Subdivision Feasibility

Like Myf said. Why 189k for developer contributions? Are you sure this applies to you? Also you only need a soil report if the suburb is known for clay or peat or cap rock. Care to share the suburb.?

 

Would you mind sharing your exit strategy?

 

It was a pre-existing duplex pair bought from the Department of Housing. I knew that if I couldn't subdivide it, I could still hold onto it as a dual income cashflow positive property, and possibly sell it after a few years once I'd refurbished it.

At the time, the riskiest foray into development I was willing to consider was either the above or a retain and subdivide.

I couldn't put in a DD clause because it was up for auction. I don't generally use a DD clause anyway because it makes for quite a weak offer compared to an unconditional one - just do your DD beforehand.

 

@Big Daddy, the contribution scheme was confirmed by the Coordinator of Scheme Contributions @Wanneroo.

Quote from the guy:
"In this scheme area, contributions will be payable at the time of either subdivision or development. The method of calculating scheme contributions depends on the nature of the proposal. In general, contributions are charged based on the number of residential lots being created or on the group housing potential by dividing the total lot area by the average lot size of the corresponding R-Code and then multiplying by the contribution scheme rate."

I have promised my JV partner that we won't be disclosing the suburb...to let's say too many people. Having said that, a few people already know about it. Happy to PM you, if need be.

 

@Ichigo
One thing that bothers me is finance for this deal, do your JV partners have experience? Just make sure you know the bottom line.

JV partners, split 3 ways, smaller profit, I wonder would it be a better option to go JV 2 way split and smaller scale ?

My guess this is Perth market? Don't wish to be negative but if it is I would want a **** load of fat in the deal, as we are in declining market and also on completion if you can not sell you can service loan.

MTR

 

@MTR , the 'potential' JV partner has his PPOR in that area and is building an IP. We do not have subdivision experience, but will be happy to engage a subdivision company to go thru the process for us (while learning from them).

I guess the main outcome of this feasibility has been to understand the fees that were missing initially, exit strategies, risks associated with JVs. Yeps, still looking for other smaller scale projects...that I can either do on my own or JV 2.

Yeps, it's in Perth. Tots agree with you in regards to the {puppy} load of fat Cheapest similar-sized blocks are selling for 320k currently. We have considered 300k, given that it will be available for sale in a year (or 1.5yrs) time..

 

It may depend on the clause eg Subject to a soil report condition in an area where its a known fact that no problem soil exists will carry limited or no risk to the vendor and shouldnt weaken your argument. Open ended clauses such as subject to satisfactory DD is another matter as you can get out of the contract for any reason you see fit.

 

How/what do we look for with this?

 

Get a flimsy (Water corp) for the property. Work out if the existing sewar can be extended or if major works are required.
Bank on your water corp contributions at least $40k.

 

Your local council will be able to advise you if storm water is available.

 

All good to put a figure for interest, but another thing to get the loan approved. Would be speaking to a decent banker/broker before getting to deep. Would also help to know who the JVs partners are before as well.

 

@Ichigo

What ended up happening? did you go ahead?

 

Nope.

WaPC suggested to seek advice from local council.

One town planner from the local council wasn't quite sure. Spoke another planner who's a bit more senior, who then suggested the industrial buffer might not be required but that may be subject to what Department of Env Regulation says..

DER looked at this scenario and came back with a full page letter...and in brief it was like...we can't really advise whether the industrial buffer will be required as it needs further consideration. We will only be able to look at it once the application went through..

I wasn't willing to take that risk/uncertainty.

 

Shame, great story.
Thanks for sharing the thought processes and details, will certainly help if I consider development

 

anyone has developed the spread sheet with complete breakdown, all in's and out's?

 

@MDD if you find a spreadsheet can you pass on. I am in the process of creating one based on Input from the forum

 

Surely someone on this forum has one that they wouldn't mind sharing?!?

 

Most definitely Mate...

 

once i get it or find it....

 

As all of the previous posts would suggest, you are so far away from getting this right it is not funny. Read this https://drive.google.com/file/d/0B-vEWrt-d9lsUDZGYVh3TlFicFk/view?usp=sharing