Knock down & build 2 townhouses

Hi,

I am new to property development and hoping to buy a block of land to knock down & build 2 townhouses.

I have so many queries to clarify and hope I will be able to get some advise from you, who have gone through this stage.

1. What sort of a block should buy to build 2 townhouses.
Would it be better to go for a block which has access from 2 roads (a corner block) or a block which is narrow from the front which widen up from the back of the land.

2. Should I inquire from the council whether townhouses could be build on that block prior to purchase

3. How long does it usually take to get the building permits

4. The cost to knock down a single story 4 bedroom house. I know this depends on the condition of the house and just give me an approximate figure if you could.

I live in Melbourne and thought of doing the first development in south-east.

Thanks in advance if you could advise me....

 

1. Corner is better given the two THs may have their own frontages, however it's not always possible.
2. Look up the zoning of the property. Look around the area for other subdivisions. Speak with council.
3. Speak with council.
4. A mate of mine did it in Wantirna, it cost him $18,000, this was 5 years ago. Take this as an indicative figure only.

Other than this, come to the meetup this Friday that @The Y-man linked to in your other thread. You may learn a few things.

 

Thanks Westie, good to know those details. I will give the preference to the corner blocks.

 

Most important is to understand how to do a feasibility. Understand from the get go this is a very high risk proposition your embarking on.

 

I know, that's why I didnt think of this during the last couple of years, as it's high risk if fails.

At start I would like to broaden the knowledge and was looking for the property development courses, but when I read this forum, most of the people have said can learn from the forum itself. Do you have any suggestions how to learn the basics of property development, what to be followed & etc.

 

Hi @Rowa

Personally I don't believe just reading the forum is anywhere near adequate. If you can, network with other developers on the PC meetups in your area, that's a fantastic start. I think doing a development course is a great way to have some structured, foundational knowledge which you can build on later. In no way is it essential, but Imo it's a great way to start, in conjunction with networking with others.

The other thing you want to do is make sure it's really within your risk profile. If you (hypothetically speaking) have $5 and you risk all $5 or worse, more than that, you really need to assess if the risk is worth it.

People mostly talk about financial capital but there is such a thing as emotional capital. Once you spend most of that, it is very hard to get back on the horse and continue to build wealth.

Not wanting to sound overly negative but the risks need to be taken very seriously, otherwise it could really derail your entire plan to build wealth for a very long time.

 

Be aware that corner blocks require larger setbacks which can mean a smaller overall building envelope.

Have you checked if you have the borrowing capacity to do it?

 

Always intrigued by the number of adventurous mum/dad developers out there..

Must be attributed to The Block and similar property TV shows..

 

Nothing wrong with trying to stretch and flap your wings either. Proper feaso and DD essential though.

 

Nothing wrong with opening up a restaurant because you saw it on TV either. Proper cooking technique and ingredients essential though.

 

Have taken a pre-approval from the bank couple of months back & was looking for a suitable block, but still didn't have a luck. There's so much of a competition on the properties in real estate.

I am just wondering how do you find properties except the onces on the real estate.

 

Excellent post

 

1. Corner blocks are good but also any block that can handle a side by side design is the next preference. THird preference would be a block where it can handle one house behind the other. For side by side the minimum width for Melbourne and a single garage might be around 15m but the wider the better, 20 would allow a double garage. Most importantly the block would have appropriate density code to allow subdivision
2. absolutely you must know if the block has the right density code and if the Town Planning Scheme of the council would support this. Do not buy if you do not know
3. In Melbourne this can be quite protracted, first you will need development approval once that is approved then you will apply for building permits. Allow 6mths for the process
4. I pay $15-20k in Perth. I would assume Melbourne might be similar but I'm not sure.

If you are doing this to make a profit, and I assume that would be your intention, then you need to learn more and have more people on your team to help make the right choices. You may need a town planner and surveyor to help guide you if the block is a good one, a builder or estimator to help guide as to how much things will cost and an accountant+broker to ensure you understand how the tax/gst will work and if you can get finance.

 

@Westminster, thanks for the information. So many things to consider.. May I know from where to get this knowledge, before committing for it, as I have not done any subdivisions before.

 

As mentioned you really need some help from a town planner to help with the beginning stages in the block selection and the others such as an accountant, broker and surveyor

 

Thanks Westminster....

 

Mate the advice is going over your head because your most likely just not ready for this type of strategy yet, imho.

 

Could consider subdividing and building a new townhouse at the back of an old house and do only cosmetic changes to the front one. Less capital expenditure required

But to be fair with building cost and price of land unless you can get approval for something that no-one thought was possible on it there is not much margin in it. The end product (2 townhouses) have not increased in value as much as the land and construction cost over the last few years. Works if you are a builder as well but clearly you are not

Most people are very skeptical of new builds that are just built as an investment to flip

 

Both are true. I take a lot of mum/dad investors through their fist dual occ development and at the end they are always amazed how many moving parts are in the site selection, feaso, & due dilligence that they were totally unaware of previously.