Join Australia's most dynamic and respected property investment community

First subdivison - South Eastern Melbourne

Discussion in 'Development' started by dan_89, 15th Aug, 2016.

  1. dan_89

    dan_89 Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    115
    Location:
    Melbourne
    Hi All,

    Looking to get started on initial stages of a subdivision in Melbourne's South Eastern suburbs (Scoresby) and would love some guidance at this early stage to ensure I am heading in the right direction.

    I will be appointing a builder to the project when plans and permits are finalized. I would love to try owner builder but at this point my time is better spent earning an income at my 9-5.

    The plan is to retain existing newly renovated property and get plans + permits to build a new 2 storey townhouse at the rear. Property details below;

    Location: Scoresby, Vic
    Land size: 868sqm (including easement - runs along back fence 3.0m from boundary)
    Current land + house value: $700,000
    Zoning: General Residencial Zone - Scedule 2 (GRZ2)
    Overlays: None (according to online search via land.vic.gov.au)
    Scope of development: Retain existing + build new 3/2/2 townhouse
    Planning + permits proposed budget: $20,000
    Build budget: Pre-approved construction loan $320,000
    Estimated final value of NEW townhouse: $640,000 - $660,000 (based on recent comparables)
    Estimated final value of EXISTING residence: $620,000

    At this point I have been dealing with a local land consultant who specializes in subdivisions. So far I have found them to be extremely helpful. I have the land survey completed and now looking to get started on initial site analysis plan. The company I am speaking with has quoted the below figures;

    - Site Analysis plan: $1100 + GST

    - Landscape plan: $900 + GST

    - Town planning: $4000 + GST

    - Independent Drafting Consultant (per unit): $2600 + GST

    - Two (2) Lot Subdivision: $3300 + GST

    Essentially the cost to proceed with plans and application to Council for a second dwelling behind the existing house will be $8,600 + GST. Once the permit has been issued the subdivision can proceed which is an additional $3,300 + GST

    In addition, the Council and certification fees will be $937 and the advertising fees will be about $400.

    Following approval I will need to engage a builder/draftsman to arrange further plans and finally working drawings to proceed with build which I am allowing an additional $4,000.

    Further to these costs I have allowed for the below items;

    - New Concrete Crossover if required: $3500

    - Electrical Group Metering – if Common Property Exists: $3000

    - Driveway Drainage: $1500 - $3000

    - Water Tapping Fee & Contributions: $3500

    - Sewer Tapping Fee & Contributions: $1500

    - Open Space Contribution: Not required as only 2 unit development? (TBC - have not confirmed this with council as yet..)

    In terms of build cost, dependent on the size of the dwelling which I am hoping to be around 20 SQM – double story then Build cost quoted by local builder should be around $13,000 - $15,000 per SQM, dependent on what’s Inclusive of the per SQM price and the quality of the finishing’s, inclusions of the house. With the above in mind, the build cost could range from $260,000 - $300,000.

    From there I will need to arrange driveway + landscaping which I am planning to allow approx. $12,000.

    If there are any items I may be missing or any figures that stand out as being over-inflated I would greatly appreciate the heads up. Any guidance to assist with my first development journey would also be greatly appreciated! :D

     

    Attached Files:

    Lil Skater, MTR and RetireRich101 like this.
  2. MrFox

    MrFox Well-Known Member

    Joined:
    20th Aug, 2015
    Posts:
    139
    Location:
    Melbourne
    You have couple of large trees in the yard. They don't look native but the council could give you a grieve. Also you may need to pay landscape bond but you will get the money back.
     
  3. dan_89

    dan_89 Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    115
    Location:
    Melbourne
    Hi MrFox,

    Thanks for the response. That is one item I did not note; The arborist report, which council have requested also. I have been quoted $500 for this to be completed. There is currently only 1 tree in the backyard which is a large gumtree (unsure of type). The other tree that is visible had been dead for years and was infested with termites therefor we had it cut down and stump burnt out. I have been told there is no vegetation overlay by neighbor but will need this confirmed by arborist and/or council. Cheers
     
  4. MrFox

    MrFox Well-Known Member

    Joined:
    20th Aug, 2015
    Posts:
    139
    Location:
    Melbourne
    The block you have is little bit challenging to develop if you are planning on keeping the existing dwelling. You will need to allow for car parking for unit 1 (hopefully single car port) and also some open space. The council usually does not like the front yard as an open space. It is a great size block so I hope you can still fit a 20 sq. dwelling on what is left.
    Fortunately the tree is where the driveway is going to be so it should be OK. You may need to use permeable surface so the tree root system is protected.
    Have you got any preliminary plans yet?
     
