Western Sydney Duplex Development Online Diary

My last Duplex development project in the area (between Parramatta and Ryde) was a success as it managed to set the record price at the time it sold. So motivated by whats happening in Parramatta and that a major development company just bought land for $160 million nearby as well as the recent duplex sales, I focused on replicating what I did before.

I have just managed to get approval (deferred commencement) for my next project. I was actually waiting for the approval as there were quite a few set backs and I wasn't entirely sure if I will get the approval but thank God I managed to get it last week.

I am using this as an online diary as I go along for my own records and anyone that may be interested to read so please feel free to contribute.

Land was purchased in February of 2017, initially I had negotiated $1.3 million with 3 months settlement but during cooling off I managed to negotiate them down to $1.25 with 5 months settlement (ended up being 6 in the end) and 5% deposit.

Advantage:

This land is situated on a good street which is also a cul-de-sac, 715 SQM, over 15 meter frontage and the long settlement alone saved me good 25k. The only comparable sale at the time (a land that was in a cul-de-sac), sold for $1.59 Mil but that land only had 620 SQM. Other comparable sales would be anywhere between 1.5 to 1.7 (depending on size and street) and of course they wont offer 6 months settlement or 5% deposit.

Issue:

The site falls under the very strict Parramatta council jurisdiction which is still under merger (and therefore much more difficult to deal with than their normal difficulty level). I went to the site on the very day it was advertised and didnt allow it to go to open home.I also took a couple of friends and family who are in the know. Looking at the site we noticed that the site falls very slightly (by about 300mm) from around the middle to the back but middle to the front is flat. So the actual house wouldn't have had an issue draining to the street but the backyard fell back by a bit. I didnt think we will need easement so I put down deposit on that day but to be sure, while under cooling off, I did a survey, took it to the council and showed it to a couple of their engineers. Their thoughts were that, worse case scenario, I can use some fill at the back, put in a deep pit at the front of the site (on street) and run concrete pipes under the kerb in order to drain storm water from the backyard. Apparently this had been done before. A larger bypass % would have also been an option to bypass the backyard altogether. At this point, based on their comments, I proceeded with the sale.

However as I found out in the months after, council completely denied this, and said the advice may have been given based on no other information. Council can be a big bully and this is a very long story which involves one DA being refused and a whole bunch of meetings and back and forth which thought me a lot. I will expand on this further on another post but for now it will suffice to say that I have to run an easement through two properties.

I had estimated the whole scenario of fill and running pipes under the kerb (mentioned above) to work out between 60k to 90k based on quotes. This easement scenario isn't that much more expensive and I estimate it to be $100k all up although I am still finalizing negotiations so it can change. Perhaps I can dedicate another post in this topic to the actual easement negotiations as this is also a very long story.

I now have a deferred commencement from council pending registration of easement. The plan is to finalize the registration and start building from March of next year (place is rented till the end of Feb next year).

Break down of costs:

Purchase price: $1,250,000
Stamp Duty: $54,240
Legal and loan fees: $2,500 approximately [may edit later with an exact figure]
First DA Fees: $18,000 approximately [may edit later with an exact figure]
Second DA Fees: $12,000 approximately [may edit later with an exact figure]

Easement Fees:

Property A Compensation: $23,000
Property B Compensation: $26,000

Legal Fees for easement: $12,000 [may edit later with an exact figure]
Building of easement and restoration fees: $38,000

Holding Cost:

Estimated amount of $150,000 [Will update as I go]

Build Cost:

I have allowed for $900,000 although I believe it can be lower than that but we will be opting for a higher end finish, so for now we will stick to that number.

Agent Fees: $50,000 [Will have to update later]

Total costs: $2,535,740

As of right now the duplexes with similar sizes and finishes are selling about $1.6 Mil to $1.7 Mil. None of them have been in a cul-de-sac and also they are not in as good of street as this one is. However I am going to calculate the resale value of $1.55 each, so in total $3,100,000.

Rough Margin: $564,260.

There will be a GST amount that I will have to calculate and include later.

 

Great post, keep them coming and go into as much detail as your comfortable with.

 

Amazing. My next step that i would love to achieve is Duplex and townhouses.

Congratulations

Photos of site would be.amazing for the Diary woud love to visualise.

Also a suggestion. Nearmaps is fantastic for site typography.

Im in the initial stages of design at an Ip for a Granny flat addition and founf the Near map application absoultely amazing when analyzing site.

 

I have not done one of these but aren’t there significant council contributions in addition to DA costs ?

 

@Tenex brave buddy for taking this site on. I'm not sure if it's the one we spoke about or a different one. Pcc are paaaaainful as I'm sure you know. They not only a bully but incompetent. What worries me is the 900k build cost. You fairly certain on that? Have you factored in demo, all soft costs, contingency. Also the easement story can take upto 12 months...so be prepared for that. Wish you the best of luck my friend on this dev.

 

Thanks for the post, looking forward to updates!

As for PCC............"not only a bully but incompetent" sums it up nicely.

 

@Leo2413 I dont think we did talk about this one as it all happened in one day. I think the one we talked about was on the border of eastwood. Still pretty good location but that property fell back by a few meters so we knew we need easement from the get go plus additional build cost so given the vendor didnt budge on price, I walked away.

In terms of being brave, any development in Australia will have a degree of risk. I had a strategy on why I picked this area and it is based on facts, data and experience. Hopefully it will pan out that way.

I got a bit unlucky with council otherwise the price for the site is pretty good. I will go into the details of how things panned out regarding council and easement in future posts when I get a bit of time.

