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land development Initial Stage

Discussion in 'Development' started by Nils, 3rd Apr, 2016.

  1. Nils

    Nils New Member

    Joined:
    3rd Apr, 2016
    Posts:
    3
    Location:
    Melbourne
    Hi All

    i am new member on this forum and its really great to see that some of the members of this forum are so much helpful to others..

    i bought a property in Rowville, Victoria couple of years back in medium density residential zone.
    recently i was approached by a land developer and he made me an offer to buy the property.
    He mentioned that he can build 3 to 4 townhouses on my land. I didn't accept the offer but it made me thinking that should i do sub development myself ?

    As i do not have any information regarding subdivision, i would greatly appreciate if anyone can help me here:

    1. i tried to contact couple of builders and they advised me that they can not give me quote for construction costs. how can i make sue that i am ready for the project ?
    2. i checked on council website and it says that one has to start construction within 2 years of getting planning permit. is it true ?
    3. what should be the starting point for me - should i go to an architect and get drafts done and get planning permit first and also subdivide block and when i will be financially ready, can I do constructions ?
    4. can anyone recommend me architect, builder and broker so that i can assess where am i standing.

    any piece of your advise by you will be like treasure to me..
    Thanks heaps in advance!!
     
  2. Rockstar

    Rockstar Well-Known Member

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    Posts:
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    Location:
    NSW
    Vic is not my turf but you begin with a full feasibility study.
    Full site survey
    Town planning advice to determine how many units + any complexities, etc
    Costings approx per sqm for fixed price contract to completion
    Run the numbers to build (include all prelim costs and fees)
    See if you have the $ to take on the project
    Research what final value or rent returns to determine if it is worth it or not

    Decide whether to build or sell the land.
     
    Tufan Chakir, Leo2413 and MTR like this.
  3. Nils

    Nils New Member

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    Location:
    Melbourne

    Thanks heaps Rockstar
     
  4. Be Developer

    Be Developer Property Developer Business Member

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    @Nils

    At very least you want to recheck zoning and overlays.

    If all good, get architect/drafty to give you idea of possible configuration and quote..

    Once you get thru townplanning stage, you will have option to sell it to developers as approved site or just build it yourself self.

    Easier said then done... But doable!!!
     
  5. Nils

    Nils New Member

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    Can anyone please recommend me a architect / draft person based in Melbourne whom i can see and discuss further ?

    Thanks
     
  6. Eleven

    Eleven Active Member

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    Location:
    Melbourne
    Millar Merrigan in Croydon South/Kilsyth. They are a large office, land surveyors, engineering, Soil Test, architectural.
     
  7. Timwest

    Timwest Well-Known Member

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    11th Feb, 2016
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    Location:
    Sydney/Wollongong
    This is an example of selling it once its been approved 49 Omar Street West Ipswich Qld 4305 - Residential Land for Sale #201478054 - realestate.com.au.

    I wonder if you bought a similar site now, got it approved ASAP, how much profit is actually in this method. My thinking is that most developers would already have a team that could buy a property then get it approved rather then buying a ready approved property.I think it would be a tough sell unless there is a shortage of land supply in that area.
     
  8. sanj

    sanj Well-Known Member

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    Perth

    there has been some good advice given in terms of steps involved to develop this site.

    before you do that though, have you stopped to consider what your plan/goal is here? what specific financial outcome are you chasing? if it's just a case of making capital and you'd probably sell the properties you develop (or have to financially) then it makes it a more focused decision and takes away a bit of the white noise.

    In the past ive seen that for many smaller sites like yours (ie 2-4 units) it is often worth the existing landowner to simply sell the land at a good price in a strong market where developers are looking hard for sites, instead of developing themselves. below assumes that the potential selling price as is would mean a good profit for you.

    SELLING SITE AS IS VS DEVELOPING
    pros
    1) less headache, simply cash to movr on to somethjng else.

    2) potential to cash in on an occasionally irrationally strong demand for blocks with smaller developers often paying more than they should at times like this.

    3) no need to pump a lot of capital in

    4) potentially 50% CGT discount and no GST payable

    5) less risky, never discount the possibility that instead of making money you might end up losing some which would be a case of a bathing defeat from the jaws of victory.

    6) realising your gains /profit now vs 2/3 years

    CONS

    1) developing could be more lucrative financially, sometimes significantly so. in this case I suspect not as much as you might expect once all costs and taxes are paid.

    2) you miss out on chance of creating equity and positive cashflow investments if you built and retained



    using rough numbers as an example, ive seen situations where someone could have sold a site they bought for 250k for double their money, meaning 250k profit with 50%CGT discount. so roughly 200k after tax.

    instead they developed and "made" $450k or so pre tax and gst, ie so an additional 200k from developing it.


    after paying higher rate of tax and gst they ended up with only about an extra 100k all up vs selling the site despite the extra time, headache, risk and capital needed.
     
    Be Developer likes this.
  9. Be Developer

    Be Developer Property Developer Business Member

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    Hard to work out actual profit.

    DA/town planning approved site calculation works slightly different. As most of guessing game is taken care of with DA approval.

    Potential buyer has to work on

    Possible reslae value

    Minus
    Building cost
    Soft cost
    Subdivision cost

    Based on above has to offer land cost and adjust expected margin.
     
  10. Tufan Chakir

    Tufan Chakir Well-Known Member

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    Location:
    Victoria, Australia
    TRhis advice is pretty solid, no matter what the location.