  5. Brendon

    Brendon Well-Known Member

    Joined:
    11th Jun, 2016
    Posts:
    46
    Location:
    Vic
    I would consider getting the tree removed before the arborist report, if you can do so legally.
    Depending on council you may be able to remove it due to how close it is to the fence without a permit but once the aborist has included it in your plans it's too late and you have to work around it.

    A friend has recently done this is Mooroolbark, that is Yarra ranges council though.

    I would also expect driveway drainage to be closer to $15,000 if/when they make you put a Detention system in for the stormwater.
     
    MTR likes this.
  6. Brady

    Brady Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    452
    Location:
    Adelaide, SA
    As above would be looking to get rid of tree ASAP. I didn't with my development and biggest regret. Instead of removing we planned to have the driveway double the distance of the neighbour. Council said neighbours shouldn't have gone through and forced me to get aborist report with hydrovac report, ended up approved but subject to permeable pavers which cost more and was meant to have arborist oversee the whole development. All alot of extra $$$$
     
  7. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,358
    Location:
    Sydney
    Keep or sell ?
    If selling budget GST and income tax in the equation.

    Budget for extras like holding costs and a reg valuer property valuation to apportion the land and the existing house/land and apply that value to the original cost to split out the land. Remember too that the fact it was once part of your home doesnt give ANY tax relief. And contingencies ?? Budget will blow out. Delays will occur.
     
  8. dan_89

    dan_89 Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    115
    Location:
    Melbourne
    Thanks all for the responses.

    I have spoken with council today who have confirmed there are no vegetation overlays on the property therefor I can take the tree down as I please.

    @MrFox I do not have any prelim plans as yet. I have been tossing up if I should proceed with plans and permits as it is a difficult block so unsure if feasible therefore hesitant to outlay the cash..

    @Paul@PFI The plan is to keep the townhouse and rent out then keep the existing as my PPOR. Will the new rear dwelling if rented be deductible? (deprecation, interest on loan etc..)

    Builder has quoted rough build cost between $260,000 - $300,000 but that is a very rough figure at this point.
     
  9. MrFox

    MrFox Well-Known Member

    Joined:
    20th Aug, 2015
    Posts:
    139
    Location:
    Melbourne
    Some times its better to start fresh and build 2 new ones. The old dwelling could detract from the value of the new one. If you are planning on keeping it as a rental that should not matter as much. Are you going to render the front unit or improve its appearance?
    The preliminary plans is just a sketch of what could fit on the block taking in consideration any trees, easements, set backs etc. There are rules about site coverage which have to be taken in consideration. Experienced architect/draftsman should be able to help you with minimum cost if any. If you need help I can give you a number of my guy.
     
    Tufan Chakir and MTR like this.
  10. klabat

    klabat Well-Known Member

    Joined:
    4th Jul, 2015
    Posts:
    69
    Location:
    Australia
    you may have an issue of neighbourhood character for two townhouses in the rear... have you looked into two single storey units?
     
  11. dan_89

    dan_89 Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    115
    Location:
    Melbourne
    Hi @MrFox thanks for the reply,

    Looking back I may have been better to demolish and build 2 but didn't have the serviceability to buy house then develop 2 so chose to renovate existing (spent $45k on full reno) with future plans to build on rear. Now that I have spent the money on the front dwelling it becomes less feasible to knock down. Based on my rough calculations, if I was to build 2 new townhouses I would only just break even.

    That would be great if you could forward a contact to get some cost effective prelim plans done! Thanks in advance.

    @klabat There are 2 other two storey townhouse subdivisions in the court that were built in the last 4-5 years so shouldn't have an issue with neighborhood character unless council regs have changed
     
  12. klabat

    klabat Well-Known Member

    Joined:
    4th Jul, 2015
    Posts:
    69
    Location:
    Australia
    yes those subdivisions and planning schemes have changed. Most councils have updated since then a majority from early 2015.
     
  13. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,299
    Location:
    Perth, Melbourne, USA
    this is excellent, thanks for sharing. I have just received approved plans and permits for 3 3x2 in Croydon and am currently progressing, started a thread on this if interested

    Holding costs?

