NSW IP in Cranebrook NSW

Hi guys, I am looking at an IP in cranebrook NSW in the Penrith council. Its a 3 bed renovated block with new kitchen and good building. The landsize is over 700 m2 and agent says potential for granny is very good. I am kind of interested in the property but thing is its a sloping block. The good thing is the block lays between two streets and have access from both streets front and back. It seems to be a good investment from that point of view I can subdivide it and both lots will have their own access but this sloping block is putting me off. The house is sitting right now at the front of the lot and backside is high up towards the back street with its own access. I am not sure how easy will it be to build a standard 2 bed granny on that kind of land. Has anyone got any experience with this type of lot? Would you buy that type of house in cranebrook ?

 

@hash_investor . Seems like the block has quite a bit going for it from a street access perspective. Though the land is sloppy! Keep in mind, the agent is working for the vendor.

Building will really depend on how sloppy the land is. However, Western Sydney has a decent market for granny flats and you should be able to rent it out as if it's a "villa" given you can do street access for itself.

I would consider buying that kind of a house in Western Sydney minus the sloppiness of the land and the time we are at in the market. Personally, I like flat blocks - easier to build on and less costly.

Work out the build cost for the granny flat and the rental for the granny flat? What's the rental yield for the house and the granny flat combined?

Also, out of curiosity, what's the reason for considering this particular property given that Sydney is said to be at the peak? (though no crystal ball and who knows it may change!)

 

I'd buy in cranebrook a.k.a crimebrook ... In 5+years

P.s It is an alright area

 

The rental yield of the 3 bed house, small rooms with only 1 built ins is around 380 p/w max. A two bed granny flay with laundry is costing between 80K-100K and will rent for 320 p/w conservatively. So yeah my greed is 700 p/w rental income with purchase + granny cost of 650K.

 

That's a rental yield of 5.6% . It may be positive cashflow now.. However lost opportunity when it's -ve cashflow during the build of the granny flat. When rates go up, to say 7%, what would be your net cashflow? I'd look at doing a spreadsheet to determine, weekly, monthly and yearly cost of holding this IP at current rates and at increased rates

Further, 80k appears to be on the conservative side for a granny flat build.

 

Penrith council (from memory), for R2 land you can build attached duplex on 650m2, or detached if 750m2 or more. You can obviously strata title it and sell separately.

If its 750m2+, maybe an option for build a 120-150m single level dwelling maybe be a better option than a granny flat

 

Alright. That figure is from one generic quote only. I am increasing that to 100K to make it a more accurate but will double check that.

Regarding rates, that will be my only 'unpaid' property so will be able to hold it up most probably, provided I need something to negatively gear as well and I am looking for long term. Hence the question, should I bank on negative gearing in Cranebrook?

 

That's conservative even for a flat block!

If it's one of those massively sloping blocks toward the castlereagh side of cranebrook it may need retaining walls which will blow out the costs even further.

I'd be getting a builder out asap for a quote.

 

Yes, that is an option too. I was thinking about it too but the agent said its such a nice building why would you rebuild it? And GF seems like an easy option.

 

How slopped is this block? Honestly if it requires retaining I would assume a figure of $200k until an engineer or very experienced builder told me otherwise.

An average quality two bed, pre-fabricated flat will cost you $120k+ from Hi-Tech Homes in Bringelly, then you need a plumber and a level 2 electrician to connect services plus all your council approval costs.

A flat built on site will have similar costs and this is all without taking into account retaining walls.

 

Thanks for your help guys.

Not sure if it requires retaining. The building currently standing on that block has a laundry underneath with levels the frontage with the back of the lot. Will have to do something like that.

 

Do you have a photo showing the slope? I looked at house on Mamre Rd, St Marys a few years ago zoned for townhouses. It was high at the front, low at the back. Because it sloped to the back I was going to have to access storm water on the rear neghbours property (townhouses) and there was an upfront access fee of $15,000 then whatever it cost to get storm water access i.e. digging and running pipes. Those are the sort of things you need to be aware of before buying a site to develop, I got lucky on that one because I had no idea what I was doing and the agent was honest and upfront about it.

www.homeimprovementpages.com.au/article/costing_your_retaining_wall_project

That article is from 2011. Generally: If the wall approaches 1 metre high you need a stuctural engineer. If the wall will be built within 1.5 metres of the property line you need council approval. It also gives the labour costs but I would be weary of those figures, there aren't many desperate trades out there at the moment, they are all pretty flat out so prices are high.

 

I should preface this with: I have only ever researched building a granny flat and townhouses in Penrith LGA and I have no qualifications in building, engineering etc. just my own experience in looking at these things when an IP opportunity comes up.

I think your best bet is to get an experienced builder out to assess the site.

I know the property you are talking about now.

The Penrith DCP sets out your minimum front and rear setbacks, I am pretty sure don't apply to granny flats but best to check with council first. I believe it will effect a duplex/subdivision:

2.2.5 Front and Rear Setbacks

A. Objective
Setbacks are to reflect the character of established garden suburbs, and provide for development of flora and fauna corridors (as shown in figure D2.4).

B. Controls
1) Development must be within the development footprint which is determined by the maximum development footprint for your site by:
a) The minimum rear setback for a single storey building (or any single storey component of a building) is 4m.
b) The minimum rear setback for a two storey building (or any two storey component of a building) is 6m.
c) Adopting an average 6m rear setback on irregular shaped allotments; and
d) Adopting a front setback that matches the neighbourhood character.

2) Within the rear boundary setback:
a) there shall be no building encroachments either above or below ground (eaves excepted);
b) maximise the amount of undisturbed soil, encouraging rapid growth of healthy trees and shrubs;
c) where there are physical encumbrances such as open drains, increase the setback accordingly.

3) Determine an appropriate front setback:
a) either average the setbacks of
b) the immediate neighbours; or
c) adopt a 5.5m minimum whichever is the greater dimension;
d) and provide extensive landscaping within the front setback area.

4) Permissible encroachments within the front setback are: a) verandahs and pergolas only; b) with a maximum 1.5m encroachment. 5) Garages and parking spaces are not permissible within the front setback, other than stacked parking or driveways leading to a garage.

 

Might want to get the water table or water pipes checked if you have a sloppy block!

 

The KFC Strategist picked up on the 'slop' references - the irony

 

So what do you think about it then?

 

The first thing I would do is get the dimensions of a 2 bed flat (Hi-tech homes can send you plans), download google earth and see if it can fit on the block or not. Looks like it will be a squeeze.

I can give you a builders details in Cranebrook if you like but I don't know if he will be available he is normally booked solid. He is the sort of bloke who will give you worst case scenario.

 

Apart from fitting on the block and how close you're going to come to the boundary I would be figuring out how where you can connect the sewer, you're unlikely to be able to connect it to the house because that's an up hill run.

 

@Tim & Chrissy **** runs down hill so the main must be at the bottom end of the block

 

Would that mean running it out the the council strip? My concern would be the costs involved in that - I have no clue.