that funding 4 units is vastly different to funding 3 units. There is only a few banks that will fund 4 units on one title, if they don't want to lend you money then you need to get a commercial loan which is lower LVR (but it is on end value and you can capitalise the interest).

    So lending is the number one issue when trying to do a development. 3 or 4 require much higher deposits than 2.
     
    Last edited: 19th Feb, 2018
  14. RickProp

    RickProp Well-Known Member

    Joined:
    21st Aug, 2015
    Posts:
    146
    Location:
    Melbourne
    Thanks for the comments, they are certainly helpful.

    Regarding finance, I will be purchasing the site for cash, I am being conservative on this as it is my first one. I am also hoping to sell all off the plan. I have been advised that as long as one has sales that exceed the level of borrowing, i.e. say I have $1.1m in sales (2 of the 4 units), then I should be able to get the same in funding? Do you agree @Westminster? I was going to put together a separate post about financing this as I think it will be helpful to others as well.

    The other question I have: is one able to use the deposits from off the plan sales to help fund the development? I assume lawyers will advise the purchasers to have the 10% deposit kept in a trust account but have you had this released to you to help fund your developments?
     
  15. Westminster

    Westminster Tigress at Tiger Developments Business Member

    Joined:
    3rd Jun, 2015
    Posts:
    11,331
    Location:
    Perth
    I'm not a broker but yes I believe presales will help. Does your suburb like off the plan sales though? They are harder to achieve as people do like to see and walk through finished product but they can be achieved with good 3D renders and solid contracts - to create OTP contracts will cost more upfront - the 3D renders too.

    Generally using deposits is frowned upon and buyers don't like it but it is technically possible I believe. Your lawyer would be the best person to advise on this but as I say it's not popular with buyers. Their deposit is generally kept in the REAs trust account.
     
    RickProp likes this.
  16. Tufan Chakir

    Tufan Chakir Well-Known Member

    Joined:
    18th Aug, 2016
    Posts:
    872
    Location:
    Victoria, Australia
    That is my advantage, I'm both a planner, AND architect (qualified and registered as both....) !!
    But you are absolutely right - get a planner. Don't rely on the designer or architect - I've seen it come unstuck on so many occasions...in a development, even same it's worth the extra $
     
  17. MTR

    MTR Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    27,786
    Location:
    My World

    I used RAMS lo doc for my 4 townhouse development in Thomastown. They were brilliant, its resi product so its cheaper than commercial, did not need to sell OTP and best thing ever did not have to jump hoops because it was a lo doc product, Westpac product. It may work for you dependent on how much money you require for your deve

    All I did was get my accountant to sign a declaration on my income. Of course you will need an ABN number.

    BTW its smart to not mention you plan to sell anything when applying for this product.

    Great News if you are Stuck
    This product rarely gets mentioned on PC and I will let you work out why;)

    MTR:)
     
    Last edited: 24th Mar, 2018
    RickProp and 13242 like this.
  18. Blacky

    Blacky Well-Known Member

    Joined:
    25th Jun, 2015
    Posts:
    2,066
    Location:
    Bali
    If you need bank funds to complete the project you would be better off preserving as much cash as possible.
    I would encourage you to find the purchase to 80%. Then put cash in the offset.

    Even if you don’t think you need more I would still be inclined to at least fund some portion (eg20%?)Developments are very cash hungry. Especially at the tail end of the project.

    Most banks are winding back lending to development - esspecially apartments.

    With only 3x units there are still lenders who will put it on resi. Speak to your broker.

    Off the plan sales may make finance more difficult if doing resi lending. And off the plan selling incurres a lot higher costs.

    Blacky
     
    Mustafa Salehi and Sackie like this.
  19. RickProp

    RickProp Well-Known Member

    Joined:
    21st Aug, 2015
    Posts:
    146
    Location:
    Melbourne
    Thanks everyone for your comments. I have been away so just picked these up now, here is an update, we have:

    1) Settled on the property, it was a short settlement (30 days) so I managed to get it at a reasonable price in my opinion. Electronic settlement now is great!

    2) Engaged an architect, we went with an someone that does the work themself and is independent. My thoughts are that they have more buy-in to the process and will be more dedicated than a firm which simply allocates it to an employee. They will also do the townplanning and actually live in the area so know the council.

    They have drawn up a sketch of the layout attached. Let me know if you have any recommendations, it is still very rough though, just to get an idea of layout. I have to go back to them with comments very shortly.

    3) We have decided to go with 4 x 2 bed 2 bath single story. I think there is a bit more profit in going 3 bed double story but this will throw up a lot of issues: a) 3 beds will will likely require reverse living to fit 4 on site b) council may have more issues with over development of the site c) more complex build and longer build time with double story d) more issues with local residents re development if double story and 3 beds e) single story 2 bed 2 bath should sell quicker as it appeals to first time home buyers, retirees, is below $600k first time home buyer stamp duty exemption in VIC etc.

    4) Architect will then put this into CAD and we will know more how it fits together

    5) We have had the land survey and arborist reports done already

    Questions I also have:

    a) The old house on site is derelict, do we need to be checking with utility providers that utilities are suspended or disconnected? Anything else to do in this regard?

    b) Do you think a fence is required on the front? The sides and back are easily accessible if someone wants to get in so I am not sure a front fence is of any benefit other than a deterrent. I am not keen on having squatters, hence questions re utilities and fence.

    c) Is building insurance required now, since house is derelict I am not sure this will be possible.

    d) the architect has suggested going a solar hot water system rather than rain water tanks as these take up space and the s.p.o.s is small already. Does anyone know the cost difference with going solar vs rain water tank? I assume this is to achieve the 6 star energy rating required.

    As discussed, this is all new to me so any/all comments are appreciated. Thanks.
     

    Attached Files:

  20. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    1,648
    Location:
    Sydney
    Just clarifying a couple of points made on this thread with regards to finance.

    Firstly, off the plans sales will kill a residential application. Once credit find out you are planning to sell then they will deem the transaction as commercial and they will ship you to commercial land where there is no funding for newbies.

    Several lenders still do 80% but the biggest issue is VALUATIONS! Valuers are seeing whats happening in the Melbourne and Sydney markets and as such are adjusting their valuations.

    RAMS is starting to lose a lot of its charm and credit are starting to wind back valuations/LVR.

    Speak to your banker and ensure that you can actually fund the projects. It doesn't mean you stop everything else but you should run this concurrently with everything else you are doing.
     
    RickProp, Mustafa Salehi and Dapa like this.