    Contingency 5%?

    make sure you appoint a gun townplanner it will make your life easy.

    If you could build single storey at rear it would achieve higher price, however I suspect you can not

    check specifications of same product in the area and what buyers want

    should be paying around $1300 per sqm for your build

    Are you going to sell the front?

    Did you purchase in your name or Trust?

    MTR
     
    SOULFLY3 likes this.
  14. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,299
    Location:
    Perth, Melbourne, USA
    PDF would be good

    The most important factor you have is a rising market.

    You nail this one, use equity, rinse and repeat.

    Have you also looked at what the value of the original property would be after developing?
     
  15. MTR

    MTR Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    7,299
    Location:
    Perth, Melbourne, USA

    I agree regarding building new, unless land is scarce, desirable areas
     
  16. Tufan Chakir

    Tufan Chakir Well-Known Member

    Joined:
    18th Aug, 2016
    Posts:
    73
    Location:
    Victoria, Australia
    Access into rear garage my be difficult - tight turning circle.
    Check the location of pipes in the easement - despite being an easement you will still need to be 1m clear of the pipe, usually
    Plan is pretty basic, alignment is determined by the block shape - I'd rotate it to align with the easement - access will be easier.
    Has the drafter (guessing it's a drafter) done a full check against ResCode?
     
  17. dan_89

    dan_89 Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    115
    Location:
    Melbourne
    Hi Tufan,

    I will request a dial before you dig report to see where services are located in the easement.

    I have a feeling if we align the rear dwelling with easement it will interfere with the new proposed carport for front dwelling but will mention this to my draftsman/land consultant.

    To my understanding initial sketches have been done to meet res codes however this is only initial plan at this point. From here I will be arranging a meeting with Knox city town planner to get their thoughts and will await feasibility report from my land consultant.

    I would have liked to build 2 x new townhouses however my serviceability at this point only allows for construction of 1 x townhouse and the fact that I have spent approx. $45k on renovating the front dwelling. In hindsight demolishing and building 2 may have been the better option however.

    Dan
     
    Tufan Chakir likes this.
  18. Tufan Chakir

    Tufan Chakir Well-Known Member

    Joined:
    18th Aug, 2016
    Posts:
    73
    Location:
    Victoria, Australia
    dan - remember at this stage the design is only lines on paper. Changing it is easy, starting again is easy. But also bear in mind once lines are on paper people tend to 1) commit to the design and, 2) become protective of the work they have done.

    I hope you don't mind - I've taken your footprint and adjusted to see what it's like.

    the first is a simple rotation of the design - shows that the north west corner is available for building, but also that the garage, in this design, does encroach significantly into the existing etc. Not the solution, but a test

    The second - I've reversed the design, flipped it over. See how there is still space available in the north west, and look at the garage position - easier access in and out. and the encroachment is much smaller.

    This tells me that what you are trying to achieve can fit, but should be redesigned for a better fit. Also think about minimising the secludes open space to the existing, to see if that gives you more land area

    remember - it's "lines on paper" at this stage. Push it a little harder, and after talking to the Council get yourself a good planner
     

    Attached Files:

  19. Paco98

    Paco98 Member

    Joined:
    1st Jun, 2016
    Posts:
    8
    Location:
    Melbourne
    Hi

    @ dan_89, I am planning to do similar thing to you, subdivide the land and build a house at the back (Ferntree Gully area).

    Current value $580k-$600k
    Land size 721m2
    GR2Z, No overlay
    Subdivision and planning budget $40k
    Building budget $300k inc driveway and landscaping
    Estimated value of existing house after subdivision and renovation $550k
    Estimated value of new house $600k

    I got a few friends built a double storey townhouse and most of them cost $350k and above. So I am wondering if it is possible to build a 18sqm-20sqm 3/2/2 double storey house within $260k-$300k budget.Otherwise I have to go for a smaller 3/2/1 single storey house.

    And may I know what company do you engage for subdivision and drafting?

    Thanks
     
  20. Timmyd02

    Timmyd02 Active Member

    Joined:
    18th Jun, 2015
    Posts:
    26
    Location:
    Melbourne
    $300-$350 for double story rear unit. $260-$310 for single storey. I have good contacts in knox if you need as this is where I do most of my developments.