South Brisbane Splitter development

Thanks for your quick reply Leo. I was keen to know the end of the story! All makes sense.

Appreciate you sharing your experience so generously, as it provides some learning for relative newbies like me. It is rare for someone actually doing it to freely share - no incentive I guess.

Have done heaps of renos and low level commercial, but development is a new thing - thinking I can combine both, especially if I retain an original house in my a development. Seems to make sense if trying to keep development costs down to retain an original house where possible and maybe renovate it - aim is to get the land for free or as close as possible to that.

For example, I am in process of DA for a 3 townhouse development in Newcastle, which involves retaining an existing house ie main house plus 2 strata town houses. Block is 700sqm and house to one side. A bit of a squeeze, but should see a return of 25%.

Whilst different to what you are doing, was interested to learn from your project. In particular, your publishing of the subdivision costs was a bit of an eye opener - more costly than thought. Am guessing that strata is less expensive?

Also, found it interesting that you need to get approval for the subdivision before the house in QLD - it is the other way around in NSW, which I think is a disadvantage for financing. For some reason Newcastle Council is worried that my two undersized lots without an approved house is problematic. Min subdivision lot size is 400sqm. There are not too many blocks in inner city fringe in Newcastle that would satisfy that criteria.

Once you have that subdivision approval (in Qld) I imagine it would have increased the value of the property? and if so are you able to use the increase as security against the build costs (and thereby free up equity for other projects)? How do the banks look at it?

I am conscious of the need for a development pipeline, which will be much easier once this development is over, but in the meantime time, there is a lot of twiddling of the thumbs!

Appreciate your posts again.
Chris

 

Well done, Very nice

It will increase the value of the land, not the house. The house will be demolished. Once the land is subdivided on two titles each lot will have a new value once revalued and the equity increase could be accessed. For us its not so important as we will fund around 75% of the project anyways. But always good to have the option of more leverage if you wanted it.

Once you get into a rhythm and system of a starting and completing cycle there is less down time. We are still trying to work out the best rhythm for us taking risk as the primary consideration into account.

 

Cheers Mate.

Good to know. Equity at a bit of a premium when you are starting out like me, so any increase in value useful.

Bound to get more efficient with practice at process/pipeline. I reckon risk management is very much at the heart of longevity in any business and the biggest reason developers go bust. Market conditions obviously play a part there though I would imagine - push a bit harder when times are good, and pull back a little when not the case?

From what I can work out, being successful as a developer doesn't require 'putting it all on the line'. My strategy is to plod along as I tend to be relatively risk averse (compared to more aggressive investors) - feel it is best to work within my own profile. Last thing I want to do is be totally stressed out because I am over committed (been there done that in the early 2000s with property investment). But I acknowledge I probably need a little push occassionally to be a bit more aggressive when it counts.

 

Totally agree with you. I don't mess around with risk. Its like a wild lion. I never turn my back or disrespect it.

I think so, I don't think you can go wrong by being extra cautious in this game. I also like to reduce leverage now that I am able to. The amount of leverage you decide to use when you don't really need to anymore is a personal choice. Its a balance of risk vs rate of expansion.

I agree, I think working within your own risk tolerance and financial situation just makes sense.

 

"Wild Lion". Lol. Good analogy.....hides in the background and when the conditions are right, rips your throat out! A bit like excess leverage in a downturn.

A nice luxury in this game, but one that ensures longevity. Hope to get to that point myself after a few developments. I have seen plenty of rich plodders!

 

LOL @Leo2413 , just found this thread and I found out that I did quite well with my splitter, bought in Nov16, submited DA right away, shifted the house, completed its full renovation to move in around Aug-Sep 17, and I thought it was too long until finding this thread....

 

Great stuff mate. How far from the CBD was your site located? Did you decide to go for a modern/ contemporary build for the other side? Do you mind giving some specs for the build? Would love to hear. Thanks

 

Just read the threat from the very beginning to here. Very interesting stuff so far! I'll be keeping an eye on the progress. Thanks for sharing Leo!

 

Hopefully you've found some value in the 2% there that wasn't silly banter. I'll update when we start the builds mate.

 

Ha ha, yeah, there was a little bit of skimming in the middle there, but mostly it was very interesting!

 

Not sure the exact distance but we can walk to work in the CBD every morning.
And yes, we are looking for a modern build maybe around 600k range on 300-400 block size... Still learning and researching so not sure when we start (actually, I am still scared of that idea, lol ...)