How much are plans and approval worth?

Discussion in 'Loans & Mortgage Brokers' started by MondeoMan, 5th Jan, 2017.

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  1. MondeoMan

    MondeoMan Active Member

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    I have come across a house that is in Geelong, so some growth but not crazy, purchased by owner in Nov 2015, they got plans and permission for 2 townhouses (unsure if it includes keeping original house and building outback) and are now selling for 100,000 more.. with no work done to main house. Normal growth in area would only have added 20,000 at most.

    Is this normal? or someone who is trying to make all their money without doing the work? Seems pricy to me but I have no experience
     
  2. melbournian

    melbournian Well-Known Member

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    Permits and plans itself cost money as well and the time and effort to get them to organize. 100K is not a lot if you ask me there are other suburbs where it can command 200-400K alone.
     
  3. MTR

    MTR Material Girl Premium Member

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    Without doing the work, what do you mean?

    I just sold DA (3 townhouses) in Croydon, Melb with plans and permits and spent months negotiating with council and employing the professionals to work on my behalf. Yes, its not building, less risk and time but they are in demand if it ticks the boxes.

    No point buying a property with DA approval unless you can make money from the end product.

    There will be a set price for lot/block dependent on the area, this information can be sourced via a re agent, anyone worth his/her salt will be able to tell you what the going rate is.
    In the main it will be builders buying as they continue building and require projects and it can take significant time/risk for builder trying to put together a DA. They can also build cheaper than a developer.

    Generally speaking the more lots you can develop the more money you will make.

    Whether it is worth buying or not is totally dependent on the numbers, cost of the land/DA, building/turnkey cost, end value of product...once you determine this then you can work out whether it will be profitable.

    MTR:)
     
  4. dabbler

    dabbler Well-Known Member

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    I would say it is worth nothing unless the plans suit you, either for living or for investment.

    If they have done a good job and it will be a good investment, it will be worth paying something for if your a developer or builder as you can get on with it, I do not see 100k myself, not in Geelong if it is not a super flash place, the 100k would go into your costs to work it out.
     
  5. albanga

    albanga Well-Known Member

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    Their value is simply in time and money to the developer. The cost could be a simple formula of planning costs + holding costs = Additional Value

    But that's very simplistic and it's true value to the developer is going to be the time and frustration saved by not having to deal with the council. That is honestly the premium you are paying for and if you have dealt with council before you know this can be tremendously valuable!
    I'm up to 40 business days and counting on a freakin secondary consent!!!!!!!
     
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  6. MTR

    MTR Material Girl Premium Member

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    Nightmare, I just got my plans endorsed, let me slit my wrist

    I worked out an easier way, don't mail hard copies, just make contact via email and keep working on the drawings, changes they require, saves months ..... only if they are prepared to work this way.

    MTR:)
     
    Last edited: 6th Jan, 2017
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  7. albanga

    albanga Well-Known Member

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    Oh don't worry as soon as my application gets assigned I ask for the planners email and then deal with them direct via email and phone calls.

    They are saying because of the "christmas" break and everyone wants approvals sorted. I called her the other day and whilst being nice quietly let her know I have been waiting 35 business days for a secondary consent that could be signed off in all of 20 minutes (It actually achieves a better result in all aspects for council planning!).
    I said I submitted it start of November and she said she is dealing with applications from October....regardless though it will be done by mid next week before she goes on leave!!!!!!!!!!!!!!!!!!! I sweat if i dont have approval by then I may go down their with a bat.
     
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  8. melbournian

    melbournian Well-Known Member

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    which council is this?
     
  9. albanga

    albanga Well-Known Member

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    Rule number 1 about council
    You do not talk about which council it is.
    Rule number 2 about council.
    You do not talk about which council it is.
     
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  10. MTR

    MTR Material Girl Premium Member

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    hehe.... I am feeling smug at the moment, cos I got a gold star from Council:p
     
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  11. dabbler

    dabbler Well-Known Member

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    C'mon guys....building is easy, I read it her eon the forum :)

    On one I did the neighbor decided that they were not going to let anything be ok, guy was a solicitor, they dragged it out over 12 months extra, was 2 years of hell before even got to do anything.