PPOR strategy, advice wanted. Plans and Permits

Discussion in 'Development' started by ADLO Projects, 30th Jan, 2018.

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  1. ADLO Projects

    ADLO Projects Active Member

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    19th Mar, 2017
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    Vic
    Hi,

    I'd appreciate peoples thoughts on this strategy prior to getting professional advice.

    I'm interested in a vacant block that has plans and permits for 3 townhouses.

    I would like to build one townhouse to live in while holding the remaining land vacant and unsubdivided.

    After a period of living in the property and obviously keeping the permit current I would then subdivide and sell the land or continue to build and sell.


    Are there any obvious issues with this plan?

    Thanks
     
    Colin Rice likes this.
  2. Colin Rice

    Colin Rice Mortgage Broker Business Member

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    Perth
    Get your finance ducks in a row (if you have not already) first as this segment is getting a little more tricky to finance in the current environment and most under estimate the $$$ they need to tip in.
     
  3. Colin Rice

    Colin Rice Mortgage Broker Business Member

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    Just reread this so wont need a massive cash injection to get up and running.

    Still get the finance part sorted as many make false assumptions before diving in.
     
  4. JDM

    JDM Well-Known Member

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    Sounds like there's a good chance this will be seen as a business enterprise that will attract GST and income tax with no CGT concessions. Definitely seek tax advice before you do this.
     
    Paul@PAS and Terry_w like this.
  5. Angad Singh

    Angad Singh Well-Known Member

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    Perth Western Australia
    Hi,

    Sounds like a good plan! I have staged developments myself in this manner to help with cash flow or equity requirements.

    The main challenges I experienced (other than the above) were:
    1. Market sentiment on blocks of land of that nature
      • In WA these may be 'strata titled' and difficult to sell because. Not that it is impossible, but it is something you need a strategy for upfront.
    2. Construction logistics
      • On occasion, building in close proximity can lead to damage, vibration etc. Also there are common areas such as driveways which could get destroyed in the process and end up being an additional cost. Again, not impossible to manage, just need a strategy upfront.
      • There are also things that make sense to do together, for example service run ins. you would need a strategy as to if you want to 'pre lay' some of this work in the initial stage.
    3. Titling
      • It is unclear whether you expect that you will get one title for the new house, and then a second title for the remaining land, or you are expecting to hold the entire thing on one title. In WA, it is not be possible to stage the subdivision in this manner from a single subdivision approval. This is because the parent title is effectively destroyed when new titles are issued, so you would need an approval for initial two lot subdivision, then a second approval to subdivide the vacant land. Again, not unmanageable, just need a strategy upfront.
    Hope this helps.

    Warm Regards,
    Angad Singh
     
    Propin likes this.
  6. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Council likely wont approve a staged townhouse dev as proposed. They dont want part completed sites. Same with bank.
     
  7. ADLO Projects

    ADLO Projects Active Member

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    19th Mar, 2017
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    Location:
    Vic
    Hi,

    Really appreciate everyones time in replying to my post. I have spent quite some time going through different scenarios and calculations for this potential development.

    The viability isnt quite there so I'm looking at other options now.

    Thanks again.