Your first development project

Hi Developers out there,

I am living a block with the right zoning for subdivision/unit titling. Currently, I do not have the funds to start my first project. Please share your story :

What is your first development project?

How much does it cost?

How did you get financing? What type of financing? I always wonder if people use cold hard cash for the first project.

How much profit did you make (first project)?

Thanks!

 

@starlight

Any subdivision is going to cost you money.

Surveyor, town planner, council contribution list, just goes on.

May be you can utilize equity (if available) on existing property and start subdivision process.

 

I'm in the same situation right now, currently living on a duplex block. Looking to subdivide and build on the back battle axe.

Looking at costs like surveying, WAPC applications, demolition of existing garage for future driveway, clearing the rear block, head works, power domes....it's looking to be about $50k total.

The plan is to build at the back, move in and then sell the front, unlocking more equity and having much lower mortgage for the new two storey.

From there....get the mortgage as low as possible and look for my next investment opportunity!

Baby steps.

 

Hey Be Developer. What's the deal with houses for sale that come along with approved development applications? Those properties haven't been subdivided, how does that all work?

 

The approval is only on paper.

 

Which means you still have to get all of the op works done, paperwork completed and infrastructure charges paid before you have separate title.

 

@Beelzebub

as @OC1 said, they are approved on paper only!.

Some of them may have stamped Construction Certificate or Building permit.

As a developer, you will still need to finalize paperwork and satisfy conditions. mandatory requirements and contributions.

if you are new or first time developer, i suggest you speak to experienced developers or hire professional hands and brains..

 

I've got a project (our first) on the go at the moment. It's a 50:50 partnership with a good mate of mine, to help with the finances.

Short story is we purchased a run down house on a corner block, with intentions to move the house forward and completely renovate, then subdivide the block and build a new house on the back.

We almost have the renovation complete, and we're ticking off subdivision conditions at the moment.

With finance, we got a loan for 88% of the original purchase ($480k), as well as 100% of the renovation costs (>$200k). We'll also be going for 100% finance on the new house when we get to it.

For everything else, including the DA and subdivision, the costs came out of our pockets. All up, subdivision is looking to be close to $50k.

 

Okay, so if you have the approvals to build the council has also approved the subdivision?

 

No, separate dealings. Generally it's a given though and you just go through the motions. Much trickier the other way round though.

 

First Development

 

Where do you normally start with a sub divide and build? And what's the general process?

A town planner?

 

High five!! I have the same plan as yours! Currently in the process of renovating the existing house..

Why is your renovation cost so high? 200k?

Is your a queenslander house? How much is the cost of moving the house?

All the best in your project! Cheers..

 

It was @aussieshorter that's doing the renovation

 

My first project we made good profit because we ended up getting lucky with timing put plans on in a rising market and sold out about 3 years later with about 35% rise in total value or about 2.5 times the cash we actually put in.

Finance has been the hardest thing we have found, we previously had good serviceability and were aiming to buy, build, sell part, repeat, now we are looking at buy (under loan), plan, presell at least a portion, build.

also and some of the more experienced people might have ways of getting it done but before we are even looking at finance for the build we had to front up deposit for the land, stamps, holdings, plans & permit costs, few out of pockets for things such as service connections, site clearing etc ... we were trying to do 2 at once and basically ran out of cash so had to sacrifice the less profitable site.

 

Why is your renovation cost so high? 200k?

Is your a queenslander house? How much is the cost of moving the house?

All the best in your project! Cheers..

 

opps..i read two messages and thought it was from the same person..
i do have the same development plan as yours...
how are you planning to get finance for the battleaxe build? would you be renovating the existing house?

 

It's a Queenslander, but it's basically a re-build. Internals all gutted, completely new kitchen and bathroom, new roof, raise and moved the house, new garage slab, new internal and external staircases, paint inside and out, new floors through half the house, etc.

I call it a renovation to differentiate it from the new build we'll be doing at the back of the block, but it's a lot more than a basic renovation!

 

Our first one was through CBA. 80% loan for land and construction by project home builder. Figures roughly as follows.
Land 210k
Construction 300k (2 houses)
Contributions 30k
Holding costs 20k
Strata subdivision + misc - 10k
Total 570k
Sold one unit for 403k
Rented the other for 380/wk (later sold it privately for 385k)
CBA used projected rental appraisals for their assessment. We had cash for the 20% of land and construction.
This one was a great project that kick started our career in property development 8.5 yrs ago. We have now built 15 houses and are about to take on 3 more projects comprising of at least 9 more homes.
Good luck with it all.

 

Our first major development was split with us and other 2 partners. We bought the block of 2 lands on 800sqm (Sydney). Had our Architect draw up a triplex and had a pre DA meeting with them. They didn't say no at the meeting but recommended some alterations to it.

Because we all had equity it was easy to get the loan for the land. The build cost for the 3 Houses were $1.1mil, the bank gave us a construction loan for $500k and between the 3 of us we provided the rest through equity.

From the time we bought until we sold it took 3 years.

Once lock up was complete we had the surveyor out and he drew up the 3 new lots, we applied with council for subdivision and once stamped from council we lodged plans at LPI. It took until completion to get it subdivided by the time it went through council and LPI.