Triplex Build in Perth Guidance

Discussion in 'Development' started by BuildWA, 28th Jun, 2020.

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  1. BuildWA

    BuildWA Member

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    Hey New to this chat group, and looking at doing a triplex on at 800sqm in the Mirrabooka area fairly soon, to take advantage of the WA Gov grants that end by Dec 2020. This will be my 1st development in WA, so seeking guidance as i go through the process. And happy to share my learnings.

    The block I'm looking at is about 800sqm, and im looking at doing triplex with a 4x2 in the back and two 3x2's in the front (All double garaged). The block is flat, simple and rectangular, and has and old 1960's house, and some trees that'll need to be removed. I'd like to do it in the most cost effective, efficient way possible with quality.



    The stratergy I'm looking at doing is going direct to a Demolition contractor to arrange demo and clearing of the site including trees. Going direct to a building designer to create plans, working drawings and do council approval's (built starta im thinking), then tender this out to WA Builders, Select the builder and begin construction (site works) hopefully around October period.

    1) Is it cheaper to get a separate contractor to do complete demo, than it is getting a fixed price lump sum turnkey package from a builder (that includes demo)? And are there any things i should look out for/specify in when im getting demo quotes?

    2) Is it more expensive or cheaper to directly go to a design contractor to arrange plans, working drawings, do council approval etc, than it is getting a fixed price lump sum turnkey package from a builder (that includes design and planning approvals)? And for a simple block triplex in WA what designers are cost effective, quick and proven? I've been told KTR Creations and Mark Anthony, is that the case, or are there any others?

    3) To reduce the schedule duration for a simple triplex - after design drawings are created can you tender out to builders then?or should you wait to have energy and engineering done before tendering out? Wondering u can get significant variations if you tender out before design is energy and engineering.

    4) If i start in July 2020 with my above strategy is having a tender approved and construction/site works beginning in October 2020 achievable? or what is more realistic? As Im trying to do as many things in parrallel that are allowed to reduce the duration.

    5) To start building/site works the quikest, is it better to go down the built strata route, or do survey strata and start building at the same time/after conditional approval?

    6) for fixed price contract is it normally cheaper to go to the big end of town (the Dale Alcock, Ross Norths etc), or the smaller end of town?

    Thanks :)
     
  2. BuildWA

    BuildWA Member

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    Also note that I'd be renting the units out not selling, and the areas I have land (which was bout in the $300ks) are Mirrabooka and Nollamara.
     
  3. Michael Cunningham

    Michael Cunningham New Member

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    If you were looking at completing a survey strata subdivision to take advantage of the grants, I would recommend starting ASAP as it usually takes 8-12 months to complete a subdivision. Even starting the process now wouldn’t guarantee titles before the grant cut off date of December 31.

    As per my understanding, you are eligible for a grant per titled lot. As built strata titles are issued after the build is complete, to use these grants you are only left with the survey strata process.
     
  4. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    There is only a very small part of Mirrabooka that has the correct zoning for doing developments - so I hope you are aware how zoning works in the area?
     
  5. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    PS have you spoken with a broker etc about funding if you are going built strata? Your cash contributions can be quite high due to the way banks value the projects in one line (3 on one title)
     
  6. BuildWA

    BuildWA Member

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    Have sufficient funds enough to cover these costs.. And seems like the quicker process.. Unless any1 has experience otherwise?
     
  7. BuildWA

    BuildWA Member

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    Zoning is R40 in these cases
     
  8. BuildWA

    BuildWA Member

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    If u read the detail it says buiding can start upto 6months after december. So really deadline seems more like june 2021
     
  9. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Even duplexes :)

    The below build was completed last month. The end vals of each were @ 1375 for refi ( long term build and hold) with some negative covid sentiment

    Val extract pre build below

    7.2 Calculations and Assumptions

    VALUATION APPROACH
    Our primary method of valuation is direct comparison in order to arrive at the as if complete gross realisation and once we have arrived at the gross realisation value on an as if complete basis the hypothetical subdivision methodology is completed in order to establish the in one line as if complete market value.

    VALUATION RATIONALE:
    In the absence of further of comparable sales of “Duplex or Multi-Unit”, style properties we have had regard to sales of dwellings/units on small lots with their own individual title to arrive at a gross realisation of the individual units (assuming individually-titled) and then deducted an acceptable profit and risk factor, sub-division costs, holding and selling costs to arrive at our valuation.


    PRIMARY "HYPOTHETICAL SUBDIVISION" APPROACH:
    The market value for the units is :
    Townhouse 1 $1,250,000
    Townhouse 2 $1,250,000
    Gross Realisation $2,500,000
    Less GST $227,273
    Selling costs 2.2% $55,000
    Net realisation $2,217,727
    Less profit and risk 7% $145,085
    Less holding, interest
    and subdivision costs $55,180
    Less acquisition costs $121,048
    VALUATION $1,896,415
    ADOPT $1,900,000

    In accordance with our instructions we have valued the units, "As if Complete" and "in one line" assuming both are on one lot and held on one title. COMMENTS REGARDING "In One Line" BASIS: The calculations and deductions below reflect an (approx.) 24% discount on the individual value of the units if they were separately titled.

    The inline value reflects the purchase price a prudent developer or investor would pay for the dwellings on one title in order to then subdivide and sell the dwellings individually with separate titles at a profit. Therefore, our valuation is less than what would be achieved if the dwellings were already subdivided, had separate titles and were valued individually.
     
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  10. Michael Cunningham

    Michael Cunningham New Member

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    Yes, construction is required to be underway within 6 months of signing the contract.
    The grant however is per titled lot, so you will need titles before December 31st.
     
  11. Hodgo

    Hodgo Well-Known Member

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    @Michael Cunningham can you please quote this information from a source such as the .gov websites?

    I believe from what I've read that the grants are only in relation to the construction contract. There is a tie in with titles but I believe it's only because the build has to commence from 3-6 months (depending upon which grant) from contract sign date, if your land doesn't have titles by that 3-6 month date and you can't start construction then your not eligable.

    Grants and subsidies | Western Australian Government
     
  12. Michael Cunningham

    Michael Cunningham New Member

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    Can I get more than one grant?
    A grant is available for each new home built or purchased as long as the homes are on separate land titles. Only one grant will apply if more than one new home is built on a single lot.

    When does construction need to start?
    Construction must start within six months of entering into the building contract.
     
  13. Hodgo

    Hodgo Well-Known Member

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    Thanks for the quote Michael.

    However it doesn't state that Titles are required before Dec 31. It's just confirming about the numer of grants that can be given.

    ie as long as you sign up for a grant or grants, before 31 Dec, and titles are issued and construction begins before the 3 and 6 month deadlines then I'm sure it's fine. So you could essentially sign a contract on 31 Dec and not have titles until Mid March and still be ok to receive both grants, of course you could always start construction before titles are issued, essentially straight after WAPC approval.

    @BuildWA so you have 9 months from now to get titles. As Michael said if you go Survey Strata you would be good, however built strata may be a different issue due to timing.

    All that being said I would recommend @BuildWA you call Department of Finance for clarification. I'm not an expert in this subject and you don't want to be on the back foot before you even begin.
     
  14. Michael Cunningham

    Michael Cunningham New Member

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    @BuildWA If a survey strata is the way you want to go, then confirm the conditions with the Dept of Finance and engage a surveyor ASAP. To have a subdivision completed and titles issued in 9 months is quite a feat.

    @Hodgo It does read like that, however, I have just used the examples on the website as a reference and the only example similar to what you have explained above is the 'owner builder' example, which isn't relevant in this case. All other examples have titles issued before December 31st.
     
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