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Naughty naughty!

Discussion in 'Commercial Property' started by JKWS, 12th Mar, 2016.

  1. JKWS

    JKWS Well-Known Member

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    Hey girls and guys of PC!

    Now some of you will have harsh words to say about this, but I'm curious to see what you all think!

    Basically I've tied up a very affordable IN1 commercial site, it's an old residential block with residential houses either side and up the street.

    Im going to lodge plans with council for 2 x loft style barns/ sheds which suit the area and the streetscape. It would appeal to a mechanic or builders office/ workshop etc, however there isn't demand for this kind of thing in the area! The only demand in the area is for affordable housing and rentals..

    You see my gap?

    Once the plans are approved I was going to go in and fit out the interiors with bedrooms and proper bathrooms, dividing walls etc- Then lease?

    The neighbours are fine with people living there and it in fact would fit the streetscape. Council would be happy as I met the requirements in the lodgement.

    What could possibly go wrong?
     
  2. Tim & Chrissy

    Tim & Chrissy Well-Known Member

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    You could be given a notice by council that if you don't have the residential tenants out in X days (30 in my experience) they will pursue you through the courts.

    Your insurance will also be invalid because you are not using the building for a purpose that is legal.
     
    JKWS likes this.
  3. JKWS

    JKWS Well-Known Member

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    There's defiantly risk, I'm just reading up on it some more now.

    Looks like I may be able to set it up as an Internet and wholesale trading facility. Apprently it allows for 24 hour onsite security, so of course you will need some creature comforts in the shed whilst working?

    Insurance would be tricky.
     
  4. Tim & Chrissy

    Tim & Chrissy Well-Known Member

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    Which means your tenants need an ABN, master security licences, security guard licence, public liability insurance....the list goes on.

    If the tenants start squatting what will you do? You can't ask the tribunal/courts to enforce a tenancy/lease that was illegal in the first place.

    Way too much trouble I think. Could you get approval for a corner store?
     
    wylie likes this.
  5. JKWS

    JKWS Well-Known Member

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  6. Tim & Chrissy

    Tim & Chrissy Well-Known Member

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    Would or wouldn't?

    Is it just commercial or is it a mixed use zoning?
     
  7. JKWS

    JKWS Well-Known Member

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    A corner store would be permissible by council.

    It's not mixed, the zoning was originally low resi, 3 years ago the whole street was changed to IN1. The current homes either side will never be able to knock down and rebuild, only renovate.

    @Tim & Chrissy
     
  8. Tim & Chrissy

    Tim & Chrissy Well-Known Member

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    Maybe enquire about the possiblity of a corner store with unit upstairs if the area is already largely residential. I would be seeking expert advise (possibly from a town planner), especially considering the recent zoning change, there is obviously a reason for it.

    Your proposing to put a lot of money into a development that can never legitimately be used for what you want. It's a huge risk that could become financially catastrophic if it goes bad.
     
    Azazel likes this.
  9. Tim & Chrissy

    Tim & Chrissy Well-Known Member

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  10. JKWS

    JKWS Well-Known Member

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    I'll keep looking for an alternative, I'd like to see if we can put zoning change through.

    Thanks for your input @Tim & Chrissy
     
  11. Tim & Chrissy

    Tim & Chrissy Well-Known Member

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    No worries :)

    Good luck! You may just come up with an legitimate alternative that brings an even higher yield than resi on the site.
     
  12. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Your proposed changes will have a Gst imoact...on profit
     
  13. bumskins

    bumskins Well-Known Member

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    Would someone use it for storage?

    I believe a tenant could contest the full rent after the fact on the basis that you never had approval/occupancy certificates. So they may be able to make a claim for full rent/majority of the rent. Though obviously this sort of stuff go's on and who knows what percentage of people get away with it.
     
  14. sanj

    sanj Well-Known Member

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    @JKWS We have zoning and relevant building standards for a reason. In the case of say apartment like it sounds you're planning, fire safety is a big one. How would you prevent a fire accidentally lit by one tenant from spreading quickly And putting your whole building and neighbours at risk? What are your tenants going to do if council one day comes in and throws everyone out? Are you comfortable putting people at risk to make some dodgy dollars? In the event of a fire And someone getting hurt you are likely to face criminal charges on top of the insurance company not paying a cent.

    You're already aware of how unethical your suggestion is based on expecting harsh words, I hope you don't go ahead with this idea.
     
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  15. Scott No Mates

    Scott No Mates Well-Known Member

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    What's on the site at present? Do you enjoy existing use rights? Can this use be continued? (Even if it is only a single dwelling with granny flat).
     
  16. JKWS

    JKWS Well-Known Member

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    Couldn't agree more, we would only move forward if a legal avenue could be identified.. Unfortunately we couldn't so we moved away from this one.

    The site would lease for a handstand area but this isn't in demand.
     
    sanj likes this.
  17. Azazel

    Azazel Well-Known Member

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    Some good advice here.
    Definitely worth speaking to an expert to find out if there are any options.