I also need urgent advice - please help

Yes you would think so. I had asked the question as to what these costs were for so perhaps they will fill us in later. It seems like a lot of cost considering we have not even had the plans approved yet. Hopefully most can become costbase as you have mentioned. I am assuming it must be an expensive build going by costs so far that is why I also asked for estimated build cost.

Either that or it is a very complicated build for some reason. Perhaps they will inform us later.

 

Has the original structure actually been demolished? Can the DA plans be amended and resubmitted? Approval is worth $$$ whether you build it or not. You may have a claim against the architect too.

 

I am in the same boat, Have a PPR in Baulkham Hills NSW (one of the worse hit suburbs with the downturn in property) I am also a Mortgage Broker so understand both sides of the fence.

As council approved plans are good for a number of years we have chosen to eat the deposit paid to the Builder (about $50,000) if we can not get the values needed to build (we have a few properties so may be able to squeeze the equity in need)

The one main factor to consider is if you can afford the repayments during the build and after and the bank will give you the loan required and you plan to live there for the unforeseeable future who cares what it is worth. As the property value is only important when you Buy, Sell or need a loan.

 

No, the $ spent doesn’t include the deposit. It is just the fees for the design and all other fees to engineers, council etc. The design is finalised but not approved.

 

Yes, that is one of my main concerns.

 

Thanks for your suggestion. It is something that we did consider but realistically, I would not be able to live in it due to the lack of space. We also did consider an extension but thought in that case, we may as well do a new build so here I am now.

 

The cost is for the architect, engineer, council, certifier etc. The build is around a $1m. Can I use these costs as cost base? Do I need approval of plans before I can apply this as cost base?

 

Yes, you can use these as a cost base as they are a cost against the property and relate directly to the property even though the plans have not been approved yet.

If the cost to finally get the plans approved is not too much, I would suggest you have them approved. I am not really up to date on some things but believe that once your plans are approved, you have up to seven years in which to start the project or build. The other reason to have the plans approved if the expense is not to great is because it may be enticing to a potential buyer or more so a developer who does not have to wait to have plans approved to start the build as may a potential home buyer if you do plan to sell. So it may improve the value and desire of the property by having them approved.

The other reason is if you do decide to sell the property and potential buyers are made aware of incompleted plans, it may be of concern to them and possibly offputting. Reducing desire and price potential.

Do you have any idea of what the cost to finally have the plans approved would be ? And why the holdup ?

Now back to the build. I can tell you from experience that there is every chance your build will take longer than estimated and end up costing more than the builder has quoted.

You said that upon completion you expect you would only get your money back. Meaning we are talking a near100% lvr if I was interpreting you correctly
That is not really a good position to be in right now or at your age. With prices looking as though they will fall further, and with the possibility the building costs could blowout by as much as 20%. And considering you think there may be 300k capital gain if you sold. If you complete this build and only get back your spend you will be losing that capital gain.

I would be considering completing the plans if the cost is not too much. Selling the property and using the capital gains to purchase a property you could move straight into and maintain a better lvr ratio and more security.

You should consider a slighty older, slightly rundown property that is single story. Something that is livable for now, but something you can improve on as you go, or something a second story could be added to. Basically something that gives you scope to improve the value of. You could buy a newer property where nothing needs doing and is quite new, but this gives you no opportunity to really improve on the value of the property. You will have to weigh those things up for yourself. Do not over commit yourself.

All the best.

 

Thanks for your detailed response.

 

Wow! 80K...how much is this place going to cost...what did you buy and where?

I don't know you...but hunch tells me...that you may not have made a prudent decision.

Need more details from you to tell either way....

 

Where abouts out of interest? I live in Mosman.

Personally, I think the very fact that you're posting on here asking for advice has almost answered your own question. Living with stress now will only increase if/when rates go up and you still have the whole build to go through. Ask anyone who has gone through that and they will say that if you're already stressed now, you haven't seen anything yet.

Add to that you expect the gain to be $300k now, but only what you spent on it if built? Sounds to me like you're probably best taking the gain and reassessing in a better frame of mind once you have some headspace and time. $80k is a lot of money, but if you've made a gain then....

- Andrew

 

If you have the finance to proceed and can service the commitments with growing income/s, why not work towards a high quality PPOR? I found a family friend acting as a project manager helped keep track of progress and checked on quality whilst we worked full time in our jobs. There would be additional stamp duty to buy another site instead.