Regarding build cost, in my experience, you should be able to get a vanilla duplex for 800k including site costs. From that point any money you spend, you have to ensure you can recover it in your sale. So yes I can spend 950k instead but my resale will be higher than mentioned above.

The only thing I realized I have not included are council contributions and some of the costs to get the cc going. I will include 20k for that.

Regarding easement, God willing, we are finalizing the deed of agreement soon and hopefully manage to register in the coming months. I have been working on this since the day I exchanged in February. I will update how I go.

I am considering the option of selling the site with DA and registered easement if I get the right number and potentially move onto another project but it is likely I will be building it.

 

Sounds like an interesting project. Hopefully now that you have deferred commencement you can get that easement sorted asap. Might need to get a membership card at your local Dan Murpheys if you haven't already Please update this thread as you progress, will be following with interest. On a more personal note, I like the fact you mentioned "god willing".

 

I'm a man of faith so I always think in that way.

Didnt get the comment about the Dan Murphy thing

I will be posting some more, expanding on what I have been doing since Feb

For now I have also put it to a couple of local agents to see if I can get the number I want, otherwise we will be going at it full-force.

 

Dan Murphy's liquor store. The alcohol may help with the BS PCC will put you though.

 

Ah, makes sense.

I actually stressed out a lot about dealing with the council but my architect's word resonated with me. He said when you are dealing with the council, don't expect to have a logical conversation and for them to understand it. They dont operate based on logic and commonsense.

 

Thanks for sharing your project. I have been through several infuriating experiences with councils, sometimes I think aliens work there instead of humans.

I'm currently mid-way though a duplex project in Dulwich Hill and have had several unexpected delays (s73, delays in materials etc) so they aways pop up.

Have you included your s73 (hopefully no major works there) and surveying/subdivision costs into your numbers?

 

Dulwich Hill, really good area. I once was looking at a terrace to purchase there. If you can build a duplex I would imagine there is good money.

I know how much water coordinator will cost, so thats the part of the CC cost that I have mentioned a few posts earlier.

The actual major / minor work is included in the build cost.

Your major / minor is a lot to do with your site as it is very labour intensive. I have had prices from 6k to 23k for the exact same job before, so you want to look around a bit.

Your water coordinator, depending on their relationship, will be able to get you a quote or two.

I will update the costing a bit later but I am going to allow 20k for CC costs and another 30k for any potential other costs.

 

I bought the site DA approved but even then the s96 took forever through council. There's higher holding costs around here but hopefully better margins at the end. I had a sewer vent pipe that needed moving on my block which caused major hassles and in hindsight might not have gone ahead had I anticipated the amount of drama.

Are you using the same builder from your previous project?

 

Update

The deed of agreement for property A easement has been sent out to them finally. My solicitor has been on and off away due to health reasons over the past few weeks and that has caused delays. I am not happy at all as at times he tells me he has done certain things which I end up finding out was not correct but I am mindful that it is due to his health reasons. I will have to have another chat with him as soon as possible.

Property A have confirmed that they have received paperwork. Hopefully from here, them and their bank will sign and send it back.

Property B, their solicitor has been very difficult to deal with as he takes weeks to months to reply to a simple email or phone call. I have been very close to taking them to court. We are trying to iron out a simple matter about a dilapidation report and if that comes through then we will be posting them the deed to sign and send back as well.

The quote for a portion of the easement works was received as well. A few thousand dollars under what I was expecting and from here I will see if I can negotiate him a bit as well. I have also sent out a request for another company to quote.

One of the agents got back to me regarding the pricing to sell with DA. His thoughts are that we should be able to achieve between early to mid 1.6 Mil. Its not the number that I am after so I have told him to see if higher will be possible but it looks very likely that I will be building.

I also tried to reach out to a builder I had in mind to start negotiating the build via a friend but it appears he is overseas. I will have to wait for a week or two.

My strategy with the builder will be to write up my own tender, put a fixed price on it and get them to respond if they can do it or not.

The builder I have used is also on the list but I wont be talking to him only.

 

It will be interesting to see how he responds to that. I would be very surprised if they just accept your proposal on or Yes or No basis. If its within their ballpark they may use their own tender incorporating the key points you have outlined. Anyway, will be interesting to see. Good luck.

 

Majority of the builders that I will talk to already know me to a degree, so thats part of the reason.

And of course everything is up for negotiation. I wont put it to them in a way that implies either this or nothing. I will be giving them a realistic figure and will be working them to get to where I want that they can cater to.

But by doing this I will remove the none-sense of I have to charge you X amount so I will be given an opportunity to then charge you a Y amount (I have to charge you to be able to charge you) and I will be removing the location bias.

As I am sure you know the same building built in Liverpool Vs Parramatta Vs Hills Vs Northern suburbs will attract wildly different prices. Builders are pretty creative on your end profits and therefore how much they can charge you nowadays

 

@Tenex will you get a fixed price for the OSDs or will they be PSs?

 

I will include it as a part of the total cost. With OSD you have the build part which is usually done right before the slab, dig, frame and concrete. You may need additional material such as bondek. I may get a concreter to price it for me individually and then I will include it in the total cost.

The other part is plumbing which portion of it will have been built as a part of the easement any way and portion of it will be built. Again I can get one individual quote to work it out and go from there.

Realistically speaking though, if one was after an "exact" figure, you cannot get it until you have done the engineering in the CC to know "exactly" what you need and how much of it.

 

You looking at approx. 40-60k?